Today’s global labor shortage, accompanied by rising inflation rates, has exponentially increased the cost of hiring and retaining skilled workers across all industries.
As we move into 2022, 46% of employers cite the need to offer higher wages to attract talent, given the current shortage. As a result, companies will compete to accommodate growing workforce demands with initiatives that require skilled technology specialists and consultants to execute successfully.
The role of skilled IT talent in supporting the global digital transformation is critical. In fact, 97% of IT leaders say they are collaborating with HR more than ever before to implement new workplace technologies.
Global Labor Shortage Concerns Spike Demand for IT Talent
Given the worldwide labor shortage, companies of all sizes and industries find it harder to attract, hire, and retain staff with the technical skills and business IT expertise they need to keep up.
Today, there are more IT positions to fill than qualified candidates, with approximately 1 million unfilled tech positions across the globe. Unfortunately, the increased risk of IT employee turnover and the global scarcity of qualified workers are projected to increase.
The employment of skilled IT workers is projected to increase 22% by 2029. Companies of all industries (technology service providers included) risk losing valuable IT team members to employers with more attractive offers.
In 2021, 72% of IT/tech employees reported they plan to leave their jobs in the next 12 months, and 76% consider salary and benefits their #1 criterion for selecting a new employer.
While retaining skilled employees who have crucial business knowledge to contribute is a key motivator for businesses are embracing digital transformation, so is the cost and time it takes to replace these team members when they leave.
As employee turnover increases, so will the time and money it takes to replace terminated employees. These include:
- Hiring Costs
- Onboarding and Training Costs
- Learning and Development costs
- Cost of Time with Unfilled Roles
Only 33% of the costs associated with employee turnover are hard costs like recruiting, background checks, drug screenings, and temp workers. In comparison, 33% are soft costs like reduced productivity, interview time, and lost knowledge. As the range of the terminated employee’s salary increases, so does the cost of finding a replacement.
- A mid-range position earning $30-50,000 a year costs 20% of the worker’s annual salary to replace. For example, replacing a $40k manager would be $8,000.
- Replacing a highly educated executive position costs 213% of the employee’s annual salary, meaning it would cost $213,000 to replace a $100k senior-level management employee.
It can take an average of one to four months to fill a vacant position, and companies are already experiencing the strain of increasing turnover rates. It’s essential to look ahead, understand where critical gaps in your organization may arise as talent scarcity becomes more prevalent, and prepare a strategic plan that takes your current staff and future needs into account.
What to Expect Moving Forward
Candidates with high-demand IT skills are already raising the bar for employers as they become even more selective about the employee benefits, compensation, and career advancement opportunities they require for employment.
In 2022, executives predict salary increase budgets to be 3.9%, the highest growth rate since 2008. To avoid losing key staff and continue to attract top talent, business leaders are reevaluating budgets for 2022. Many are also working to leverage IT service providers that offer the resources their organization needs to stay competitive and keep up with workforce demands.
Whether you’re an accounting firm with your own IT department or an IT provider employing an organization of IT professionals, technology skills and expertise will only become more expensive and increasingly essential for long-term business success.
We provide managed IT services to companies looking to take a strategic approach to IT. Check out our IT Outsourcing and Fractional CIO IT Consulting services to learn more about how we can help your business maximize the value of IT to your people and your bottom line.