Uncovering the true cost of the tech skills shortage

We are still seeing demand for talent outstripping supply across many industry sectors. According to the annual employment trends survey conducted by the CBI and Pertemps, over three-quarters of UK businesses believe that a lack of access to skills is negatively impacting the competitiveness of the labour market.

This skills gap has had a significant effect on more than a third of these businesses, with 38% stating that they've missed out on new business opportunities in the past year due to this issue. Additionally, 22% of companies have been forced to delay investments in different areas of their operations, and 12% have experienced downsizing as a direct result of skills shortages.

Technology businesses are among the worst affected by this issue. Figures from Hays released at the beginning of 2023 revealed that almost 95% of employers looking for tech talent had encountered a skills shortage over the past year. In the survey of 13,000 employers and workers in the UK, 1,400 of which were in tech, the recruitment and HR firm found that 94% faced a lack of talent in the prior year, up from 89% in the year before that.

The financial toll of IT skills gaps

IT skill shortages are a costly expense  to organisations too. In a recent survey commissioned by Symatrix polling 200 IT decision-makers across the UK, nearly a quarter (22%) said they estimated IT skills shortages were costing their business more than £100,000 every year in recruitment fees, temporary staffing, increased salaries, and hiring at a lower level then bringing employees up to speed.

In light of such shortages, many businesses are also finding technology too complex to handle themselves in-house. The constant cadence of new software updates, and the associated testing and reporting required, is difficult to manage.

They may be operating in a fully cloud-based environment but even then without suitable planning, update cycles can be a major issue stretching hard-pressed internal IT resources to the limit, both from a capacity and a technical capability point of view. As standard, there are new mandatory updates to cloud applications that come in at regular intervals.

These leave businesses with just a small window of time in which they can adopt new functionality or test the existing scope of what they use. Doing this all internally without having the opportunity to call on expert third party resource is challenging to any organisation but especially so to one having to deal with an ongoing shortage of internal IT skills.

Even where organisations have a strong, mature IT model for supporting cloud applications, there are likely to be parts of the deployment that are niche specialist areas, such as staying abreast of the latest release functionality, performing impact assessments and testing before the release. Organisations are therefore unable to get the most from new technology implementations, or cloud migrations, leading to many falling short of delivering the intended value.

Meeting the recruitment challenge

Exacerbating the issue, businesses are struggling to recruit. Over three-quarters of IT decision-makers (77%) polled in the recent Symatrix’ survey said their IT recruitment costs have increased over the past three years compared to just 6% who say they decreased – and nearly half (45%) say costs have increased by more than 10%. The research also found that over half (54%) of organisations were taking more than a month to fill an IT vacancy.

This is a huge problem because difficulty in recruiting IT staff can lead to delays in the development and implementation of new technologies and innovations. This can put companies at a competitive disadvantage, especially in industries where technology plays a key role in driving business growth and efficiency.

Pointing the way forward

In looking for a solution to the ongoing IT skills shortages problem,, it is important for any business to invest in skills development and enhanced training for its IT teams. Over and above this though, a managed services approach offers organisations a positive route forward as they seek to counter many of the challenges they face.

Bringing in the necessary skills and expertise from specialists outside the organisation to effectively manage IT systems can enable businesses to implement cutting-edge technologies and processes. This not only facilitates innovation but also offers financial benefits, leveraging economies of scale and  knowledge that organisations would struggle to develop independently.

Evidence from Symatrix’ survey suggests that companies employing managed services realise greater value over time compared to those who manage their IT in-house. In fact,  about 61% of businesses currently managing their IT internally estimate they could save upwards of £50,000 annually by partnering with a managed services provider.

The ongoing IT skills shortage presents a continuing challenge to businesses today, necessitating innovative ideas and solutions to ensure companies can continue to thrive in an increasingly technology-driven marketplace. Organisations need to take a multifaceted approach, which can include investing in the development and training of internal teams, fostering a culture of continuous learning and leveraging external expertise through managed services. By adopting this kind of strategy, businesses position themselves to navigate the complexities of today’s IT landscape, ensuring they remain competitive in the face of evolving technological demands.