Warning of global technology skills shortage

22 Dec 2006

Finding and retaining top technology talent will be a major battle for technology firms in 2007, according to a PricewaterhouseCoopers (PwC) report.

Businesses operating in the tech sector as well as businesses that require IT people will need to employ the right management strategies to secure vital human capital and keep them incentivised and motivated.

Technology companies around the world still have a long way to go in effectively finding and retaining talent and in managing their human resources to ensure continued success, according to the report.

The report found that although executives at technology companies understand that human capital management should be their top priority, most say their organisation’s capabilities in this area are lacking.

“Workforce investments represent a singular untapped opportunity for ICT sector companies to drive financial performance,” said Mark Carter, Partner, PwC Ireland.

“Technology executives must upgrade human capital management in their companies and create innovative programmes in order to attract and retain the best people.

“In Ireland it is critical to our ambitions as a knowledge economy to increase our focus on such programmes and the Government recognises that it also has a role to play in fostering initiatives which encourage the development of qualified resources.”

Carter said it is too simple to say that the competition for talent is intensifying. “It’s not purely a numbers game today, but rather a contest for quality.”

A European human resources manager for a US software company explained: “The number of applicants isn’t falling, but truly qualified applicants is another story. Demand for the best is rising, so the number of qualified applicants to his/her company is on the decline.”

To find new sources of talent, ICT companies have been forced to look offshore in order to gain access to larger pools of talent. However, even this resource is not secure with European and Asian executives anticipating a severe shortage of talent within the next three years.

Nor is the talent gap shortage limited to developed markets, with 42pc of all technology companies indicating difficulty in finding technical talent in emerging markets and 48pc reporting difficulty keeping this talent.

In addition, emerging markets have experienced a rise in tech salaries – a direct result of the intensifying need for talent. Compensation levels are also increasing to a point where China and India are no longer necessarily viewed as low-cost countries, the report found.

Carter explained: “While Ireland opened up the borders to nationals of EU accession countries two years ago, employers in certain sectors believe that there is still an insufficient pool of talent to meet their needs.

“The Employment Permits Act, 2006 is expected to go some way towards addressing these skills shortages but whether these new arrangements will go far enough to meet the needs of the ICT sector in Ireland remains to be seen.”

The report identified weaknesses in the technology industry in areas such as training for senior executives, career development and establishing remuneration systems that are both motivating and rewarding.

“ICT sector companies have always had to compete for the best and the brightest, but with an industry boom in many markets they are faced with a looming talent shortage,” said Helge Benz, senior manager, PwC Ireland.

“It is no longer adequate for technology employees to have an advanced degree in mathematics or the sciences. They need a strong drive to succeed, a willingness to learn, collaborate and innovate and the capacity to manage change.”

The report does provide some evidence that organisations are implementing ways to improve their human capital strategies in various markets. Some organisations are working with schools to enhance aspects of the curriculum and encourage students to study mathematics and sciences in order to combat the diminishing talent pools with these qualifications.

Others are looking in-house to better manage their best assets. Those companies realising the benefits of managing their in-house talent are using tools such as talent maps to assess their present and future talent needs, worker engagement surveys, and implementing human capital metrics at all levels of the organisation.

No longer are employees just attracted by the financial benefits of an organisation. They are demanding innovative and interesting work and a clear view of how their careers will develop.

Some 90pc of respondents said that developing and retaining existing high performers is very important.

“It’s no longer a mere battle for talent. The real contest will be won through the development of superior tools and strategies for managing human capital across the enterprise,” Benz concluded.

By John Kennedy