Tech talent is still hard to find, despite layoffs in the sector

Facing challenges ranging from the pandemic to macroeconomic uncertainty, tech companies and workers have been sailing rough seas over the past few years. Most recently, tech industry leaders have been under pressure to rectify overhiring, improve efficiency, reduce costs, and increase automation, which has led to over 150,000 technology industry workers being laid off in the US since the beginning of 2023.¹ Amidst these cuts, companies are still struggling to find all the technical talent that they need to drive newer, more innovation-focused initiatives.²

In a Deloitte survey of technology industry leaders, workforce issues were seen as both a top challenge and a top opportunity. They have held steady as the second-highest top strategic challenge over the past six months (with competition and market disruption ranked number one).³ Looking a little closer, nearly 90% of leaders said that recruiting and retaining talent were a moderate or major challenge. In addition, 72% ranked “meeting workers’ broader needs” as a moderate or major challenge (figure).

Companies will likely continue to struggle with returning to the office, layoffs, and addressing the shifting preferences of workers. Two areas that leaders identified as especially difficult were finding people with highly sought-after technical skills and helping younger workers thrive in an evolving workplace.

High-skill roles are still hard to fill

Because of layoffs and more prudent hiring practices, retention issues aren’t quite as bad as they once were.⁴ However, executives are still struggling to fill senior technical roles like system architects, cybersecurity specialists, and those requiring AI expertise.

One leader listed off hardest-to-fill roles: “On the technical side, I would say security and system architects. People that understand how things fit together. I call them unicorns. Somebody that can actually sit down and think about how software and the network and hardware and cloud and data all fit together. That's really hard to find.”

These skills shortages seem to be hampering companies’ ability to pursue new projects. “We have so many initiatives that are still in the pipeline, but we are not getting enough people to kick them off. We have the budget. We aren't getting people coming in with backgrounds in AI, ML, automation, cloud security, cloud infrastructure, etc. In fact, we really want to improve our security and take it to the next level, but we aren't getting enough talent,” one executive lamented.

Finding cybersecurity professionals is a perennial issue, and current demand remains high.⁵ “Talent has always been an issue for cybersecurity… The problem became even more complicated over the last two years because of the pandemic, work from home, and companies bringing in new tools and technologies to secure their environments,” one leader explained.

With the surge of new generative AI tools, the number of job postings mentioning AI has exploded since the beginning of the year.⁶ Engineers, data scientists, and developers with AI expertise are all in high demand — not only those who can build from scratch, but those who are adept at using new models and tools, as well.

The next generation of talent struggles to connect

The second major workforce-related challenge that tech industry leaders surveyed highlighted is satisfying the desire of younger workers to work from home while meeting the greater needs of their companies. Leaders say they are struggling to find opportunities for connection and to build a cohesive culture. One leader said: “Gen Z likes being virtual, but at the same time, it is very difficult over Zoom or Teams to build a network. I think we're trying to figure out how to best help with that.”

A lot of these younger employees entered the workforce during the pandemic and are caught in the middle of the discussion between which working model is best — fully flexible environments, structured hybrid approaches (e.g., 2–3 days per week in the office), or fully in-office requirements. Each brings benefits and drawbacks.⁷

A key, according to one leader, is flexibility. “I've seen CEOs take a hard line, and I get it, because I think you do lose some productivity and collaboration, especially with new people just entering the workforce. On the flip side, if you don't embrace this flexibility, you're going to lose the best talent. The conversation always seems to go to the extremes. I happen to believe that it's a bit in the middle. It's more about listening and adapting and adjusting.”

Recommendations for technology industry leaders to consider

Competing for specialized talent and developing younger workers are difficult challenges, but there are well-tested tactics companies can use. In the short-term, project-based outsourcing can be an option for well-defined projects or pilots. Focusing more on skills rather than pedigree could also help alleviate some shortages. Expand the aperture on your talent pool and seek people with different backgrounds (e.g., veterans, community college graduates). Providing new education and certification opportunities to current workers around emerging technology areas may prove to be a cost-effective longer-term solution. Consider looking for internal candidates with the right foundational skills, human capabilities, and untapped potential that could be nurtured.⁸ With a limited supply of technical talent, flexibility is going to be critical.⁹

In today’s hybrid working environment, many companies are also experimenting with new approaches to mentorship, career guidance, and training. New employees and those starting their careers can have a lot of enthusiasm, curiosity, and ideas. Companies could do well to leverage that passion and have younger workers co-create these types of support programs or employ reverse-mentoring (where younger workers counsel more experienced ones).¹⁰ One exec said, “If a company has a reputation of having a very good mentoring program, that, to me, is an attraction for an early career person to actually go join the company.”

Tech companies must do more than simply attract workers who already have valuable skills, they must develop them, too. That’s gotten harder in an environment where younger workers haven’t had as many opportunities. In the rush to reduce costs, tech companies may have unintentionally cut potential technical “unicorns” and future leaders. Mentorship programs, flexible work arrangements, and clear paths for skills development can both build a company’s talent pipeline and build loyalty for younger employees.