Navigating the tech talent shortage

Four imperatives for driving tech talent transformation

In order to navigate the tech talent shortage, organizations may need to evolve from a traditional, fixed model of tech talent management to a dynamic model that can enable flexibility and responsiveness to the organizations’ ever-changing and expanding tech talent needs. Below, we highlight four transformational imperatives that organizations can consider adopting to develop an advantage in the competitive tech talent landscape.

Planning continuously for tech talent

• The traditional approach: Hire tech talent as part of an annual plan to serve IT and IT-related functions.
• The transformational imperative: Plan continuously to meet tech talent needs across the organization.

A Harvard Business Review study suggests that effective workforce planning has led to a 10% increase in productivity and a 25% decrease in labor costs over five years.⁸ This could be particularly important for critical workforce segments that are central to driving business priorities and executive commitments. By leveraging predictive modeling and AI, organizations can analyze past data, in conjunction with market trends, to draw forecasts and steer continuous workforce planning. Google, for example, uses its workforce data along with external market trends to simultaneously plan for short-term talent needs and long-term expansion plans. This enables the company to forecast skill deficiencies and staffing needs, including understaffing and overstaffing, and ensure its talent strategy remains closely aligned with the organization’s strategic objectives.⁹

Effective and continuous workforce planning for tech talent can help anticipate and respond to shifting market dynamics. Even during high-profile tech sector layoffs in 2023, a Deloitte survey found that nearly 90% of tech industry leaders said that recruiting and retaining tech talent remained either a moderate or major issue, with challenges related to the tech workforce outpacing challenges related to fostering innovation, driving productivity, and integrating new technology.¹⁰ Executives surveyed noted that they struggled to hire workers with critical IT backgrounds in security, machine learning, and software architecture, and were forced to delay projects with financial backing due to a shortage of appropriately skilled talent.¹¹

Because tech talent is critical to this wide range of priorities, organizations should consider tech talent planning, with tech talent being a critical workforce segment and at the center of the effort. At the same time, organizations should be mindful of which tasks and roles require specialized tech skills and which can be addressed by more general and flexibly deployed tech talent.

Additionally, organizations with a global presence should consider planning tech work across geographies and delivery models to help ensure that the global workforce is collaborating as effectively and efficiently as possible. By establishing global capability centers, organizations can leverage tech talent in overseas locations while driving business growth, innovation, and operational excellence in their global operations.¹²

Planning needs are likely to become even more complex as needs for tech talent proliferate and the market for skills becomes more dynamic. Accessibility to newer sources of data and emerging technologies related to AI, cloud, and edge computing are not only changing the skills needs of tech workers, but also prompting tech roles to expand to functions beyond IT.¹³ Even the C-suite has become more technical. A recent Deloitte analysis found that, over the last five years, demand for technical skills in the C-suite has grown particularly fast in roles that have not historically been technical roles, including the chief human resources officer and chief sales officer.¹⁴

Looking ahead, gen AI may create more complexity for leaders when planning for tech skills even as it creates opportunities to approach skill development more flexibly. For instance, the emergence of gen AI will likely create demands for specialized tech skills that are hard to acquire without ongoing, forward-looking workforce planning efforts. The rise of gen AI may also create opportunities to expand the definition of tech talent and identify strategies to better integrate business. As one of the human capital specialists we interviewed said, “We’ve traditionally thought of tech talent as being centralized within IT or under the chief information officer. With low-code, no-code platforms, and the ability to put technology responsibilities in the hands of business users, you’ll see more decentralization that requires a completely different way of thinking about it than we’ve had before.”¹⁵

Developing both technical skills and human capabilities

• The traditional approach: Focus on acquiring and building technical capabilities.
• The transformational imperative: Create experiences for workers to share hidden skills and develop new tech skills as well as enduring capabilities.

The half-life of skills—particularly technology skills—is shrinking. This may help explain why respondents in Deloitte’s 2024 Global Human Capital Trends research said that they are spending about 50% more time learning new skills compared to the prior year.¹⁷

To create new talent models in an era where technology is advancing so rapidly that tasks can quickly become obsolete, organizations should embrace skills over static, unchanging jobs. Organizations that take a skills-based approach are 63% more likely to achieve business outcomes than those that don’t.¹⁸ This skills-based approach can include efforts to collect and mine traditional skills data—including technical and business skills—as part of a larger effort to quantify the organization.¹⁹

This kind of skills-based approach is particularly valuable for tech talent as it enables an organization to quickly redeploy internal talent to fill skill gaps and meet urgent priorities. Often, workers come into a role with skills and capabilities that go beyond the specific requirements of their job scope. Similarly, many long-tenured tech workers have built relevant skills over the course of a career that get overlooked when focusing only on their recent projects and work. These skills can be identified through open-source platforms, hackathons, and external certifications. These skills can also be identified by analyzing work-related data generated by workers through digital work applications, workplace smart sensors, wearables, and voice and video calls. Through these solutions, organizations can develop a deeper understanding of their workers’ existing tech skills and capabilities²⁰ and can identify hidden skills. This helps them expand their workers’ responsibilities and provide them with an opportunity to take on different challenges. Additionally, it can provide organizations the ability to quickly address urgent needs through existing tech talent.

This analysis can help tech leaders identify “unicorns”—workers within the organization who have skills that cross technical, industry, or functional expertise. Such analysis can also identify workers who are a good fit for new projects based on past work deliverables, their connections, and the teams they have worked with previously. This approach can help support a broader need to bring together business, technical, and customer experience skills and invest in developing tech talent who can speak broadly to customer interests and business needs.²¹

Tech leaders are increasingly seeing human capabilities as critical to tech talent development, according to Deloitte’s 2023 Global Technology Leadership Study.²² When asked to identify the skills that will be most critical to their technology function in the next two years, tech leaders ranked leadership as most critical, followed by problem-solving, relationship skills, and creativity and imagination. Of the top five skills identified, only one is primarily technical in nature.

But there is a substantial gap between knowing and acting when it comes to investing in human capabilities: According to Deloitte’s 2024 Global Human Capital Trends research, 73% of respondents said it is important to ensure that the human capabilities in the organization keep pace with technological innovation, but just 9% say they are making progress toward achieving that balance.²³

Ultimately, skills are often acquired through experiences, and leaders can help overcome tech skills shortages by finding opportunities to create experiences to accelerate skill development. By pairing continuous workforce planning with a skills-based approach, organizations can begin to develop longer-range plans to build new skills across the workforce that can help mitigate the challenges related to a constantly shifting landscape for tech skills. Organizations can also use this understanding to intentionally create developmental experiences for tech talent by creating agile teams rather than waiting for a role to emerge within the organization. Additional accelerators to learning can be found outside of the current company. Tech talent can include participation in open-source communities. In one survey of developers who work on open-source projects, 35% of respondents said that working on these projects had helped them develop new skills for their work.²⁴

An alternative to fostering experiences outside of the company is to use digital playgrounds, which can provide opportunities for workers to test new ideas and explore new skills.²⁵ Digital playgrounds can be safe spaces for workers to experiment and co-create products, services, and ways of working.

For example, Coldwell Banker Richard Ellis, a commercial real estate services and investment firm, created an internal sandbox environment where workers could use a gen AI model to query real estate data and get responses to their queries. The AI playground attracted over 3,000 users, with software engineers using it to write code and generate test scripts and marketing support executives using it to query real estate data and generate responses in a safe environment.²⁶

Adopting an ecosystem approach

• The traditional approach: Bring as much talent in-house while hiring and training for all new skills.
• The transformational imperative: Cast a wider net and embrace an ecosystem model to expand how you manage and deploy talent.

Acquiring and retaining full-time workers to accomplish strategic objectives may not always be possible, but talent ecosystem models can help organizations better address tech priorities while reducing delays and lowering costs. In a recent Deloitte survey of nearly 5,000 executives, 87% said they consider their workforce to include other kinds of workers, such as gig and long-term workers, as part of a larger workforce ecosystem.²⁷ And yet many organizations have a divide—including divided ownership between human resources and vendor relationship leaders—in how they plan to engage this broad ecosystem.

A workforce ecosystem includes full-time employees as well as outside professional services organizations, long-term contractors, and freelancers, all of whom can be brought on as needed.²⁸ In some cases, organizations are open to hiring workers for specialized engineering roles or emerging technologies, such as AI and cyber, on an hourly basis instead of short-term contracts.²⁹

For instance, a US-based data services and infrastructure company collaborates with external partners to source contract workers and adjusts its use of this talent based on ongoing shifts in priorities and volumes of work related to gen AI.³⁰ Another example is a cybersecurity company that uses flexible talent models to meet emerging tech needs.³¹ By leveraging cybersecurity experts on contract, the company identifies areas where its customers’ digital assets can be breached and implements rigorous security measures to counter such breaches on a continuous basis.

External talent ecosystems create an abundance of options to harness external tech talent, which can add to the burden of managers who are already stretched, especially in situations where there is not a clear strategy to use these options wisely. But organizations that adopt an ecosystem have added flexibility when deploying tech talent and building teams, as long as HR and procurement are collaborating to manage their talent ecosystem. In many examples, organizations are leveraging the technical expertise of an external vendor to stand up, stabilize, transform, and eventually transition new tech processes back to the organization.³²

As one specialist we interviewed said, “Most organizations will have to pull multiple levers through the ‘build, buy, borrow, bot’ approach. How do you figure out how much capacity you have versus what you need? How much do you need to hire? How much can you develop? And how do you rescale and redeploy people that you already have?”³³ To do this well, managers should consider how these deployment models fit within larger efforts to rearchitect work by focusing on outcomes over outputs and map technological capabilities and human capabilities to achieve the desired outcomes.³⁴

Taking the ecosystem approach may require a concerted effort to bridge potential divides between traditional full-time workers and the external talent ecosystem. This includes narrowing the potentially massive divide between procurement, which traditionally focuses on managing external vendors, and HR workforce and planning professionals, who focus on supporting traditional employees. Additional actions include building bridges between external talent through clear ways of working and a shared sense of values, commitments, and goals. Furthermore, organizations should have good people managers to manage full-time employees as well as contract workers in a technical work environment. Effective people managers can help tech workers align their technical acumen in the service of the organization’s strategic priorities, which can be competing at times. Additionally, they should be able to manage the dynamics among full-time and part-time tech workers, ensuring that those in contract roles are onboarded well and have the resources they need to do the job, and driving a one-team mindset.

A flexible approach to external talent may also require building technical systems and processes to bring them in safely. This can include using “secure by design” principles to minimize risks and accelerate the pace with which external talent can be integrated into critical projects. For instance, Toyota Motor North America wanted to engage its broader workforce to develop new applications in a secure environment. The company launched a development platform unifying training materials, ready-to-use templates, cost estimations, and infrastructure tooling with security features embedded. While over 40 templates enabled scalability through standardization, the built-in authentication features ensured security in the application development process. As a result, the company was able to access a wider talent pool, lower its cloud infrastructure cost, and reduce its application development time significantly.³⁵

Customizing experiences and encouraging microcultures

• The traditional approach: Integrate tech talent into existing organizational culture.
• The transformational imperative: Strengthen retention and development of tech talent by focusing on customized experiences and microcultures.

The unique needs of tech workers require a strong partnership between chief intelligence officers and chief human resources officers. Strong talent acquisition practices, competitive total rewards, career development, and focused performance management are important to engaging tech workers and critical to building a thriving culture.

An organization’s culture broadly comprises two components: shared values that are uniform across the organization and lived behaviors—actions and ways of working that can vary across teams. Recent research reveals that executives are recognizing the importance of this variation in ways of working. For instance, 50% of executives surveyed in Deloitte’s 2024 Global Human Capital Trends report suggest that an organization’s culture is most successful when there is a moderate degree of variation, but facilitating this development of “microcultures” can be particularly tricky to achieve. The 2024 Global Human Capital Trends research also found that a lack of a unique tech microculture is one of the primary reasons organizations fail to attract and retain top tech talent.³⁶

Because of the key role that tech talent plays in driving change and disruption, embracing change and flexibility is a key part of a tech talent microculture. Companies can better innovate—while also becoming more attractive to engineering talent—by reducing hierarchy, giving engineers more autonomy, and enabling them to work on solving problems from the bottom up rather than taking direction exclusively from the top down.³⁷ This kind of approach is evident in how an American bank, Capital One Financial Corporation, works with engineering talent, focusing on creating on-demand learning opportunities as well as a collaborative approach to problem-solving.³⁸ The collaborative culture enables individual workers to connect and address issues more quickly while also sharing knowledge and developing additional skills.

Organizations can use a tailored approach to career development to strengthen the microculture for tech talent. Many tech workers want to progress in their careers and take on added technical responsibilities without adding traditional management responsibilities. One global study suggests that more than a third of developers are uninterested in taking on managerial responsibilities.³⁹ In fact, for some tech talent, taking on added people management responsibilities can be actively off-putting. As a solution, some organizations provide rotational opportunities to engineers to take on special projects to further their skills.⁴⁰

As important as it is to invest in these kinds of programs for career development, organizations should still invest heavily in developing technical leaders with people management skills who can embrace this broader microculture of flexibility. Indeed, the availability of alternative career paths for tech talent, coupled with the complexity of the technical and business landscape, is likely to increase the value of middle managers who combine technical and people leadership skills.

Organizations are even creating specialized recruiting processes to ensure that developing a microculture starts from the first point of contact with a potential worker. For example, when hiring tech talent, one global life sciences company emphasizes speed of decision-making, skills, and the unique value proposition of the role.⁴¹ A recruiter is the first point of contact for an applicant and a face for the company. Having specialized tech recruiters who can move quickly—rather than follow the slower, standard processes—is critical to attracting tech talent. This can be particularly true for companies in more traditional industries that need to bolster their talent pipeline.

Having strong relationships with colleagues appears to be particularly important to tech talent. A recent Deloitte survey of tech workers found that 47% of tech workers identified colleagues as a key factor in whether or not they remain in a role.⁴² In contrast, a separate survey of a general population of workers found that only 30% identified colleagues as a top reason for staying in a role.⁴³

Leading the future of tech talent transformation

As the role of tech talent continues to expand across organizations, and as the demand for tech talent continues to outpace supply, the responsibilities of leadership are likely to become more complex and multifaceted. Transformation and change tend to no longer be event-driven: They’re often fundamental expectations. Leaders will likely be under increasing pressure to get ahead of a constantly shifting market for tech talent, plan for needs before they emerge, and create a culture of readiness to adapt quickly when market conditions change—and they may need to do so in a context in which the importance of tech talent to business performance is likely to grow. Leaders can start by considering the following principles.

• Embrace the opportunity in the evolving complexity: The landscape for tech talent is complex and constantly evolving, and these dynamics are likely to persist. Because of this, there are no silver bullet solutions that an organization can use to address all their needs related to tech talent. Instead, optimizing tech talent should be elevated to be an ongoing executive priority.
• Incorporate continuous workforce planning to achieve business goals: Tech talent is increasingly expected to not only contribute to bottom-line efficiencies but also strengthen innovation and top-line growth. Coupled with ongoing shifts in required skills, talent expectations, and more, leaders may need to regularly map out how to deploy this talent to help meet the most critical business objectives.
• Partner to win: As more tech vendors are hiring and retaining strong talent with emerging tech skills, organizations should seek new ways to partner with service providers where they are unable to hire and retain. Unless an organization can build a true technology differentiator, working with companies that are providing an integrated industry solution can be a strong alternative.⁴⁸
• Activate managers to drive microcultures and transformation: While transformational leadership comes from the top, middle managers are likely to be a critical part of bringing this transformation to life. In particular, key elements of a tech talent microculture—such as flexibility, agility, and openness to change—can be shaped by the ways in which managers engage with tech talent.

Talent strategy serves as a bedrock on which business results can be achieved. As tech talent continues to be increasingly critical across industries and more central to organizational success, leaders should develop continuous approaches to tech talent transformation and workforce planning that are consistent with the importance of this workforce segment. These efforts can be aided by flexible approaches to talent and deployment models, an appetite to engage with the increasingly complex talent ecosystem and ongoing efforts to develop and strengthen a tech talent microculture.

Organizations that adopt these transformation imperatives can be rewarded with reduced costs, improved innovation, and enhanced growth. An effective tech talent transformation effort can help organizations anticipate future needs and build a resilient and adaptable workforce capable of seizing emerging opportunities and navigating changing market dynamics.