When tech talent shortage meets economic downturn

Rimini Street Staff
3 min read

“Businesses are moving full-speed toward a collision,” warns Pat Phelan, Rimini Street VP, Market Research. “Companies are going to need people during a time of historically low unemployment but at the same time are going to suffer budget cuts due to economic recession.” How CIOs and application leaders manage those two waves will have significant consequences for their organizations.

A tech talent shortage

The shortage of IT professionals has dominated headlines for well over a year. Some of that is due to the number who have retired (on time or early) or left because of burnout. As many depart the workplace entirely, their replacements’ production is failing to keep pace with demand.

In fact, while hiring good employees is getting harder, the need for them continues to increase, and that is especially true in the IT world. To sum up its recent report on industry hiring, tech placement agency Hired says, “The demand for software engineers is simply not slowing down. We’ve run out of ways to describe how much it’s increasing.”

The obvious causes of this trend are also reasons to believe it will not disappear quickly. As technology continues to spread into every aspect of modern life, it also continues its spread into parts of the globe where it has been unknown. More people are joining the digital world, and everyone in that digital world expects more from their technology. The tech worker pinch isn’t going away.

Recession: A double whammy

Meanwhile, economists are warning of a recession, which portends rigorous spend-reduction. Microsoft, Amazon, Peloton, Netflix, and other firms recently announced layoffs. Reports indicate that Oracle plans the same. They are far from alone. Across the industry, tech titans and smaller outfits alike will need to trim costs.

Companies across virtually every industry will continue to feel these pressures, and their leaders will be forced to make hard choices. “I believe it’ll be tiered by industry and type of job,” says Phelan. “Everyone’s going to have to cut, but it’ll be difficult to force a cut in some places, and some cuts can damage your business in ways you can’t recover from.” The savvy CIO will recognize this trend and separate must-haves from nice-to-haves. “Yes, we all understand belt-tightening, but you’ve also got to keep the lights on. That’ll force CIOs to be creative,” she adds.

How to soften the blow

When you know the collision is imminent, it’s wise to prepare for it. Phelan suggests three actions for CIOs to take now, as they brace for the impact.

  • Figure out the must-haves. “To keep any company running, there are some IT services and skills you can’t cut budget on,” she says. Determine those and make the business case for retaining their funding.
  • Align priorities. “Now more than ever, CIOs will want to make sure their spend on the back end agrees with the overall business strategy on the front end,” advises Phelan. CIOs must understand the organization’s priorities and help leadership understand the IT costs of achieving those priorities. That means, she adds, “the CIO has got to be a trusted partner to the rest of C-suite.”
  • Draw your own roadmap. “Recognize that your IT vendor’s vision for the future may not necessarily match yours,” Phelan recommends. A company’s strategic priorities should drive the plan for applications. For example, software vendors often advise costly upgrades without accounting for how they will be used. A company might opt instead to retain older, still-functioning software that serves its purpose, using the savings to invest in upgrades that are truly necessary. Third-party providers can soften the blow in two ways: by maintaining companies’ older-version or custom software and by providing the needed support at a lower overall cost.

The collision of the tech talent shortage and recession cutbacks is coming, says Phelan. Many companies are feeling it now. CIOs play a crucial role in seeing their organizations safely through it.

You may also like: