Workforce models are changing in IT Services

The tech ecosystem is becoming increasingly complex, and IT Services companies are feeling the impact. Many of the sector’s clients today are running mature technology environments, each with specific requirements and strategies. These clients are demanding more sophisticated, customized and scalable models every day – but the challenge for IT Services is finding the talent to deliver it.

Technological complexity and talent need As business requirements become more layered, IT Services companies need advanced tech skills that can straddle multiple disciplines as well as demonstrating expertise in single areas. For example, as more businesses adopt hybrid cloud computing, there will be need for experts across not only cloud architecture, but also within networking, storage, and cybersecurity. This level of complexity is mutating existing skillsets – merging some disciplines to improve agility (e.g. DevSecOps), while creating greater definition and more offshoots in others (for example as cybersecurity becomes more wrapped into every facet of technology, new specialisms are emerging). This, combined with a constant need to keep up to date on emerging technology, is causing a talent crisis in IT Services. In addition, embracing emerging technology is becoming pivotal to both building and attracting new customer segments, with buyers now coming from different business areas.

Technology has become such an instrumental part of business, that tech strategy is often a board-level agenda. Covid-19 has also raised tech to the top of the agenda, with 90% of executives reporting that Covid-19 has changed how they view tech, and more than half planning to invest or refocus their business in digital technologies. Simplifying offerings while retaining the benefits of advanced, emerging tech will therefore become key for getting ahead. This means that IT Services providers need technologists that have the human skills to understand the services that sell, as well as deep tech expertise. But these candidates are in incredibly short supply, and very expensive.  Cost is a real challenge for the sector. With more companies investing in skills in-house, clients often look to IT Services providers to deliver cost savings as well as improved efficiency and flexibility. IT Services providers need to stay operationally lean in order to contain costs and stay competitive – making niche talent even less affordable.

Covid-19 has also made the environment more complex, and many IT Services organizations are now hesitant about the future. According to CompTIA, only 37% of companies are planning on bringing on new headcount in 2021, and 13% are currently in a hiring freeze. Meanwhile, only four in ten businesses plan on maintaining funding at 2020 levels, with 13% predicting lower investment, and 14% unsure.  But attracting skill short talent on a shoestring isn’t an option. So how will IT Services providers find the candidates needed to meet ongoing customer demands? By changing the workforce model in the following ways.

Upskilling the permanent workforce One of the sectors’ biggest challenges is that disciplines are always on the move. This means that large parts of the workforce are quickly working with outdated skills.  The popularity of DevOps is a good example of this in action. Over the last five years DevOps has become an attractive tool for companies looking to improve the speed and agility of their projects. However, DevOps, which combines development and operations, has until recently been an unusual candidate combination. Although teams could technically be made up of experts in both areas, it is now becoming more attractive to hire candidates that have mastered both. This has meant that both development and operations experts have been put under pressure to upskill into DevOps quickly. The gap between supply and demand is one that candidates are just as eager to fill, if companies can be patient. The rise in home working over the pandemic will offer more opportunities to upskill and self-learn for candidates. Meanwhile, previous barriers around accessibility and flexibility for diverse groups have been lifted by remote working – meaning new talent pools to tap into. 

If companies invest in upskilling their permanent workforce, this could be mutually beneficial – driving costs down for employers, while futureproofing careers for employees.  Pumping up the contractor workforce  While the high cost of labor will mean more businesses invest in reskilling their permanent staff, any short-to-medium term demand will be plugged by using contractors. In 2020, three in ten IT Services businesses said they were planning on filling vacancies using contract workers.  This follows a wider industry trend which is currently tilting towards contractors. According to recent Gartner research, even though many organizations initially responded to the pandemic by reducing their contractor numbers, 32% of businesses are now replacing full-time employees with contractors as a cost saving measure.

There are many benefits to a contractor workforce. Companies can be more flexible to disruption by scaling contractor use, they can be useful for cross-skilling and sharing expertise, especially in areas where the existing workforce lacks, and the speed at which contract talent is deployed means minimal delays to critical business projects.  This means that the contractor market may become just as competitive for talent as the permanent market in the future.  Considering other talent models The strength of need for skill scarce talent in IT Services is so deep that simply upskilling permanent resources or relying on contract talent alone will not be enough to plug the shortfall. As a result, many IT Services businesses may diversify their talent management approach. A mixed approach – using contract workers, Employed Consultant or SoW to plug short-term skills gaps, while upskilling permanent staff – could prove the optimum blend to gain the expertise needed in the short, medium and long-term. Naturally, one of the values of contingent talent is the ability to share knowledge and experience, which will be important in a skill scarce economy. Meanwhile SoW can be used to focus on time-critical projects and ECs can be a cost-effective route to trial talent. As a combination, this will provide a safety net for skill acquisition as permanent talent is being upskilled.  Recent Gartner research also indicates that we may see an emergence of new job models seen during the pandemic to improve flexibility moving forward – such as talent sharing and 80% pay for 80% work. 

Cracking the code to the optimum workforce in IT Services is going to be a challenge for many businesses. As well as maneuvering the changing requirements of clients and emerging skills needs, IT Services providers will need to keep half an eye on the commercial acumen of its tech people to upsell and simplify business offerings, and on its purse strings. These are complex requirements befitting a complex landscape – but the pay off for those IT Services companies that can get it right is significant.  Are you trying to find the right balance in your talent pool? At Lorien, we can help you optimize your workforce and locate top talent in even the most challenging of environments. Contact me at matthew.dunham@lorienglobal.com for more information.