Tech talent - the war rages on
- jordan7991
- Feb 27, 2023
- 4 min read
Updated: Apr 17, 2023
Economies all over the world have struggled to deal with post-COVID issues impacting supply chains and commodity prices, resulting in higher prices on supermarket shelves and for many other every day items. Add to that a war in Europe and we're faced with broader economic issues impacting every business and household in the UK with inflation levels that haven’t been seen for decades.
Wages are rising at their fastest rate in living memory and much has been reported by the media about the larger global technology organisations laying off thousands of hard-working Technologists, regularly speculating that the Technology jobs market is cooling. But they are mistakenly focussing on what’s happening at a few big-name global companies rather than understanding what has really been happening across the broader Technology and Digital employment market. Here we’ll explore what’s happening and what it might mean for your organisation.
There are several factors that are impacting the demand for talent, some of them are linked to choices being made by organisations and some are out of our control, here are four of the most important:
Productivity
Technology continues to be at the forefront of any forward-thinking organisation looking to remove wasted effort and reduce operational costs. When it comes to productivity, the UK has, allegedly, been slower than many of our global trading competitors over the last few years and the current economic backdrop provides the perfect platform to change that to offset the various macro-economic drivers impacting margins.
Economy
Inflation is still too high, starting the year at 13.4% despite early signs that prices are rising at a slower pace and commodity prices continue to add relentless pressure on margins in a way that most companies haven’t seen in decades - including during the 2008 banking crisis when it peaked at 5% (Nb. it did also hit 5.6% in September 2011).
Investment
Venture Capital and Angel Investment in the UK Tech sector is also a driving force behind the demand for talent, with VC investment between 2020 and 2021 increasing by 130%.
Transformation
Another major demand driver is the continuous evolution of Technology, driving transformation into large scale businesses, with various motivations, including:
The capacity and limitation of their systems which cause a glass ceiling to further growth of a business.
Mergers, acquisitions, disposals and separations.
Changing business models which create a need to realign, rebuild or replace systems.
The Demand
The various factors listed above (productivity, economy, investment and transformation), creating the ongoing demand for talent means that the number of jobs in Technology increased significantly between 2019 and 2022, jumping from just under three million to just under five million and the demand is right across the country, with 80,000 new jobs being created in Manchester alone between May 2021 and May 2022.
The combination of a high number of jobs and a finite amount of people to fill vacancies has led to UK companies facing high levels of staff turnover in 2022, reaching over 30%, up from 28.7% in 2021* and pushing up wages for Technology and Digital workers to be on average 80% higher versus non-Tech salaries (source: Technation.io)
Strategic Partnerships
The demand pressures mean there will continue to be a significant need for support from other markets when it comes to delivering transformational Technology, in particular from the major off-shore players like India where there are an estimated 5 million workers to tap into, but also near-shore in places like Estonia, Poland and Ukraine.
Working with off-shore and near-shore Technology teams can add tremendous pace and agility to any organisation – when set up well and with the right leadership in place between all parties, it’s a tried and tested method that has been used for decades. Unfortunately, get some of the ways of working wrong and it can slow down projects and lead to very difficult conversations at board room level. Often, this comes down to misaligned expectations and an over reliance on the Technology partners to fill a void left through lack of clear business strategy, limited management oversight or poor communication.
Trusted Delivery Partners
To avoid this, a trusted delivery partner can be used who can step in and operate in between the customer and the Technology services company to help steer the transformation programme and keep it on track.
This is where Xandr Consulting can help. We can play a number of roles for your organisation to help get things off on the right foot or help to bring a programme back on track. We can help get the best out of a strategic Technology partnership, providing advisory and delivery expertise on engagements such as:
Supplier Sourcing – help drive and / or deliver a strategic sourcing exercise to bring in the right Technology services partner, including running a competitive tender;
Supplier Assessment – review the capabilities being delivered to identify opportunities to improve the quality of output and build a joint plan to achieve the desired results;
Delivery Partner – work on behalf of either the customer or the Technology services company to manage one or more outcomes and improve the chances of success.
To speak to us about how we can help you and your organisation with either your talent development strategy or managing your Technology partnerships, please use the contact us section of the website, which you'll find through the menu, and we’ll get back to you as soon as possible.
Appendix:
Further detail behind the points raised in this article:
Productivity - In 2021, the UK’s output per hour worked was lower than France, Germany and the United States, but higher than Canada and Italy when using the component method. The UK’s productivity per hour worked was £46.92 versus the United states - £58.88, Germany - £55.83 and France - £55.50.
Source: ons.gov.uk (International comparisons of UK productivity (ICP), final estimates: 2021)
Economy - At the time of writing this article, the latest estimate for RPI in January 2023 was 13.4%, down from the high of 14.2% in October 2022 - still significantly higher than the Bank of England’s 2% target. For context, before the current peak, the last time CPI was above 14% was December 1980.
Investment - The UK Tech ecosystem is valued at just under $1tn in 2022 - placing it third in the world, more than 17x the value ten years ago ($53.6bn), whilst the scaleup ecosystem is valued over 50x more than a decade ago
Source: Tech nation, dealroom 2022
*UK Staff Turnover - Statistics show courtesy of a study published by Remote.com
