By Chris Engle, Vice President, Avalanche Consulting
After nine years of economic expansion this summer, the U.S. unemployment rate has fallen to 4.3 percent, a 16-year low. Labor shortages throughout many parts of the U.S. are significant and affecting all sectors of the economy. Few industries, however, are more adversely impacted by the tight labor market than the IT sector. Technology workers are among the most difficult-to-find, and IT wage levels among the fastest growing. With digital technologies filtering throughout all aspects of life and business, the lack of available IT workers will ultimately impact a host of other industries.
Concern over availability of tech workers has spread throughout the U.S., from major markets to small midwestern regions. In a recent survey by Avalanche Consulting, 90 percent of local economic development leaders across the U.S. reported that finding a skilled workforce is the top growing concern for companies. The availability of a talented labor force has become more important than more traditional site selection criteria such as business climate and infrastructure. In fact, we believe that the changing nature of the workforce will be the defining theme of the U.S. economy over the next decade.
In this article, we will explore 1) drivers affecting today’s technology workforce demand, 2) where to find technology workers, and 3) how to grow and retain your technology workforce. While all STEM (science, technology, engineering, and math) workers are in high demand from healthcare to industrial manufacturing, we focus this article on a definition of “technology worker” that is information technology-centric, including software fields as well as hardware engineering and mathematics.
What are the Key Drivers of Technology Workforce Demand?
Understanding the drivers will clarify the types of technology workers needed and what demand will look like in 5-10 years:
- Pervasive Digitization of the Economy / Internet of Everything – It’s easy to overlook how much our smart phones have changed us and the economy. While the iphone was unveiled 10 years ago, it took several years for social media and the App Economy to take hold of our every free moment in the day. Today, with most of the economic Internet converted to a mobile format, we can buy almost anything, connect with anyone, and run business in real-time through our phones. If a part of the economy can be strung through our smart phones, it will be – eventually. Similarly, if any business process can be digitized, it will be.
- Data as a Competitive Force – As software pervades the economy, data will become a new currency. Every digital action, interaction, and transaction will be recorded and analyzed. Businesses will know more about their consumers than ever before. Privacy will continue to be sacrificed in exchange for new features and apps. All of this data will become the basis for new business ideas, optimizing production, and besting the competition. Data will need vastly more shepherds, trainers, and masters – these will be the hundreds of thousands of data scientists and millions of data-savvy managers that McKinsey believes will be in short supply in the near future.
- Software Automation of Business and the Workforce – In 2011, Marc Andressen of Netscape fame and now top VC investor (Twitter, Facebook, Airbnb) presciently announced that “software is eating the world.” His prediction came true – and we’re still in the early stages. Now, software is seeking to automate the world, through artificial intelligence (AI) or just plain replacement of rote work. Customer service will transition to virtual representatives, retail stores and restaurants will implement tablet-based kiosks, and low-end back office/data processing jobs will disappear. And, software will eat itself, as more sophisticated software displaces low-end web programming and design. Without doubt, all IT workers must be in a permanent, lifelong learning mode and companies will look to a young workforce to bring knowledge of the latest technologies into the workforce.
- Remote Work / Rise of the Rest – In his book “Rise of the Rest” book last year, AOL Founder Steve Case argues that the next wave of Internet-based economic activity will occur across all regions in the U.S. – not just the tech centers of the last two decades. Companies in traditional industries everywhere will digitize their business and they will need more and more tech workers across branch locations across the U.S. Information Technology will move from producer regions (Silicon Valley, etc.) to the adopters and sellers in both large and small markets. But, these tech workers will look different – we’ll need a workforce that is tech-savvy but also great at communications. Converting long-standing human processes into digital ones will take a deft, translational workforce. Soft skills and team collaboration will be as important as technology skills – usually combined. And finally, telecommuting and remote work will become commonplace for tech workers. Consider this trend, Dell plans to have 50 perent of its workforce telecommuting full-time or a few days a week within a few years. A survey from Gallup shows a that 43 percent of U.S. workers do some or all of their work from home, up from 39 percent in 2012. Pure-tech companies know they need to access a workforce wherever they live.
Where Can You Find Your Future Technology Workforce?
Whether you are an established technology company, a Fortune 500 company in a traditional industry, or a s
tartup, odds are that you look to your tech workforce to be your top competitive force for the near- and long-term future. How can you find the new workforce you’ll need for years to come?
1) Formalize and optimize your college graduate recruitment strategy. Commit to participate in recruiting activities at a core set of colleges each year. Get to know the department heads that you recruit from. Participate in internship programs each summer. Activate the alumni networks within your current workforce. Identify the colleges to recruit from that are right for you. If you
are a large or VC-backed company and can recruit the best of the best, focus on the major markets for tech grads.
If you want to stand out from other firms or want to improve your offer-to-hire conversion rate, look toward regions that are heavy producers of college grads but don’t have a lot of IT jobs.
2) Open an office in a region that already attracts a technology workforce and offers competitive salaries. Over the last decade, companies have flocked to second-tier tech markets like Austin, Portland, or Madison. But, as wages and cost of living escalate in these high-growth areas companies now have the opportunities to look for a deep tech workforce in other emerging tech hubs both large and small. Below is a list of mid and large metros with the fastest-growing IT workforce that still offers competitive IT wages.
Growing and Retaining Talent Where You are Now
In addition to attracting new college graduates or opening an office in a new city with an abundant, growing workforce, consider how to support local talent development initiatives. By doing so, not only will you expand your local pipeline of workforce recruits, but you’ll help grow the size and improve the skills of the local workforce for years to come.
Many local chambers of commerce now have workforce planning efforts and lead talent development programs. This is relatively new – and overdue – but will become the gold standard of success for a local economic development program. Local chambers and economic development organizations are also starting to manage campaigns to recruit and retain talent, which can help companies boost excitement around the region’s quality of life assets and draw in new workers. Some chambers even take companies to other markets to run job fairs.
With the economy changing and workforce skills continuously needing upgrades, chambers look to their business community for guidance on priorities. What positions are hardest to fill? What skills are lacking from local college graduates? In which programs do we need to boost local graduate production? How can lifestyle assets be improved to make attracting a workforce easier? Chamber seek to match local college programs with demand for local employers by developing a Talent Alignment Strategy. Find these and get involved. These programs serve the needs of the company, help a local college grad find a job, and retains more grads in the economy – a win-win for all involved. Companies with large or unique labor needs should work with chambers to provide annual input to post-secondary institutions on their needs.
Also, get involved in K-12 education. The more kids can learn about technology at an early age, the more likely they will turn into your IT workforce.
In summary, today’s tight labor market requires new and creative approaches to finding and developing your future technology workforce. Spread your recruitment efforts and expansion plans to new institutions and new regional markets. Get involved in local planning and branding efforts to grow the size of the tech workforce. Help educators understand how their curriculum should adapt to a changing technology landscape.
Solving today’s workforce shortages in technology will require a collective, collaborative approach between the private sector, government, education institutions, and students. Fortunately, we now have the communications technologies to make these connections happen more regularly and efficient. Now, do we have the will and the persistence?
Bio: Chris Engle, Avalanche’s Vice President, is a national thought leader on economic development strategy, workforce planning, and industry trends. He has over 20 years of experience as a researcher and strategist. His expertise includes economic analysis, benchmarking, workforce supply-demand gap analysis, labor market studies, and site selection. Chris has contributed to dozens of economic and workforce development plans for communities across the U.S. and abroad, including Greater Charlotte, Miami-Dade County, Providence (RI), Gainesville (FL), Hampton Roads (VA), Charleston (SC), Jefferson Parish (LA), Northern Kentucky, Quad Cities (IL), San Joaquin County (CA), Santa Fe (NM), Winston-Salem (NC), the Czech Republic, and Portugal, to name a few. His corporate clients have included Applied Materials, Dell Computer, Gables Residential, Opus Development, and Stratus Properties.