The tech skills gap is one of the greatest risks to organisations today. Business leaders report that they are struggling to keep pace with the global demand for the technical skills required to leverage the latest technological advances such as AI, Cybersecurity, and IT Operations. This shortage threatens to stifle economic growth as without adequate skills, organisations will be unable to leverage emerging technologies or meet evolving customer expectations. Indeed in April 2024, the UK government reported that the tech skills gap is estimated to cost the UK economy £63 billion per year.

Andrew Vasko, CXO recently told us,

“Businesses, small, medium and large, across all industries are undergoing rapid digital transformation, with rapidly increasing demand for skills in areas like cloud computing, AI, machine learning, data analytics, and cyber-security. There is a significant gap between the global demand for tech skills and the available talent pool, in highly specialised fields like cybersecurity.“

Chief Disruptor members recently highlighted their concerns about the tech skills crisis in our January Insights poll where we asked members to tell us their thoughts about the launch of the ‘AI Opportunities Action Plan’. The consensus was that although the plan was highly ambitious, there were doubts about whether the government would be able to train the tens of thousands of AI professionals needed for the plan to be successful.

Rapid digitalisation has disrupted the labour market, displacing traditional roles and demanding new digital skills. However many would argue that the education system has not kept pace with these developments and is failing to equip the future workforce with the skills they will need to succeed. A recent Prince’s Trust report, ‘Decoding the Digital Skills Gap’ stated that over a third of young people in the UK reported not studying a ‘digital or tech subject’ beyond Key Stage 3, and 37% of those surveyed reported they are worried they don’t have the digital skills to get a good job.

Worryingly, this demand for tech skills is only set to increase in the future as technology developments continue to evolve at an ever-increasing pace. How can organisations be expected to compete with the likes of Google, Amazon and Meta who can attract the best and brightest with the highest salaries and sexiest brands?

Given the high stakes involved in the ongoing battle for competitive advantage, in our March Chief Disruptor Insights poll, we asked the question, “How are you addressing the tech skills shortage?”

One of the simplest solutions, and by far the most popular choice in our poll, is to invest in the ongoing development of existing employees. Upskilling saves on recruitment costs and also improves productivity and morale. A recent article in the HBR described re-skilling as a “strategic imperative”, “allowing companies to build competitive advantage quickly by developing talent that is not readily available in the market and filling skills gaps that are instrumental to achieving their strategic objectives before and better than their competitors do.”

However, effective upskilling starts with being able to anticipate what skills the business will need to take them forward into the future. Some of these new skills may be in emerging technologies or on how to work adaptably. Leaders will also want to identify the skills and talent that existing employees have beyond their existing roles. Some organisations are using creative experiences such as hackathons and digital team challenges to help identify these hidden talents.

Our second most popular choice, ‘outsourcing’, refers to the action of harnessing external tech talent through partnering with the right outsourcing provider. This option offers flexibility, cost optimisation and access to specialised skills to stay ahead of the curve. The decision between hiring in-house and outsourcing IT services is critical and there are pros and cons to this approach. Typically though, outsourcing can be more cost effective due to lower labour costs in other countries. It’s also a highly scalable solution, enabling organisations to flex according to work requirements. On the negative side, leaders can find it more difficult to control the team and potential language and time zone barriers can arise. Today many believe we are seeing the next wave in outsourcing, driven by AI and automation. This is resulting in more automation of routine tasks, more intelligent collaboration between on and offshore teams, and smarter decision-making through predictive analytics.

Despite a recent backlash against the effectiveness of DEI programmes, some Chief Disruptor members are pursuing diversity programmes to access a broader pool of available talent. This approach can be highly effective at attracting people from diverse backgrounds who may not traditionally have been considered for tech roles. Once in, these individuals bring fresh perspectives, new ideas and solutions to solve complex problems. Organisations are exploring a range of options to promote diversity including offering flexible working options, and mentorship programmes for individuals from under-represented groups.

Though this was the least popular option in our poll, it was perhaps surprising to see any organisations selecting the option ‘increasing salaries’ as a way to tackle the tech skills shortage. The larger tech giants like Google, Amazon, Microsoft, Apple and Meta are among the biggest hirers of top tech talent, alongside highly funded start-ups offering both highly competitive salaries and benefits and a strong brand reputation. As the skills gap is only going to grow in the next few years, it’s difficult to see how this strategy can be a sustainable option.

There’s clearly no silver bullet to solve the mismatch between the skills people have and the skills employers need. The government is championing a number of initiatives including Skills England, the Digital Skills Council and the National AI Strategy to help build the workplace for tomorrow. In the meantime, organisations will probably need to deploy a number of these different strategies in tandem to be able to meet their immediate tech talent requirements. I’ll leave you with a final thought on this from Andrew Vasko.

“To close the gap companies invest both in internal training programmes as well as partnerships with educational institutions, online learning platforms and global industry players. The tech giants like Google and Microsoft made numerous training/upskilling courses available online for free and the Adaptive Learning Platforms are gathering momentum where AI is being used to create personalised learning paths for individuals, helping them acquire the skills they need more efficiently.”