Does it feel like it’s becoming more difficult to hire IT resources for your company?
It turns out that this is more than a feeling – it’s a fact.
There’s a shortage of IT talent
Problem one is that there’s a shortage of skilled IT labor. Recent reports estimate in the next two years alone, there will be one million unfilled job openings in the tech sector. By 2026, this number will grow to 1.3 million. That said, only about 60,000 people per year graduate with degrees in computer science. So there’s a clear gap between the number of IT roles and the number of people with the IT knowledge to fill those roles.
Technologists are Hard to Retain
This shortage is compounded by problem two: it’s notoriously difficult to retain IT talent once hired. In fact, according to a LinkedIn study published this spring:
- Technology is the industry with the highest average turnover rate – 13.2%
- UX designers had extremely high turnover at 23.3%
- Data analysts and embedded software engineers both have an average turnover of 21.7%
“As employers and offers get more competitive, top talent is more eager to jump on new opportunities.”
In the history of our company, this is something we’ve often seen first hand. In fact, we can count several customers where our relationship as the outsourced software development partner has outlasted as many as 3 generations of internal hires.
Outsourcing at New High
There’s no doubt about it, hiring and retaining top IT talent is difficult. So difficult, in fact, that companies are increasingly choosing to outsource more of their IT functions. For example, the IT Outsourcing Statistics 2017/2018 study from Computer Economics indicates that in 2017, the IT outsourcing percentages were the highest they’ve been in the last five years. From 2016 to 2017:
- Large organizations increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7%
- Midsize companies increased the percentage of their IT budgets spent on outsourcing from 4.7% to 6.5%.
- Small organizations increased the percentage of their IT budgets spent on outsourcing from 6.7% to 7.8%
Internal or Outsourced: How to Decide
Rather than take on the effort and cost to hire (and retain) IT staff, many companies are turning to outsourced providers.
But what’s the best course of action for your company? Should you hire for an internal IT position, seek outsourced help or use a combination of both? Here are three questions to help you make that decision:
1. Does the project require specialty skills?
If you need a specialist – whether it’s a UX designer, an IoT development expert or a cyber security expert – you’d probably be better off outsourcing the job. These tasks require highly skilled technicians with knowledge of a wide range of technologies. And they’re often not needed until a specific point in a project or when until an issue arises, so having them on your payroll full time is often an unnecessary expense. Specialty functions can be done much more effectively and more economically when they’re not in-house.
2. Is the role/project mission critical?
If the function you’re hiring against is a core competency or key differentiator of your company, you might want to keep the position in-house. While IT providers can become highly engaged strategic partners, the purpose and goals of IT projects need to originate within your organization.
3. Are you currently succeeding?
While it seems counterintuitive, the best time to hire and outsourced IT partner is when things are going well. This communicates to your in-house IT personnel that your company is investing in growth without grossly overburdening current staff. So if you company is doing well, but just needs more bandwidth, it might be time to consider outsourcing.
Dev IQ has years of experience working as an outsourced development and IT partner for companies like the City of Boulder, Colorado, Skywriter MD, Nortek and Collective Goods. For more information about how we work, let’s connect. We’d love the opportunity to help you brainstorm your needs and demonstrate our capabilities.
CEO of Dev IQ, triathlete, and technology philosopher.