IT staffing time bomb set to explode in US

North American IT shops may well be facing a staffing perfect storm, according to industry research company Ovum.

Two big challenges are certain -- a mass retirement of baby boomers that promises to deplete staff and starve many companies of critical skills; and a shortage of replacements due to a smaller crop of college graduates and a dramatic decline in students majoring in and planning to enter IT-related fields.

The impact of a third challenge -- the inevitable, but largely unpredictable trends toward outsourcing and offshoring -- remains uncertain.

There are a number of steps that companies can take now to address current requirements and many others that corporations, in partnership with government organizations and educational institutions, must take to pre-empt even greater challenges in the future.

The first step, however, is to do something that only a small percentage of US corporations have done; acknowledge the nature and extent of the problem and the need to address it.

Twenty-five million baby boomers are planning to retire over the next 12 years. Few companies have begun to chart a course for retaining these skills or for managing a smooth transition to a new generation of employees.

Only about five million people are expected to enter the workforce in the period during which 25 million will retire. The percentage of these people going to college is actually declining, with the percentage of these that are majoring in computer science declining by about 50 per cent.

And even if IT departments can find qualified people, they will face big new challenges in recruiting and retaining them.

The first step companies must take to address near-term IT staffing shortfalls is to totally reassess the skills they will need over the next five to 10 years, rather than attempt to duplicate or replace current skills. The last step, which must be integrated into each of the other steps, is to determine exactly which skills should be retained in-house, and which should be outsourced.

Individual companies must assume responsibility for developing strategic programs for addressing their staffing requirements. Unfortunately, the combination of three big structural challenges will mandate big compromises.

The only true way of addressing these structural challenges is for leading IT vendors to work together to craft a historic coalition between the private sector, educational institutions, and government organizations.

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Comments (20)

No cause for panic

by LiChing Ooi 10/22/2007 12:00:00 AMA smaller IT applicant pool is no cause for panic. Companies should expand their applicant pool to include recent graduates and those with lesser work experience. Training and also cross-training should be a corporate culture.

IT Professional

by There will Never be a Shortage of IT Pros 11/21/2007 12:00:00 AMI have been in the IT industry for almost 20 years, heard this hype many times before, and I can tell you there never has been and never will be a shortage of skilled IT professionals; only a surplus. People like Nortel ex-CEO John Roth used to advocate the notion of shortages in order to widen the labour pool (through more IT grads, immigrants, etc.) to drive down wages. What also gives the illusion of a shortage is that companies have tight budgets, inflexible cost structures, unrealistic expectations and overly stringent job requirements when looking for new IT hires. If there really was a shortage of skilled IT professionals, then people such as recent grads, immigrants and those over age 40 would have no problem getting work. And this will never change. You?ll see in the future, during the supposed ?staffing perfect storm?, that IT companies are just as reluctant to hire as they always were. So if you know anyone thinking about a career path in IT, please discourage them. Otherwise, they can look forward to a life of crushing deadline pressure, built-in job instability, poor treatment by their employer(s), guaranteed job losses, and extended periods of unemployment.

Database Analyst

by Dr. DBA 10/22/2007 12:00:00 AMThis is the Nth time I've heard this cry. Fine by me. Just go consulting and asking for as much as you can. Why not? companies where good to us in the 80's and during Y2K fears, then they just dumped us to outsource so that the stock holders can make even more money. Soon it will be our turn to say 'Show me the Money'! You think companies will change before then? Not until the 11th hour, maybe! Just look at some of the stats that still show companies without disaster recovery plans.

Companies cannot or will not invest in their workers

by Scott 10/22/2007 12:00:00 AMI work for a small company in BC; I believe 80% of all businesses would be considered small business (<10 employees). Small businesses cannot afford to train workers in new IT skills. And, even if they did, the workers could just jump ship, and the small business would lose all the benefit. I cannot afford to pay for training because I have wife, kids, and mortgage that use up all my income. Plus, Microsoft courses cost $1,500 each for a classroom session, and correspondence doesn't work for me. And, even if I took a loan for training, my wage would not change; so why bother? I will keep writing code in VB6 until the last x32 box is gone I think; after that I trust that Wal-Mart will still be hiring Greeters and Cashiers.

Information Systems Specialist

by Daniel Collison 10/22/2007 12:00:00 AMI work for Statistics Canada and we have various IT type conferences every now and then. I remember that at the last conference I went to they had an expert on this issue from Carleton University, Linda Duxburry. She outlined for us this problem with extreme clarity and with the stats to boot. I think that yes, this is a critical issue and yes, it is going to get worse. But sadly, what compounds this problem is the extreme caution and relunctance to hire new people into existing environments. Common, you HR people and bosses, lighten up! All humans are the same: hire them, be nice to them, and they will do a good job for you. Young blood is crucial to the success of any organization, so let's hire!!!!

I can't believe that people are still falling for this

by Mike P 10/22/2007 12:00:00 AMI'm in the IT business for more then 15 years and at no time (except maybe the need for Cobol programmers for Y2K and even that one has a big question mark if the need was real or just media paranoia and incompetence from the top) I had IT positions that I couldn't fill either for my company or the companies I worked for.

new mindset for IT managers

by dansys 10/22/2007 12:00:00 AMbe pro-active to this impending problem in order to sustain business continuity. one major approach is to change the paradigm of the IT manager's mindset on continuous education program for new IT entrants such as foreign trained immigrants. local sources of new IT Pros could not sustain the replenishment due to other easy jobs such as finance because of aging population needs. Sweeten the IT jobs and more will taste it.

IT jaded

by Anonymous 11/17/2007 12:00:00 AMThe reason why no one wants to be in IT (from someone who has spent 20 years in this industry) is because it really really sux - from every point of view. Here are a few issues (and employers are to blame for most of them): --high pay but the expectation of working 80 hours a wee. SO per hour pay is lower then the bus driver who takes me to work every day. --work is grinding and high-pressure. You will die early in this profession (heart attack or whatever) --being fired/;laid off is built into your contract and is done with reckless adandon and as often as possible to keep employees in line. --IT bosses are sadistic phsychopaths - the industry attarcts them like bears to honey Until employers start treating IT workers as PEOPLE not HEADCOUNT, we will continue to live ina Dilbert world.

Training

by Common nonsense 11/17/2007 12:00:00 AMAs an IT trainer I have a vested interest in what I am about to say but I can assure you I believed it before and will continue to believe the following: to say that training employees is a waste of money because they may 'jump ship' implies that you believe the following (otherwise you are a hypocrite): 1) You want your employees to be ignorant and incompetent. I assume you reward bad performance in your organization. 2) You are such a crap employer that people just want to leave as soon as they can. 3) You dont care about the quality of the IT products you churn out since you are happy to have monkeys as workers (the more untrained they are the better right?) To you I say this - this approach guarantees your business will fail - and when that happens you wont have to worry about providing for your wife and mortgage since you wont have either (your wife will leave you and take your house with her). Grow a brain.

They will run out

by Outsourcing 11/17/2007 12:00:00 AMI am not concerned about outsourcing at all. Why? Because they will run out of skilled workers and it is already happening in India! They have exhausted their workers - the fact is that it takes YEARS of hard study and experience on top of that to become a skilled IT professional. And there are only so many people out there that are able and willing to earn those skills. Very soon there wont be enough Russians Indians or Romanians to out source too - then what do companies do? I for onw wil lmake them pay through the nose for my skills (I may even get them to go down on one knee and beg,just for fun)....hope you do the same.

Amazed

by IT Director - Australia 4/3/2008 12:00:00 AMI am amazed at the comments, this is not a IT or North America problem. Its world wide shortage of skilled staff across all industries and the IT Industry will be competing for resources with all other industries. On top of this the dramatic drop in IT Graduates exacerbates the problem. Some commentators are predicting that even China will have problems meeting its requirements for skilled workers. We that is users of It and IT suppliers have to get smarter it the way we deliver services. (work smarter not harder)

Director, Information Technology

by IT executive 11/19/2007 12:00:00 AMAfter more than 25 years in the IT field, I have been there through the hiring cycles and hype. I don't think we will be faced with a major problem since there are graduates out there and I believe many baby boomers will continue to work part-time or full-time well into their retirement years. Having said this though, it is prudent for organizations to have a strategic plan in place with respect to the impending large number of retirees. I am not a big believer of hiring or outsourcing to Russia and Easter Europe in general. Of course this is an unfair generalization, however my experience has been that they are not as qualified as Canadians and expect to be higly compensated for very little effort. I apologize for this statement as I am certain there are many hard working Eastern Europeans but I say this with conviction, from my experience in hiring in Canada. The Indian and Chinese know their material but outsouring poses geographical communication issues - sometimes culturally related. The stategy needs to incorporate various components including having a succession plan, training Canadian-based staff (irrespective of their origins) and hiring students in co-op programs. Hire a Canadian!!!

Outsourcing is the solution to the IT shortage

by ITPro 11/24/2007 12:00:00 AMThink about it. Employers want to go cheap when it comes to paying for local skills. Then someone makes a decision on the golf course and IT gets outsourced. The same job that took 10 minutes with 1 person onsite to handle the task locally VPs, and 1 Outsourced coordinator. The cost just went from $10 to $10000 for a simple task. So the banks, insurance companies, and the likes now charge more service charges. I talked about the benefits for the outsourced company, but there are several advantages for folks staying in IT locally. The cost will be so high to outsource that we can start demanding high rates for contracting. Its payback time from the post dot-com demise through 2050. I d say, charge the Canadian and US companies $300 per hour and even that will be cheaper than outsourcing in 2010 and beyond. So guys in IT in Canada, hang on tight, fasten your seat belts, there is a ton of money for you, your kids, grand kids, and generations from now.

Owner

by Y. Baert, PMG 10/18/2007 12:00:00 AMLike everything else, companies will wait till they can see the problem looming closer. Then they will panic and salaries will rise according to demand just like Y2K. I think we need accurate Canadian figures on retirements because we've had a very low birthrate for years (not as bad in the US) and it isn't improving much. These numbers must be specific and regional. We will have to import good technicals and make the field more appealing to todays youngsters. Technology and software will evolve and business knowledge and security will become more critical in the meantime. If we do not rise to this challenge, even more work will be subcontracted to India and Asia. Let's get creative about wooing people to our companies and cross-train accountants, engineers, and other professionals so there is greater flexibility and overall business knowledge. This is achievable.

Senior Software Developer

by Howard Russo 10/23/2007 12:00:00 AMIt may be another case of 'crying wolf', but the biggest problem is that people are not getting into the IT field because they know their jobs will just be outsourced at some point. Companies have shot themselves in the feet by refusing to pay decent wages for local skills. No wonder they can no longer find those local skills. Companies have no loyalty to their IT staff, so the potential staff have no interest in working for those companies. Vicious circle? Yes. Solution? Start showing that you value your existing employees, or find that they go elsewhere and there are NO replacements, whether outsourced or not! And let's be realistic about outsourcing: there is still the need to manage the outsourced project; you can't just toss the request somewhere and hope that some time in the future the resultant product comes back exactly as you thought it should be!

Old News

by Steve McP 10/18/2007 12:00:00 AMAnyone who has been associated with Silicon Valley knows that this has been a problem for over 15 years. The baby boomers' children have watched their parents live for the corporation, working long hours for no loyalty - latch key kids. Some companies have gone so far as to institute some sanity policies: - go home at 5:00PM - turn out the lights if you must work after 5:00PM - move your car out of the company lot after 5:00PM if you must work late - anything that gives the 'we're not a sweatr shop' image To attract, you must be attractive.

The immigrant worker solution?

by George Samuela 10/22/2007 12:00:00 AMWell now the immigrant workers we are getting are not the cream of the crop either. why? because the home countries have better opportunities with the our western 'big' companies setting up shop there (outsourcing). Add that to the other known issue which is that they don't have to come here and get asked for the so-called 'canadian expirience' and wait for months to get a foot in the door. The canadian treatment wasn't good in the first place, and now we aren't seeing the same caliber workers anymore, either here or in US.

'Old' News is right!

by Bob Gilbert 10/23/2007 12:00:00 AMWhen the companies say they can't find IT staff they really mean they can't find under 40 IT staff. Over 40 and you are not on the HR radar screen. Over 45 and (regardless of carefully and expensively maintained skill sets) and you might as well be on a different planet.

Pppfffttt!

by T. Sceptic 10/19/2007 12:00:00 AMWe keep hearing about the ever increasing IT staff shortages, yet no companies care to give out of work IT pros, or new grads a chance to prove they have what it takes. This is a vicous circle and it's just going to keep getting worse.

Total Scam

by Chip Douglas 10/19/2007 12:00:00 AMThe real problem is that US companies (Canada to a small degree) play this game about interviewing domestic IT Workers and then claim they don't have the skills when in reality its simply to then hire abroad at a much more reduced wage. They simply don't want to pay IT workers the justified amount and know that a worker from say India or Russia will work for a third of the wage to come over with a temporary visa. It's ridiculous and has to stop.