The guide to managing tech talent shortages in 2025

According to Deloitte, the global demand for tech jobs in the world is set to increase significantly in the upcoming years, rising from 6 million in 2023 to an estimated 7.1 million by 2034. This growing demand comes at a time when the tech industry is simultaneously facing a severe talent shortage. The ManpowerGroup US Talent Shortage Report reveals that the shortage of IT professionals has skyrocketed from 40% in 2014 to a staggering 70% in 2024, and it is projected to reach 75% within the next decade.

As businesses embrace new technologies, the US Bureau of Labor Statistics predicts that tech jobs will grow at twice the rate of the overall workforce in America in the coming years. Despite this growth, companies struggle to find the right talent for critical roles in a rapidly evolving industry. This creates a paradox for the tech sector: even amidst significant layoffs, the challenge of filling essential positions remains.

In this guide, we will explore the reasons behind the persistent tech talent shortages in 2025 and offer insights on how businesses can effectively address these challenges. To succeed in this competitive market, companies will need to rethink their traditional hiring strategies and use innovative approaches to attract and retain the much-needed tech talent.

The persistent tech talent dilemma: more openings, fewer ideal matches

The tech talent shortage is real: there are more job openings, but fewer ideal matches. So, companies struggle to find qualified tech workers for key positions. Despite the slowdown in tech hiring, the demand for skilled workers remains high. This creates a huge problem as businesses continue to lose money.

According to the Korn Ferry Institute, the United States can expect to lose $162.25 billion by 2030 due to sector skills shortages. China will fail to generate $44.45 billion in revenue due to the same problem. Great Britain will fail to realize almost 9% of the technology, media, and telecommunications sector’s potential revenue by 2030.

Layoffs don’t equal talent pool boom

In 2023, an average of 2,080 employees lost their jobs every day, according to Layoffs.fyi. This follows a tough year in 2022 when over 154,000 workers were laid off in the tech sector. High-profile companies like Amazon, Salesforce, Microsoft, Google, Twitter, Vimeo, Parler, Coinbase, and Qualtrics were all impacted by these changes.

Despite these layoffs, the expected increase in available tech talent hasn't materialized. Many companies are still struggling to find the right workers, and are left to grapple with the consequences of a persistent skills gap. This gap refers to the mismatch between the skills and qualifications required for available jobs and the skills and qualifications possessed by job candidates.

The skills gap persists beyond degrees

The skills gap in the tech industry remains a pressing issue, with many job candidates possessing degrees but still lacking the practical skills required for modern tech jobs. This highlights a gap in traditional education, which often does not adequately prepare individuals for the demands of the modern workforce.

One of the primary reasons for this skills gap is the rapid pace of technological change. As new technologies emerge and evolve, traditional education paths often struggle to keep up. Many universities and colleges focus on providing foundational knowledge and theory, but may not provide students with sufficient hands-on experience or training in the latest technologies.

For example - the rise of artificial intelligence (AI) and machine learning (ML). While many students are well-versed in the theoretical aspects of AI and ML, they may not have the practical skills to apply these technologies in real-world scenarios. This can make it difficult for them to secure jobs in this field or to effectively work with AI and ML systems.

Similarly, the increasing importance of cloud computing and DevOps has created a skills gap in this area as well. Many students have experience working with traditional data centers and on-premises infrastructure, yet they do not have the skills to migrate to the cloud or to manage complex DevOps environments.

To bridge this skills gap, many companies are turning to alternative education paths such as boot camps, vocational training programs, and online courses. These programs provide individuals with the practical skills and hands-on experience they need to succeed in the tech industry.

Key factors driving the tech talent shortage

The tech shortage is a complex issue that is driven by a combination of factors. In this section, we will discuss the key factors contributing to the shortage.

Rapid technological evolution

The tech industry is constantly changing, making it difficult for professionals to keep their skills up-to-date. New technologies and tools are emerging every day, replacing old ones at a rapid pace. As a result, technical skills are expiring in around 2.5 years.

To stay relevant, professionals need to refresh or update their skills frequently to keep pace with the rapid evolution of technology. This means that tech professionals risk becoming obsolete if they don't adapt to new technologies and tools, making it challenging for companies to find skilled workers with the latest skills and expertise.

Gaps in education and training

In the United States, shared student debt is already over $1 trillion, with one student debt being $99,417 on average. Yet, even if this sum is paid it doesn't mean that amount of money will guarantee students employment. Traditional academic institutions are often struggling to provide graduates with the job-ready tech skills they need to succeed in today's industry.

As a result, the gap between academic education and the demands of the tech job market continues to widen. Moreover, college enrollment is declining, according to the National Student Clearinghouse Research Center and young people choose to self-study or opt for alternatives. This is no wonder as educational programs development may take from 6 months to 2 years to complete all levels of approval. This means that universities are staying behind the progress and many graduates are not equipped with the skills and expertise required by employers, leaving them unprepared for the challenges of the tech industry.

Geographic imbalance

The tech talent situation shows major differences across regions, with some areas having plenty of skilled professionals while others struggle to find enough workers. In the United States, a report from ManpowerGroup US Talent Shortage Report highlights a worrying trend: the shortage of IT talent jumped from 40% in 2014 to 70% in 2024, and it’s expected to reach 75% in just ten years.

Sweden, often called the Silicon Valley of Europe, also has a hard time filling tech positions quickly, facing an annual shortage of about 18,000 tech professionals. Similarly, Germany, a key technology hub with many large companies, currently has 149,000 IT open jobs and this number is expected to increase in the coming years.

Australia is not immune to these challenges either. In 2024, there was a significant shortage of skilled workers. According to the Global Talent Crunch Survey by 2030, it is projected that there could be a global shortfall of 85.2 million tech workers, leading to nearly $8.5 trillion in potential lost revenue.

While Western Europe seems to be doing better overall, tech companies in the Nordics, Eastern Europe, and the USA are still facing notable shortages, with gaps of 19%, 17.7%, and 16.5%, respectively. This geographic imbalance makes hiring difficult and shows the urgent need for effective strategies to close the talent gap.

Increased demand for specialized roles

There is an increasing demand for professionals in niche fields like artificial intelligence, cybersecurity, and cloud computing. Most companies are aggressively looking for personnel with specific know-how in the field to ensure innovation and security. However such talent is tough to find since most professionals have not been well-trained or are available in such large numbers that would meet the growing demand.

For example, AI specialists are as important to develop intelligent systems and improvements in automation; still, the pool of qualified candidates is limited. On the other hand, cybersecurity professionals play a very important role in this present world, and yet skilled professions in this regard are considerably insufficient. Another similar area of technology is cloud computing, which is very fundamental to businesses of today. Likewise, high specialist talent with few qualified candidates constitutes a significant demand-supply gap.

This heightened demand for specialized positions emphasizes the growing need for training and development programs, which will help more people acquire the necessary skills to occupy these highly important positions. The competition for top talent in these areas continues to grow, and finding effective solutions that close the skills gap will be a key part of determining future success.

The business impact of the talent shortage

While businesses face the consequences of a talent shortage, their practices and decisions can also contribute to the problem.

Higher hiring costs and longer recruitment cycles

Hiring new employees comes with significant costs that can impact a company's bottom line. According to a Gallup report, replacing a worker can be expensive, with costs ranging from 50% to 200% of the employee's annual salary. This underscores the importance of not just attracting but also retaining top talent.

Moreover, while the average onboarding program lasts about 90 days, it typically takes new employees around a year to reach their full potential in terms of performance. This means that during the first year, businesses often invest time and resources into training and developing employees before they can fully contribute to the team's success.

Finding and onboarding qualified candidates has become increasingly time-consuming and resource-intensive due to the current talent shortage. Companies are facing longer recruitment cycles as they work to identify candidates who not only have the right skills but also fit well within their company culture. Additionally, the process of onboarding has become more complex, as new hires need support to acclimate to the company's systems and processes.

Employee burnout

The ongoing talent shortage is taking a significant toll on employees, contributing to a rise in burnout and decreased productivity. Although the prevalence of employee burnout has slightly decreased according to the HR Trends report, a staggering 65% of employees continue to experience burnout. This indicates the pressure and stress associated with meeting workforce demands.

One of the most concerning consequences of burnout is its impact on employee performance. A significant majority, 72%, of employees have reported that burnout has impaired their productivity. This not only hampers individual performance but also affects the overall well-being and success of the company.

The talent shortage has created a perfect storm that is pushing employees to their limits, leading to decreased motivation, demotivation, and increased absenteeism. Long-term, such burnout might be followed by a lack of job satisfaction, higher rates of turnover, and higher recruitment costs.

The workplace landscape currently poses many challenges for businesses. It is now imperative that special attention be paid to employee well-being and a work environment that is sympathetic to the burden of working in a talent shortage. This is the way forward in limiting burnout while preserving positivity and productivity in workers who drive the business.

Rethinking talent strategies: Solutions for 2025

Сompanies are facing unprecedented challenges, from a shrinking talent pool to shifting employee expectations and the impact of technology on job roles. To thrive in this dynamic environment, businesses must rethink their talent strategies and adopt innovative solutions that not only attract top talent but also retain and develop their existing workforce.

This proactive approach will be essential in 2025 and beyond, as companies strive to foster actionable strategies and forward-thinking solutions that help navigate the complexities of talent management in the future.

Investing in upskilling and reskilling

A recent study by the IBM Institute for Business Value revealed that executives anticipate a significant shift in workforce requirements. They estimate that over 40% of their employees will need to be reskilled within the next three years. This growing need for reskilling is largely driven by the rapid development of artificial intelligence (AI) and automation in everyday business operations, which are transforming how work is done across various industries.

In addition to this, the Voice of the Workforce 2023-2024 report highlights another crucial aspect: 90% of employees believe that their experiences as workers directly impact the quality of service they provide to customers. This insight underscores the importance of investing in employee development, as a skilled and satisfied workforce is essential for delivering excellent customer service.

To effectively work through these changes, companies should establish continuous learning environments that facilitate the worker in picking up the newest skills and knowledge. This means ongoing training and development for the employees as they adjust to the technological advances and company movements.

By putting first the activities of upskilling and reskilling, a business is sure to increase employee performance to better satisfy customers and grow its relevance within the increasingly competitive market.

For companies to thrive in an automated future, investing in employee development is a necessity. Companies will have to keep in mind the culture fostered and continuous learning a workforce will need to meet the demands of tomorrow.

Embracing global talent pools

Businesses do not have to be tied down by the physical boundaries of place anymore. Especially when it comes to finding the right talent. Remote working and outsourcing have changed the whole nature of hiring as companies can now reach out to a pool of skilled professionals around the world. This brings not only flexibility in operations but also innovation and creativity because of the amalgamation of different perspectives and experiences.

Access to global talent pools makes it possible for companies to get competencies that might be in short supply or simply unavailable in local markets. A company can thus find the best fit for their needs, whether specialized technical skills, creative design capabilities, or strategic business insights. The use of international talent can lead to cost savings for a business, as more often than not, high-quality services can be found at competitive rates.

The benefits do not stop at the access to skills alone but extend to encompass enhanced cultural competence and adaptability for a company. Companies are much better placed in understanding and servicing diverse customer bases with people on their teams, fostering growth and increasing satisfaction.

Also, remote work includes a wide variety of people in different regions and settings who value contributions. Inclusion brings diversity into the workplace, adds culture, and empowers employees with opportunities they might not have had in their local settings.

Remote work and outsourcing have become strategic differentiators in tapping global talent pools, pathways to innovation, and resilience. As companies continue to power through increasingly treacherous landscapes, the ones that tap into the full spectrum of global talent will be those best positioned to thrive in the future.

The role of staff augmentation and outsourcing in solving the talent crisis

As many companies are facing a talent crisis, and struggle to find the right skilled workers to meet their needs, staff augmentation and outsourcing appear as a perfect way to solve this tech shortage problem.

Faster access to skilled professionals

When businesses need to grow quickly, staff augmentation is the best strategy. You can get the desired number of skilled workers that will be brought in to help with the workload. For example, if a software company is working on a big project, they can easily outsource extra developers for a few months. This way, they can complete the project on time without hiring permanent staff. Moreover, you will not have to deal with a lengthy onboarding process and administrative questions, your partner, an outsourcing company, will do that for you.

Specialized expertise on-demand

Sometimes, companies need specific skills first that their current team does not have. Outsourcing allows them to find experts for these roles without committing to long-term contracts. For instance, a Fintech company may need someone with a really good knowledge of generative AI implementation. They can outsource this task to a professional who specializes in that area, ensuring they get high-quality work without a long-term commitment.

Cost-effective workforce scaling

Permanent staffing is quite expensive, especially for small businesses. Staff augmentation and outsourcing offer flexible staffing options. Concerning this, the companies pay for the help required only when needed. For example, during the holiday, a retail business may outsource extra customer service agents to cope with the increased demand. This helps them stay within their budgets while still providing good service.

Reduced risk and compliance complexity

Several legal and administrative activities come along with hiring. Such responsibilities can be handled by the staff augmentation partner. This minimizes risks to the business. For instance, should a company decide to hire contractors, its staff augmentation partner can manage the contracts and ensure everything complies with labour laws. In this way, businesses can focus 100% of their attention on their core activities without worrying about any legal issues.

Software outsourcing services have become an effective way to solve the talent crisis for any business. It provides access to skilled resources and niche knowledge, reduces costs, and lowers risks associated with hiring.

The talent crisis in the job market is a pressing issue for businesses today, especially in the technology sector. Many companies find it challenging to recruit and retain skilled IT professionals. Devico is here to help with tailored staff augmentation services and outsourcing solutions that effectively bridge these talent gaps. Let’s explore how these methods can support businesses:

With staff augmentation and outsourcing through partners like Devico, businesses can effectively address their talent shortages and continue to innovate and grow in a competitive market.

Conclusion

Today many tech businesses face a talent shortage. However, solutions like staff augmentation can help companies overcome these challenges.

It allows you to lessen administrative tasks, reduce hiring risks, and focus on what you do best while keeping your team motivated.

To stay competitive in these changing times, it’s important to adapt how you find and use talent. The Devico team is here to provide the talent and assistance you need to move your projects forward and reach your goals. Don’t let the tech worker shortage slow you down – work with us to tap into global expertise and improve your operations.