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Is the tech sector facing an IT skills exodus?

Three out of five of tech professionals say they are looking to move jobs over the next year. Why is this, and how big a skills problem is the tech industry facing?

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The UK jobs market is currently in turmoil, with labour shortages making themselves felt right across the economy due to a heady mix of pandemic and Brexit-related pressures – and the tech sector is no exception here.

In fact, according to the latest Quarterly insights survey conducted by recruitment consultancy Hays Technology, three out of five of the 350 tech professionals questioned are actually planning to change jobs over the next 12 months, with 45% intending to do so within six months. A huge 62% have already had at least one interview over the past six months, too.

Key reasons people cited for their seeming dissatisfaction were a lack of career prospects at their existing employer (22%), as well as the longer hours racked up when working remotely (46%) and having to work during holidays as a result of the pandemic (34%).

Bev White, CEO at recruitment consultancy Harvey Nash, agrees that tech workers have become “more inclined to take calls” as a result of long hours and rising workloads, particularly if they have been subject to pay freezes. Moreover, when taken with the findings of the firm’s Tech salary and hot skills report 2021, which indicates three quarters of tech professionals feel that work has had a negative effect on their mental health over the last year, “it makes people think ‘this isn’t the firm I signed up for’,” she says.

The third annual Confidence index 2021 from IT jobs board CWJobs, which was based on a poll of 1,000 tech workers and more than 500 IT decision makers, indicates similar trends.

It found that a mere 29% of respondents wanted to stay with their existing employer, while 14% were keen to move to a new company. Around 11% respectively were thinking about starting their own tech business, going part-time or changing locations. A further 10% were considering whether to become contractors, while 8% were contemplating leaving the sector altogether.

But this situation is taking place in the face of an ostensible rise in job satisfaction (52%) over the last year due to people taking on more responsibility (62%) and feeling their work was more meaningful (57%), driven at least partially by their important role in keeping the business afloat during lockdown.

Understanding complex motivations

Dominic Harvey, director at CWJobs, explains this apparent disconnect: “At the start, I think many within tech and elsewhere simply wanted to see out the pandemic,” he says. “But with a greater sense of stability, they feel the time may now be right to pursue the next chapter of their career.”

Working from home has also given many people a chance to reassess and reprioritise their lives in terms of what matters to them. As a result, “if they suspect companies will return to old ways of working, they may want to join what they deem a more progressive employer with a greater sense of flexibility”, he points out.

Another piece of this complex puzzle relates to an individual company’s purpose and mission and whether it chimes with an employee’s personal values – a factor that is becoming increasingly important, particularly among the younger generation.

But there are other intrinsic motivations too. A key one, says James Hallahan, Hays Technology’s director for the UK and Ireland, relates to a lack of “emotional connection”.

A significant challenge here is that a dearth of face-to-face interaction during lockdown has in many instances had a negative impact in relationship-building terms, especially in the case of new joiners. This situation has in turn negatively affected employee engagement and loyalty to managers, the team and the wider organisation, making it an easier emotional proposition for people to go elsewhere should a better opportunity present itself.

Such opportunities appear to be widespread too. Hallahan points out that employees in certain roles, such as data scientists and software developers, are currently being approached with between four and five new openings per week and are changing jobs on average every 12 to 18 months as a result, leading to base salary increases of between 15-20% each time.

How market dynamics are playing out

Harvey Nash’s White is seeing a similar dynamic. She says that in a pre-Covid world, if employers made four job offers, they could expect to have three accepted. But because candidates are currently on the receiving end of multiple opportunities, this figure has now dropped to two.

Hiring process times have also significantly speeded up. The period between receiving a CV and an offer being accepted used to be weeks or even months, but for some posts it is now as little as five to seven days.

The upshot of such high demand, which has only been exacerbated by many skilled European workers returning home post-Brexit and during the pandemic, is “huge wage inflation”, says White. According to the firm’s report, development managers and team leaders are currently experiencing salary hikes of around 59%, while user interface and experience designers as well as quality assurance professionals are benefitting from wage uplifts of more like 50%.

Jen Ely, who has just started a new position as Salesforce delivery manager for house builder Strata Homes, has changed jobs twice since the start of the pandemic and recognises many of these dynamics.

For example, after having been employed at one firm for nearly five years, Ely says she “could feel growth happening around me, but the company I was working at was stagnant”. As a result, due to “all the great opportunities being pitched at me”, she decided to grasp the nettle.

But in a second job with a charity, which consisted of an 18-month remote working contract, she met her colleagues only once, which made it “much easier to move on”. A key advantage of her new role though, she feels, is that not only does it pay more, but it is also “permanent and so offers more stability” while providing flexible working opportunities at the same time.

“For me, it’s never just been about how much you’re taking home – it’s the whole package, so career opportunities, training, the culture of the place,” Ely says. “But the job market is definitely in the candidate’s favour at the moment and we’ve got the world at our feet, although I do think things will settle down. It’s just a post-lockdown burst.”

Dealing with the skills merry-go-round

White is also not convinced that the current skills merry-go-round will quite be as marked as the survey figures would suggest.

“Will these numbers be realised? It may be in people’s minds to leave now but the reality into the future could be something different,” she says. “As many as a quarter or more of the workforce may decide to move, but when people realise there’s more to it, that they work with people they like and remember why they joined the company in the first place, they could start seeing things through a different lens.”

Interestingly, for instance, she is already seeing a growing number of employees discover they have “jumped out of the frying pan into the fire”, which has resulted in them returning to their original employer.

Meanwhile, although many organisations are making counteroffers to keep hold of key talent, there has also been an increasing realisation of the need to re-engage staff who “partially checked out” by providing them with a “more compelling place to work”, says White.

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  • Research by Capgemini found just over three-quarters of global tech employees who are women or ethnic minorities don’t feel a sense of belonging at work.
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Examples here include providing “more health and wellbeing support, actively addressing salary issues – which isn’t necessarily just about a pay hike but also a deal that weaves in flexibility – and making the office somewhere fun that people want to go”.

In recognition of the fact that it has “been a very difficult 18 months for people”, a key focus for digital identity specialists GBG has been to demonstrate that they “can have the best of both worlds” by staying put, says chief people officer James Miller.

“As an employer, you want to create a sweet spot where someone doesn’t want to pick up the phone,” he says. “If someone has great opportunities and feel fairly rewarded, they’ll feel content where they are and won’t jump elsewhere.”

As a result, the company is putting a big focus on internal development and progression, staff health and wellbeing as well as offering employees the flexibility to work when, how and where works best for them and their teams. This approach includes taking less of a location-based stance to recruitment by building more international teams, primarily in the 13 countries in which the organisation already has offices.

Out of chaos can come lasting change

Hays Technology’s Hallahan acknowledges that this move towards creating distributed workforces in order to access the best talent wherever it may be is a growing trend at both a national and international level. A popular tactic here is to establish talent clusters in which individuals work remotely but get together regularly for team-building purposes.

Another trend that is coming to the fore because of the current lack of “permanent talent to deliver against demand” is the growing use of outsourcing to deliver products and services, which includes taking on contingent workers.

The introduction of changes to IR35 contracting regulations at the start of this year though has “changed the risk profile for digital transformation projects”, says Hallahan, leading to “significant growth in the delivery of outcome-based contracts”. This means many contractors are no longer being paid on a time and materials basis but for outcomes, which results in the risk being outsourced to them.

But in general terms, employers are now beginning to understand just how vital it is to ensure a positive and fair company culture that treats their workforce well, says White.

“It’s currently a perfect storm, but out of the chaos can come lasting change. So we’re talking about better organisational practices where long hours are addressed, people are helped to navigate difficult moments, receive good development opportunities and are paid fairly – and many employers are starting to get it now,” she concludes.

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