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Debunking the U.S. Technology Talent Shortage

Author: Forrester’s Andrew Bartels
Author: Forrester's Andrew Bartels

Is the U.S. suffering a tech talent gap? That impression has been showing up in the press a lot, and seems to fit with a perception of a dysfunctional U.S. education system.

But while it may be challenging to recruit workers with certain tech skills, in a new Forrester report, “Debunking The US Tech Talent Shortage — Creative CIOs Will Find The Tech Talent They Need,” my colleague Nate Meneer and I conclude that fears of a crisis in the American tech labor market are vastly overblown. In fact, data from the Bureau of Labor Statistics and other sources indicate that supply and demand relationship for broad categories of tech workers is quite healthy:

1. U.S. businesses are adding tech jobs at a fast pace. Coveted professions, such as application developer and security specialist, have seen impressive annual average job growth rates above 7% over the last five years. Professions related to the management and analysis of tech systems have grown at CAGRs above 3%. Both rates are well above the national average of 1.9%.

2. Tech wage growth has been lackluster—indicating that competition for talent is reasonable. Despite the large number of tech jobs added to the U.S. economy, the average annual growth of mean wages for most high-demand tech professions has been below 3%. This is not too far off the national average of 2.0%, and considerably less than other non-tech professions that are in high demand, such as credit analyst (4%), pharmacy aides (4.9%), and personal financial advisor (7.9%).

3. The growth of tech graduates has been outpacing that of tech jobs. Graduation data from the U.S. Department of Education indicate that the number of individuals graduating with tech-related degree and diplomas has been growing faster than the number of new U.S. tech jobs. While the U.S. arguably needs even more tech graduates, this data tell us that the situation is getting better—not worse:

While the overall tech market picture looks good, gaps between the demand for and supply of tech talent can still occur in two areas:

1. There are, and always will be, highly coveted subsets of skills that are challenging to find, especially in new areas like artificial intelligence or mobile apps. So, CIOs will need to get creative to attract people with these leading-edge skills.  They should be prepared to offer not just higher compensation, but also a team, a culture, and a set of interesting business challenges. They should also look at training existing workers, recruiting free-lancers, and bringing back alumni or retirees on a part time basis. They should also look outside the IT department, for employees in the business who understand business needs, can work well with business partners, and can be trained on the tech skills they may need.

2. Tech vendors face a more bigger challenge than CIOs and other tech department leaders. Tech vendors need the most talented, most innovative workers to be competitors, and those superstars can be hard to find.  In the case of outsourcing providers, capital-efficient labor (high skill, low cost) will be a perennial challenge. But, facing these challenges is inherent to their business models and is a big part of how they compete with one another and generate value.

Andrew Bartels is VP and principal analyst at Forrester Research. Read more Forrester blogs here.