With Covid-19 having accelerated the need for digital transformation, the demand continues to outweigh the availability of developers, analysts, support, engineers, and IT specialists.
Therefore, companies must pursue new initiatives to overcome the IT skills gap in this competitive labor market.
A few of the initiatives companies are exploring include:
- Hiring candidates from non-traditional backgrounds like those without a college degree
- Training college graduates with non-technical backgrounds to do technical jobs
- Forming strategic partnerships with specialized IT staffing servicesThis post discusses approach #3, staffing solutions, by looking at 13 surprising statistics that may explain the rise of its popularity as a business strategy.
This post discusses approach #3, staffing solutions, by looking at 13 surprising statistics that may explain the rise of its popularity as a business strategy.
What Are IT Staffing Solutions?
IT staffing firms support their clients by ‘loaning’ them the tech professionals and/or remote teams they temporarily require to reach their business goals.
These professionals and/or teams may include programmers, developers, engineers, specialists, analysts, architects, project managers, technical writers, etc.
Staffing services can provide their clients with tech professionals through two models: staff augmentation or per project.
Staffing Models: Staff Augmentation and Per Project (Vs. Managed Services)
Staff augmentation, also known as team extension or outstaffing, is a staffing model in which one or a few professionals temporarily integrate into a client’s internal team, and operate under the client’s management.
Per project, however, is a strategy in which a company assigns their project to a remote development team for them to complete externally. Once the project is finished, the remote team delivers the full end-to-end development project, ready for deployment. Per project is also known as IT project outsourcing.
For a more detailed description of the differences between these two models and their advantages/disadvantages, read IT Outsourcing Vs Staff Augmentation: The Stigma, the Differences, and the Strategies.
What about managed services? Unlike staffing services (staff augmentation and per project), managed services are a more permanent solution. Many companies use managed services to indefinitely outsource their cybersecurity and support services, like tech support and call centers. It’s a continuous delivery of services, usually a whole process or system, in the long term.
Staffing Solutions Vs Recruitment Companies
Unlike recruitment firms, staffing services deliver temporary and contract job positions, ranging anywhere from a few months to two years. Despite the professional working within a client company, they remain an employee of the staffing agency. The staffing agency is in charge of the employee’s salary and benefits package.
A recruitment company, however, connects its client companies to potential permanent hires for which the client company will be responsible.
Why Are Companies Using IT Staffing Solutions?
Perhaps you’re wondering why a company would need a temporary tech professional or development team.
Whether it’s to fill one vacancy or outsource an entire project, more companies are leveraging IT staffing services for a variety of reasons:
- Reduce costs
- Increase agility
- Improve time to market
- Cover a maternity leave
- Undergo digital transformation
- Complete a short-term project
- Expand or downsize quickly and flexibly
- Meet periods of high demand such as seasonal spikes
- Gain access to the latest technology, tools, and processes
- Free up the internal team’s time to focus on core business strategy
- Cover for an open, hard-to-fill position that requires a lengthy recruitment and training process
- Get expert consultation in an area in which the internal team does not possess the required expertise
- Complete tasks outside their core business responsibilities, for example, automation, building a web app, creating a mobile app, data management and analysis, cloud integration, cybersecurity, etc.
13 Surprising Statistics
IT Job Demand
- In the United States, IT positions are projected to grow 11% from 2019 to 2029. According to the U.S. Bureau of Labor Statistics, that’s, “much faster than the average for all occupations.” The bureau projects these positions will add 531,200 new jobs.
- The average growth rate for all occupations in the U.S. is 4%, however, the growth rate for software developers is projected to grow a whopping 22% by 2029.
- Keeping IT personnel can be an even bigger problem than hiring them. A study using LinkedIn’s member data found that tech companies lose 13% of their IT team every year.
- A 2020 Workforce Study from ISC2 found that the talent gap in the cybersecurity field has actually decreased globally since 2019…but barely. There remains a global demand for an additional 3.1 million cybersecurity professionals to close that gap.
- According to a 2019 report from iCIMS, it’s taking companies an average of 66 working days to fill tech positions. The same iCIMS report calculates that the average company loses $680 per day per vacancy because of job postings, background checks, and lost days of productivity.
- To address the IT skills gap, 79% of companies are exploring diverse initiatives. These initiatives include hiring candidates from non-traditional backgrounds, training people with non-technical backgrounds, and utilizing staffing solutions to outsource work to third-party remote teams abroad.
- In 2019, the global staffing industry generated USD$497 billion, 85% of which was generated through temporary and contract employment.
Who Is Taking Advantage of IT Staffing Solutions?
- E-commerce sales are projected to account for 22% of retail sales worldwide by 2023. With the demand for e-commerce on the rise, the retail industry is increasingly turning to IT staffing services to build and maintain its e-commerce platforms/online stores. Other industries that are accelerating digital transformation and driving up demand for IT staffing solutions are health care and fintech.
- In response to Covid-19, the financial services industry had to improve and expand its online services in a short amount of time, which led to increased collaboration with third-party service providers. According to the US Fidelity National Information Services (FIS), mobile banking traffic grew 85% in April 2020, and registrations for mobile banking increased by 200%.
- Clutch—a ratings/reviews platform for IT and marketing service providers—surveyed 500 small businesses in the U.S.A. In their survey, Clutch found that IT is the area that small businesses are most likely to outsource. 27% of small businesses surveyed said they plan to outsource IT services in 2021.
What’s the Motivation Behind Using IT Staffing Solutions?
- In Deloitte’s 2020 Global Outsourcing Survey, 0% of the executives they interviewed said their main reason for outsourcing is to reduce costs. 40% of the executives interviewed said they outsource to increase flexibility, 20% use outsourcing to increase their speed to market, 15% for access to tools and processes, and 15% cite agility as one of their main reasons for outsourcing.
- However, a GSA-UK report from the National Outsourcing Association offers very different survey results. The GSA-UK report states that 35% of businesses surveyed outsourced IT for cost-effectiveness while 23% outsourced IT to improve the customer experience.
- Of the 500 SMEs that Clutch surveyed in the U.S., 37% were already outsourcing and 80% expressed an interest in outsourcing in 2021. Their reasons included saving time, increasing efficiency, scaling their business, and collaborating with experts.
The Argument Against Staffing Solutions
Harvard Business Review suggests that many companies aren’t actually suffering from a talent shortage, but from a retention problem. One article concludes that companies suffer poor retention because they put little to no effort into their internal development opportunities.
In their article, Your Approach to Hiring is All Wrong, they indicate that the problem begins when companies turn to staffing services and recruitment agencies before posting job openings internally.
As we mentioned in the introduction, staffing services are not the only solution to the skills gap that U.S.-based businesses are exploring.
Employers have become much more flexible with job qualifications by rewriting job descriptions and even changing job titles to attract tech-savvy individuals even if they don’t hold a 4-year university degree.
And tech companies, especially the tech giants, have begun to offer on-the-job training, certification courses, apprenticeship programs, and partnerships with online learning platforms. They are training/preparing internal candidates from non-technology teams in data analytics, cloud computing, and IT support. According to a CNBC survey, “over half (52%) of technology executives said they’ve hired workers without a college degree. Seventy-two percent of respondents to the CNBC survey said they are hiring internal candidates from non-technology teams; another 72% said they are finding candidates with degrees in liberal arts.”
IT staffing models such as staff augmentation and per project are strategic outsourcing frameworks that can offer companies multiple benefits—expertise, flexibility, agility, cost reduction, etc.
A few conclusions that we may be able to draw from the research are:
- The demand in the U.S. for experienced tech professionals is growing faster than the availability. And this trend is projected to continue.
- Staffing services are not the only solution to overcoming the talent gap.
- Staffing solutions are needed across multiple business verticals, no matter the size of the company.
- CEOs and CIOs are motivated to use staffing solutions as a means to reach a variety of business goals—cost reduction, efficiency, scalability, etc.
Staffing Solutions at Nativo
If your SME or tech company is looking for help with website design, web apps, mobile apps, and/or QA services, visit Nativo.la and download our rates.
Nativo helps fast-growing companies with their digital transformation by providing on-demand developers, cost-effective rates, an opportune location, and 10+ years of experience.