With digital transformation, certain industries become more attractive for tech talent. Over the last decade, sky-high valuations of tech companies and rivers of VC funding have starved companies in more conventional industries of digital talent. But as tech giants announce hiring freezes and European start-ups reduce their workforces, financial services and utilities firms have a new appeal as they start to offer attractive salaries and job stability. Indeed, according to new data from Forrester, tech redundancies will make traditionally "unattractive" industries desirable again in 2023.
At the same time, there are reports of smaller, technology-focused companies having more trouble recruiting technology and marketing talent from more established industries. All of this points to a need for stability among digital talent. But if those traditional industries are considered stale by talented candidates with digital skills, digital transformation efforts might help entice those workers to work for a stable company that is digitalizing.
Do you know of any examples of digital talent moving to more traditional industries for more stability?
There is an interesting dichotomy happening at the moment wherein tech companies and startups remain the most attractive areas for top tech talent when it comes to interesting work and good compensation, but the stability of traditional industries is enticing as we enter into a steep market downturn. Venture Capital funds have been pouring billions into tech startups for years now and, as the industry grows exponentially, it is well established that there is not enough tech talent to fill the associated demand. Consequently, we have seen salaries for tech roles reach record highs, particularly for the most in-demand roles like data scientists and programmer positions. In addition to the high salaries, startups and pure tech companies are also considered to offer the most interesting work as they sit at the forefront of the field.
These factors leave more traditional industries in a difficult position when it comes to hiring top-tier tech talent, particularly when large numbers of tech staff are required. Most traditional companies are not able to offer the same salary compensation as the biggest tech companies, and their digital projects are often less exciting than those offered by startups or companies working on cutting-edge technologies. For this reason, we have not seen a large percentage of talent moving into traditional industries, and we have not yet observed a shift. However, as venture funding is slowing as we enter into the new year, and many larger tech companies like Salesforce and Apple announce hiring freezes, fresh tech talent will be forced to find jobs elsewhere. We expect there to be more of an even playing field between traditional industries and tech companies and startups when it comes to hiring in the new year.
Are the recent problems experienced by tech companies and start-ups resulting in more available tech talent for companies in traditional industries?
With the drop-off in market capitalization of tech companies including Apple, Microsoft, Amazon, Meta, and Twitter, the tech job market is experiencing a hiring freeze. We are not seeing a slowdown in graduates pursuing careers in tech nor uptake stagnation for digital skills courses. In fact, in the UK we are seeing more young people pursuing STEM higher education courses than ever before. In addition to the freeze, we are also seeing global layoffs across the board and a drop off in funding and investment into tech startups. With both of these factors in mind, we are now seeing more available tech talent for traditional industries to snap up where they can.
Is it expected to make any real difference to the enormous skills gap in those industries?
We can anticipate a short-term easing of the skills gap pressures for recruiters given the recent layoffs, most notably from major tech players. However, the more relevant question is whether this will make a difference to the digital skills gap in the long term. The tech industry is predicted to continue growing at a fast rate, even accounting for an upcoming recession and hiring freezes and layoffs. Because the pace of growth is expected to remain at such a high level, we cannot expect any real difference to be made in closing the digital skills gap without a lot more people choosing to pursue a career in tech. Encouraging more people into tech, particularly for groups like women and people of color that are currently underrepresented in the field, is the best way to make headway in closing the gap. Offering incentives to young people for pursuing tech courses and careers, or offering upskilling and retraining programs within organizations is the best way to tackle the digital skills gap and for HR and recruitment managers to get around the tech skills crisis.
Might we expect an acceleration of DX initiatives in those companies as more tech talent comes on board?
We can certainly expect an acceleration of digital transformation initiatives if more tech talent comes on board. In fact, in 2022, Red Hat called out the digital skills gap as the main barrier to digital transformation in their 2022 Global Tech Outlook report. This is also reflected in a recent Udacity X Ipsos report, which found enterprise digital transformations to be stalling due to a lack of job-ready digital talent. With the digital talent available, more digital transformation projects should be able to get off the ground. However, it can’t also be forgotten that there needs to be as much investment into digital transformation initiatives from the top of the company, as there is at the bottom. Without board-level support for digital initiatives, digital projects tend to stagnate or fail.
We recently found that, in a study of 380 board members of 55 of the UK’s largest family-owned companies, 73% did not have any digital expertise. Innovation is becoming increasingly central to businesses across all industries, and business leaders need to keep on top of it and start integrating digital projects into their strategic business planning. Unless there is industry-wide education happening at all levels of businesses and top-level buy-in to digital projects, simply recruiting tech talent will not be enough for digital transformations to accelerate and succeed.
Additionally, it is worth noting that tech talent is an umbrella term, particularly when it comes to traditional industries that usually require a blend of skills. Digital transformation initiatives for companies conventionally need a mix of people driving the project forward - employees who are entirely focused on the technological side of the project, tech people who keep business interests in mind, and more business-minded people with an understanding of digital projects.
Conversely, to what extent do DX initiatives help attract that talent?
How attractive a digital transformation initiative is to tech talent depends on the initiative. In a recent Capgemini X LinkedIn report, 55% of digitally talented respondents said that they would switch jobs if they felt their skills were stagnating. Similarly, top-level talent tends to gravitate towards the most cutting-edge projects. As a digital consultancy, we observe business trends and keep a keen eye on tech developments. Some popular fields at the moment include Web 3.0, ESG AI, Machine Learning, and automation. Though digital transformation projects can certainly help to attract digital talent, the best talent will tend to flock to the most interesting and challenging projects.
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