Growing IT Talent Demand is Squeezing a Pandemic-Disrupted Market

Growing IT Talent Demand is Squeezing a Pandemic-Disrupted Market

Robots and AI are coming to take our jobs has been a commonly heard refrain in recent years, but it now seems clear that is not going to happen for a good while yet. In fact, as the global economy emerges from the shock of the pandemic, there are severe labour shortages being reported across multiple sectors in numerous countries.

The talent deficit in IT was evident long before COVID-19 struck, and the changes the pandemic has wrought on the way we work and live are only increasing demand for the skilled professionals required for these ongoing transformations. The acceleration of digitalisation, more working from home, and the related greater need for cybersecurity are just a few of the factors driving IT needs.

Japan’s demographic issues and related workforce shortfall are well documented, and the country has been increasingly reliant on foreign talent to help make up for the domestic scarcity in IT expertise.  The international travel restrictions imposed since early last year have largely cut off that flow of people and exacerbated the squeeze.

Closed borders and trapped talent

Adding another layer of severity is the fact that a significant portion of the overseas IT professionals recruited by companies in Japan hail from India, a country currently suffering from the virus more than any other. There are more than 10,000 universities of technology and other educational institutions nationwide producing IT experts, according to the All India Council for Technical Education. India and Japan signed a memorandum of cooperation in January designed to make it easier for skilled Indian workers in 14 categories, including IT, to secure employment in Japan.  However, for the time being, most are unable to venture beyond their own shores so the short-term impact of the agreement on the IT shortfall is limited.  

In addition, a significant chunk of some Japanese firms’ IT operations have been offshored to India, much of it to Bangalore. These operations have also faced serious disruptions as the virus ravaged the country.

“In the beginning of 2020, as COVID-19 cases rose…we decided to shut our offices and asked employees to work from home. However, we soon realised that they might not have appropriate desks or chairs at home,” said an executive in India for one such firm, who explained that the company let employees take furniture home from the office.

“When the second wave hit, a lot of our employees got infected with the virus. However, their colleagues joined together and stepped in to ensure work was not disrupted,” they added

Despite the situation, they continued to recruit large numbers of IT specialists, interviewing online and having candidates code during interviews to expedite the process. The growing competition for IT workers in India is set to intensify further after the pandemic.

“Bengaluru [Bangalore], the city called ‘India’s Silicon Valley’, is home to various multinational companies, start-ups of different scales and other corporations. The competition for talent is very severe as organisations are on the lookout for people with similar skill sets,” explained the executive.

It is of course not only Japan that is feeling the pinch, IT talent from India has become crucial to companies around the world, particularly those in the US.  

And the shortage of qualified personnel won’t be magically fixed when the virus is under control and borders reopen. There is a supply and demand mismatch for nearly all IT positions, including developers, programmers, engineers, data analysts and cybersecurity specialists.

A recent report by consulting firm Korn Ferry predicted there could be a shortage of 85 million workers across all sectors globally by 2030. That would cause a hit of $8.5 trillion to the world economy, approximately equivalent to the GDP of Japan and Germany combined. The report suggested that tech in the US alone could miss out on $162 billion in revenues over the same period.  

Coping strategies

With more than 40% of staff across the world thinking about changing jobs this year – according to Microsoft’s 2021 Work Trend Index survey of 30,000 people across 31 countries – employers looking to attract talent in a field as competitive as IT will have to shift to more flexible and creative approaches to recruitment.

The IT talent market is already well on its way to becoming truly global, a trend that will strengthen as competition heats up. This will force companies to cast their nets even wider and consider boosting relocation packages, including more support in areas like language training.

Another way to broaden the potential talent pool is for firms to become more flexible in their recruitment criteria, such as considering non-graduates for positions which they have traditionally required degrees for. It’s worth remembering that the founders of Microsoft, Apple, Facebook, Twitter, Oracle and Dell never finished university.

Recruitment practices by Japanese corporates have traditionally been notoriously rigid. Though there have been some signs of progress recently, most domestic companies significantly lag their global counterparts in the flexibility stakes. The ongoing IT talent squeeze should give impetus for further shifts in that direction.

The shortfall of IT workers in Japan is predicted to hit approximately 350,000 by 2025 and around 450,000 by 2030, according to the Ministry of Economy, Trade and Industry. In fact,  the AI sector by itself is facing a shortage of 120,000 workers by 2030, says the ministry.

The good news in this sea of troubles is for professionals with IT skills, who will find themselves increasingly in demand by companies which should be inclined to value them more highly than ever.

By: Gavin Blair