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    How Companies Can Address The Tech Talent Shortage In 2023 With IT Outsourcing

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    Talent shortage moves to a chronic challenge 

    The need for technology and digital transformation has reached fever pitch because of the COVID-19 pandemic. Organizations have rushed to quickly apply digital solutions to allow for efficient remote working conditions and adapt to changing customer behavior, worsening the IT talent gap. As the demand for employees escalates, so does the cost of labor, owing in part to the comprehensive training necessary to onboard new software developers and engineers. Subsequently, the digital skills gap is widening, and the demand for tech talent has become more urgent than ever. According to Datapeople’s 2022 hiring report, the available labor pool in the tech industry has reduced considerably. The market reported a 25% decrease in applicants while the number of posted jobs nearly doubled over the same period, affecting 69% of enterprises. 

    Alarmingly the talent shortage is found as the main obstacle to emerging tech adoption as per a Gartner, Inc. survey. Regardless of talent shortages, infrastructure and operations (I&O) and other IT leaders have boosted the adoption of advanced technologies to create new competitive advantages since businesses begin to recover from the pandemic. Across all technology domains, 58% of participants reported either an increase or a plan to enhance emerging technology investment in 2021, compared with 29% in 2020. Moreover, I&O functions have recorded a decrease in deployment timelines, with all technologies in deployment anticipated to attain adoption within the next 6 to 18 months.

    Technology areas are facing IT skills gap

    Developers in IT Outsourcing

    1. Talent gap in Data Analytics

    AI and IoT technologies are creating more and more data, yet, a large amount of data doesn’t mean much if companies can’t deploy it effectively, explaining why the tech sector has progressively sought staff skilled in analysis. Since 2014, tech recruiters have specifically targeted IT professionals with advanced analytics skills such as machine learning, data science, natural language processing, image processing, data engineering, and visualization.

    2. Software developers are in short supply 

    Recruiting developers with the right skills is predicted to be the biggest business challenge in 2020. According to the Top Software Development Challenges for 2022 Survey Report by, Blazor (64%) is the platform that most managers are looking to employ skilled developers for, followed by .NET (48%), Angular (40%) and React (37%). To tackle this issue, some businesses are planning to use low-code/no-code (app builder) tools or design-to-code platforms for citizen developers. 

    3. Software Testers are in demand

    The growing need for software development has given rise to an increased demand for software testing. The Skills Gap in the Software Testing Industry article by David Blanks showed that most software testers don’t have the required technical skills including: 

    • Programming skills
    • Database skills
    • Project experience skills
    • Automation skills
    • Structured training

    Solutions to address the tech talent shortage in 2023

    To alleviate the talent shortage crisis, different strategies can be executed depending on the corporation’s needs. Here are the three most common strategies companies can apply.

    1. Grow Internal Talent

    External recruitment isn’t always the optimal option to fill vacant positions. As your current employees are already familiar with your organization and embedded in the culture, they usually make excellent nominees when new opportunities emerge. This enables firms to lessen onboarding hours, and rewarding top performers with promotions is a fantastic approach to boost retention. According to McKinsey’s survey, skill-building was cited as the second-most common tactic for addressing skill gaps. Companies have been progressively launching reskilling and upskilling programs through personalized learning, guidance and mentoring courses.

    2. Reinvent training methods & increase employee benefits

    Companies can partner with universities and community colleges to develop their own specialized training pathways, replete with customized training programs and infrastructure. Establishing strategic training courses and boot camps aimed at top graduates to ‘’certify’’ them for the crucially needed roles. Programs can vary from 1 month to 6 months of executive training, on-ramping and structured mentorship programs. This would be a scalable approach in the long run, built to employ elite individuals ahead of demand.

    Furthermore, to win the war for talent, business leaders will need to revamp company cultures. 95% of candidates evaluate culture before they apply while inadequate compensation and perks are found to be the main reason why candidates hesitate to apply for certain technology positions. Besides offering financial wellness benefits like stock options, home loan incentive programs, and unlimited PTO, firms also need to consider providing career growth and work flexibility.

    3. IT Outsourcing

    These two above-mentioned strategies might be harder to implement for SMEs as they require considerable investment. Subsequently, outsourced IT operations have become a popular method to outcome the talent shortfalls. Instead of having to invest in both talent attraction and retention tactics to appear more appealing to developers, companies will only have to find appropriate vendors to build high-performing dedicated software development teams. A wide range of offerings is also available with IT outsourcing, from software development projects to IT services like mainframe hosting, system maintenance, desktop support, etc.

    Benefits of IT Outsourcing 

    The main advantages of IT outsourcing services are:

    1. Access high-quality labor

    While an internal tech team is restricted by the company’s resources and the training it provides, with outsourced IT support, employers can approach high-quality manpower and access to enterprise-grade support tools.
    Outsourced IT services also empower organizations to quickly increase or shrink their human resources in different development periods without being worried about personnel organization, hence aiding them to improve labor productivity.

    2. Cost-effectiveness

    Outsourcing IT operations allows businesses to reduce their overall labor expenditures. Firms can pay for the service as they go rather than making large upfront investments. Additionally, it helps firms gain expert support without acquiring the latest IT infrastructure or hiring full-time professionals to improve the efficiency of the business.

    3. Flexibility

    Outsourced dedicated software development team assists in tackling the short and long-term demands of organizations. Whether businesses need to scale their tech teams for complex project developments that cover several years or only require a certain skill for a short period of time, outsourced service providers can efficiently satisfy the requirements.

    Learn more: Reason to use IT Outsourcing

    4. Knowledge of the industry and innovation

    If the business’ core activities have little to no relevance to information technology, there is a decent chance that the company is missing out on the latest trends in the industry. Thus, it is a good idea to opt for IT outsourcing as they can get an innovative look at what the organization needs in terms of information technology.

    Best Practices for IT Outsourcing

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    To ensure a successful IT outsourcing partnership, companies are advised to follow these practices.

    • Make a plan

    Clear, practical objectives with well-defined timelines are suggested. This not only gives firms more control over the project but also puts them in a better position to choose the appropriate staff augmentation model for their specific industry. Clearly outlined goals will also enable vendors to generate thorough proposals and estimate the size and cost of the project. 

    Another recommendation is to document each stage of your outsourcing venture involving deliverables, alterations, updates, and reassessment. It can include email, meeting notes, bug tracker submission, or even code comments. This helps companies keep track of progress effectively. 

    • Go Agile

    Agile development is the leading approach to software development. 71% of enterprises employ agile and agile projects are 28% more successful than traditional projects. 

    Agile development is implemented in multiple short iterations. Each iteration is done in a few weeks and entails building, testing, and launching new versions. In contrast, traditional development can take several months to accomplish a new release.

    Agile also entitles businesses to perform new changes with greater flexibility and speed. Corporations as large as Microsoft have achieved success with agile in everything from small-scale initiatives to enterprise-level projects. Therefore, it is highly recommended that organizations adopt Scaled Agile mindset and frameworks for successful project implementation. 

    • Communication clearly

    A lack of communication is a recipe for a collaboration disaster. Roadblocks, development issues, and requirement modification will have detrimental influences on a project if not communicated swiftly and clearly. Thus, frequent communication is essential to keep both parties engaged and aware of updates to the project. With outsourcing, language, culture, and time differences can be barriers to effective communication. Nevertheless, considering the tools and technologies available today, there’s no excuse for teams to not share information. 

    Vendor Selection Criteria

    Vendor Selection Checklist - KMS Solutions

    To choose the right IT outsourcing providers for your business, here are a few critical qualities you need to carefully consider while evaluating vendors

    • Experience: You want to look for outsourced IT service providers who do not only have years of experience but also have the expertise in your industry
    • Experts: IT offshore outsourcing is advised when technology experts in your area are limited. Software vendors should also be able to provide adequate infrastructure to ensure a seamless and secure implementation.  
    • Portfolio & References: Outsourcing vendors’ portfolios and references should also be investigated thoroughly
    • Location & Communication: When looking for offshore outsourcing suppliers, it is suggested that you search for those within 3-6 hours flying distance to help both sides build relationships. In case an outsourcing vendor’s location isn’t that vital to you, communication is still a must. 
    • Pricing: Even though pricing is an important factor to consider when selecting an IT outsourcing vendor, you shouldn’t base your choice solely on it. This might result in poor quality and extensive postponement in receiving the end result. 

    To better assess the outsourcing partners, corporations can consider creating a checklist for selecting IT sourcing vendors.

    About KMS Solutions

    Working closely with leading software companies across the globe, KMS Solutions - Top 10 IT Services Companies in Vietnam 2022 by Clutch prides itself on delivering superior IT outsourcing services across different technology domains, from data analytics, and software testing to digital apps and platforms. With 12+ years of experience in the industry, we have helped multiple companies develop innovative digital solutions with agile methodologies.

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