The rapid spread of Omicron is creating a new challenge for employers. While this version of the variant seems to cause less-severe disease, its high level of contagion has led to massive worker sick outages for businesses that are already short-staffed because of existing COVID-19 issues and what has been termed the Great Resignation.
Most of the conversations in the media and within communities have focused on industries like retail, manufacturing, and transportation. The reason is that these predominantly in-person occupations are more obvious, and because they impact the average consumer more directly – airline flight cancellations, empty grocery shelves, or shortened office hours because workers simply aren’t available.
But this outage is also of enormous concern to service and professional industries. Staffing shortages put strain on the remaining team and lead to production delays and lost business, forcing companies to scramble to maintain output and keep costs low for customers.
The technology industry might be at an even greater risk than most other sectors – both for near-term support and long-term workforce stability – because these COVID shortages layer on top of a pre-existing shortage of technology workers.
Well before COVID or the Great Resignation were front page stories, the industry was already facing a sizable gap between open jobs and qualified applicants. Back in 2019, CompTIA predicted there would be more than one million unfilled tech positions by 2026.
Now, that gap between jobs and workers has widened even faster than expected because the pandemic forced many companies to accelerate their technology implementation and digital transformation plans. According to Deloitte, 65% of U.S. companies are planning digital adoption efforts, compared to 25% in 2017. This has led to more demand and open positions than anticipated.
Amidst that growing talent chasm, consider that many tech workers have means and flexibility – two factors that are likely contributing to the Great Resignation. In fact, a survey from Manpower USA says that staff turnover in the US IT industry is highest among all industries at 13.2%.
Further, the Bureau of Labor estimates that 500,000 software developers are leaving the industry either through retirement or other circumstances. At the same time, the Bureau predicts a 22% growth in software developer jobs in 2022 but a reduction in computer science graduates.
“While we are not immune to these challenges and have had to deal with staffing shortages like everyone else, our history of remote work and updated hiring/retention policies have helped us succeed in this most difficult time.”
Michael J. Rappaport, CEO and Founder of Chariot Solutions
Not only does this attrition impact work product and corporate reputation, it’s also expensive. The Manpower survey also pointed out employers often pay 50-250% of a tech worker’s salary when they need to replace them.
Simple math highlights our obvious problem. Take an existing gap of qualified IT workers, add in more demand, subtract departing workers without adding new ones….and it all leads to a severe shortage of tech talent. And this is not just happening in Silicon Valley, but across the country.
For available IT professionals, this is a tremendous boon. New career options, benefits, and compensation have all skyrocketed. The median salary for a software developer is now $110,000, compared to $86,000 in 2017.
But for employers and service providers, it can be catastrophic. Cutthroat competition for workers, stitching together teams, and absorbing extra costs to retain clients. When IT salaries jumped 10% overnight, it created an additional retention challenge. How do you retain employees when they can make more money elsewhere? And when you hire new employees making more money than existing employees that were hired a year ago, how do you prevent this from offending anyone?
All of this can cause a business to fail.
We have been fortunate at Chariot Solutions. While we are not immune to these challenges and have had to deal with staffing shortages like everyone else, our history of remote work and updated hiring/retention policies have helped us succeed in this most difficult time. We still need more people to meet demand, but at least we are managing to grow – albeit at a slower pace than we’d like.
We have increased our compensation offers to new recruits/employees to match the market. To make things right, we have implemented a plan to accelerate salary increases for those hired in the years before the pandemic, to quickly get them up as well. This means giving unexpected, unplanned raises to many existing employees. A move like this can be difficult, but not nearly as tough as losing great employees.
Our standard rates for new business have gone up accordingly. Unfortunately, we are not able to increase our rates to existing clients at the same pace as our costs are inflated. It’s just not feasible, so we will have to accept significantly less profit for a period of time, until our rates catch up or the cycle changes once again. Fortunately, how much profit we make is not the most important thing to any of us at Chariot.
Our philosophy has always been to provide great service at reasonable rates. By treating our employees like the superstars they are, we have been able to do that while maintaining outstanding track records and relationships with clients.
In summary, providing a superior workplace culture and benefits package have enabled us to thrive as a business even amidst external crises. Hopefully this strategy will be helpful to other service or technology businesses facing similar challenges.