Creating a high-performance technology function has become an urgent priority for business leaders across the C-suite, not just for IT leaders. Tech talent is now crucial for driving not only operational efficiency but also business strategy and top-line performance. Industries that once viewed tech talent as supportive now recognize its vital role in growth, further heightening demand for this critical workforce segment.

Over the next decade, the US tech workforce is expected to grow at twice the rate of the overall US workforce. Estimates suggest tech jobs will increase from six million in 2023 to 7.1 million by 2034. Despite notable layoffs in the tech sector in 2023, the unemployment rate for tech workers remains significantly lower than the general workforce rate.

This escalating demand for tech talent across industries has created a highly competitive job market. Technology vendors are hiring tech talent more rapidly than end-user organizations, complicating hiring strategies. A recent survey revealed that 70% of technical workers had multiple job offers when they accepted their current positions. This demand is further intensified by evolving key tech skills. For instance, job postings requiring generative AI skills in the US surged by over 1,800%. Meanwhile, previously essential skills are becoming obsolete. A Harvard Business Review study found that some tech skills have a half-life as short as 2.5 years, a span that might shrink even more due to advances in AI.

The tech talent shortage is creating a vicious cycle for many organizations. While there's a clear need for talent with future-oriented skills, many organizations struggle to address immediate challenges. As a result, teams often take shortcuts in software development and focus on maintaining legacy systems instead of fostering growth. This cycle makes it increasingly difficult for organizations to fulfill their long-term commitments, forcing their talent to concentrate on current issues rather than future innovation. Organizations end up constantly reprioritizing to meet tech-enabled growth promises, perpetuating an endless cycle of catch-up.

As tech talent becomes increasingly critical to business performance, addressing these challenges is more urgent than ever. To gain and maintain an advantage, organizations should adopt continuous tech talent planning and embed change proficiency into their organizational DNA. To tackle the tech talent shortage, organizations should recognize the diverse skills workers bring beyond their formal roles, leverage the talent ecosystem, create flexible teaming and deployment strategies, and foster a culture that prioritizes adaptability to meet business needs.

Four Imperatives for Driving Tech Talent Transformation

To navigate the tech talent shortage, organizations may need to shift from a traditional, fixed model of tech talent management to a dynamic model that enables flexibility and responsiveness to evolving tech talent needs. Here are four transformational imperatives for gaining a competitive edge in the tech talent landscape:

1. Recognize the Full Spectrum of Talent and Skills: Appreciate the diverse capabilities employees bring beyond their job titles.

2. Leverage the Talent Ecosystem: Utilize external and internal talent pools to address various needs.

3. Adopt Flexible Teaming and Deployment Approaches: Implement strategies that allow for agile and adaptable team structures.

4. Cultivate a Culture of Adaptability: Foster an environment that emphasizes continuous learning and adaptability to meet evolving business demands.

### Continuous Planning for Tech Talent

Traditional Approach: Hire tech talent annually to serve IT and related functions.

Transformational Imperative: Continuously plan to meet tech talent needs across the entire organization.

A Harvard Business Review study reveals that effective workforce planning can boost productivity by 10% and cut labor costs by 25% over five years. This is crucial for critical workforce segments that drive business priorities and executive commitments. Using predictive modeling and AI, organizations can analyze historical data alongside market trends to forecast and facilitate ongoing workforce planning. For instance, Google integrates workforce data with external market trends to plan for both short-term talent needs and long-term growth, helping to predict skill gaps and staffing needs and align talent strategy with strategic objectives.

Effective and continuous workforce planning for tech talent enables organizations to anticipate and adapt to shifting market dynamics. Despite high-profile tech sector layoffs in 2023, a Deloitte survey found that nearly 90% of tech industry leaders still viewed recruiting and retaining tech talent as a significant issue, surpassing challenges related to innovation, productivity, and technology integration. Executives reported difficulties in hiring workers with critical IT skills in areas such as security, machine learning, and software architecture, leading to project delays due to a shortage of appropriately skilled talent.

Given the critical role of tech talent, organizations should prioritize tech talent planning, recognizing it as a central workforce segment. It's essential to distinguish between roles that require specialized tech skills and those that can be managed by more general, flexible tech talent.

For organizations with a global presence, tech talent planning should span geographies and delivery models to ensure effective and efficient collaboration within the global workforce. Establishing global capability centers allows organizations to leverage overseas tech talent while driving growth, innovation, and operational excellence worldwide.

As the demand for tech talent grows and the market for skills becomes more dynamic, planning needs will become increasingly complex. Emerging technologies in AI, cloud, and edge computing are reshaping the skills required for tech roles, extending these roles beyond traditional IT functions. The C-suite is also becoming more technical, with a Deloitte analysis indicating a significant rise in demand for technical skills in historically non-technical roles such as chief human resources officer and chief sales officer over the past five years.

Looking forward, generative AI (gen AI) will add complexity to tech skill planning while offering flexible skill development opportunities. The advent of gen AI will likely necessitate specialized tech skills that require continuous, proactive workforce planning. It also broadens the definition of tech talent and suggests new strategies for integrating business functions. As one human capital specialist noted, “We’ve traditionally viewed tech talent as centralized within IT or under the CIO. With low-code and no-code platforms, technology responsibilities will increasingly shift to business users, necessitating a fundamentally different approach to tech talent planning.”

Developing both technical skills and human capabilities:

Traditional approach: Emphasize the acquisition and development of technical skills.

Transformational imperative: Create experiences for workers to uncover hidden skills and develop both new technical skills and enduring capabilities.

The rapid obsolescence of skills, especially technical ones, explains why respondents in Deloitte’s 2024 Global Human Capital Trends research reported spending about 50% more time learning new skills compared to the previous year.

In an era of rapid technological advancement, organizations should prioritize skills over static job roles to create new talent models. Companies that adopt a skills-based approach are 63% more likely to achieve business outcomes than those that do not. This approach involves collecting and analyzing data on traditional skills, including technical and business skills, to better quantify and understand the organization’s capabilities.

A skills-based approach is particularly beneficial for tech talent, allowing organizations to swiftly redeploy internal talent to address skill gaps and urgent needs. Workers often possess skills beyond their job descriptions, and long-tenured tech workers may have developed relevant skills that go unnoticed. These skills can be identified through open-source platforms, hackathons, external certifications, and by analyzing work-related data from digital applications, smart sensors, wearables, and communication tools. This enables organizations to gain a deeper understanding of their workers' tech skills and capabilities, identify hidden talents, expand responsibilities, and quickly address urgent needs using existing tech talent.

Tech leaders can identify "unicorns"—employees with cross-disciplinary expertise—through such analysis. They can also pinpoint workers suited for new projects based on past performance, connections, and team collaborations. This approach supports the integration of business, technical, and customer experience skills, fostering tech talent that can address customer interests and business needs comprehensively.

Deloitte’s 2023 Global Technology Leadership Study reveals that tech leaders increasingly value human capabilities in tech talent development. They rank leadership, problem-solving, relationship skills, and creativity as critical, with only one of the top five skills being primarily technical.

However, there is a significant gap between recognizing the importance of human capabilities and acting on it. Deloitte’s 2024 Global Human Capital Trends research indicates that while 73% of respondents believe it is crucial to align human capabilities with technological innovation, only 9% report progress in this area.

Ultimately, skills are often acquired through experiences. Leaders can address tech skills shortages by creating opportunities for experiential learning, pairing continuous workforce planning with a skills-based approach to develop long-term plans for skill-building. Organizations can intentionally create developmental experiences for tech talent through agile teams rather than waiting for specific roles to emerge. Participation in open-source communities is another way to accelerate learning, with 35% of developers in one survey stating that such projects helped them acquire new work-related skills.

Alternatively, organizations can use digital playgrounds to provide safe spaces for workers to experiment, co-create, and explore new skills. For example, Coldwell Banker Richard Ellis created an internal sandbox environment where employees could use a generative AI model to query real estate data, attracting over 3,000 users who utilized it for tasks ranging from writing code to generating marketing data responses.

Embracing an ecosystem approach involves a shift in how organizations manage and deploy talent. Traditionally, the focus has been on hiring and training full-time employees to cover all necessary skills. However, there is a growing recognition of the need to expand beyond this approach by integrating various types of external talent into a broader ecosystem.

According to a recent survey by Deloitte, 87% of executives now include gig workers, long-term contractors, and other non-traditional employees in their workforce strategies. Despite this trend, many organizations face challenges, including divided responsibilities between human resources and vendor relationship leaders, in effectively engaging this diverse talent pool.

A workforce ecosystem encompasses not only full-time staff but also external partners such as professional service firms, contractors, and freelancers who can be engaged as required. This model offers flexibility, particularly in fields like AI and cybersecurity, where specialized expertise may be needed on a short-term or hourly basis rather than through traditional contracts.

For example, a US-based data services company collaborates with external partners to flexibly source contract workers based on shifting priorities related to advanced AI technologies. Similarly, a cybersecurity firm employs flexible talent models to meet evolving technological demands, using contracted experts to enhance digital security measures continuously.

While leveraging external talent ecosystems can enhance flexibility and technical capabilities, it also requires careful management to ensure alignment with strategic objectives. Collaboration between HR and procurement is crucial to effectively manage this hybrid workforce model. Organizations often leverage external vendors to initiate, stabilize, and eventually integrate new tech processes, highlighting the importance of strategic collaboration in managing talent transitions.

Managing this diverse talent ecosystem involves multiple strategies, such as aligning deployment models with broader organizational goals and integrating technological and human capabilities to optimize outcomes. It also requires bridging potential divides between traditional full-time employees and external talent, emphasizing shared values and effective management practices across all workforce segments.

In essence, adopting an ecosystem approach necessitates a holistic effort to integrate external talent seamlessly, enhance security measures, and align technical expertise with strategic imperatives. This approach not only expands access to specialized skills but also supports agile responses to changing business needs, ultimately driving innovation and efficiency across the organization.

Customizing experiences and fostering microcultures

The conventional approach: Assimilating tech talent into the existing organizational culture.

The transformative necessity: Enhancing tech talent retention and growth by prioritizing personalized experiences and fostering microcultures.

Given the unique needs of tech professionals, it is crucial for Chief Intelligence Officers and Chief Human Resources Officers to collaborate closely. Effective talent acquisition strategies, competitive total rewards, career development opportunities, and targeted performance management are essential for engaging tech talent and building a vibrant organizational culture.

An organization's culture typically consists of two main elements: shared values that are consistent across the organization and lived behaviors—actions and workstyles that can vary between teams. Recent research underscores the recognition among executives of the importance of these diverse workstyles. For example, according to Deloitte's 2024 Global Human Capital Trends report, 50% of executives believe that an organization's culture thrives best with a moderate degree of variation, although cultivating such "microcultures" can be challenging. The same research highlights that the absence of a distinct tech microculture is a primary reason why organizations struggle to attract and retain top tech talent.

Given the pivotal role of tech talent in driving innovation and disruption, embracing change and flexibility is fundamental to fostering a tech talent microculture. Companies can enhance innovation and appeal to engineering talent by reducing hierarchical structures, granting engineers greater autonomy, and empowering them to tackle problems from the ground up rather than solely following top-down directives. This approach mirrors how Capital One Financial Corporation collaborates with its engineering talent, emphasizing on-demand learning opportunities and a collaborative problem-solving approach. This collaborative culture facilitates faster issue resolution, knowledge sharing, and skill development among individual contributors.

To strengthen the microculture for tech talent, organizations can adopt tailored career development approaches. Many tech professionals aspire to advance their technical skills and take on additional technical responsibilities without necessarily assuming traditional managerial roles. Research indicates that over a third of developers are uninterested in managerial responsibilities, with some even finding them unappealing. Consequently, organizations may offer engineers rotational opportunities and special projects to further develop their skills.

While investing in career development programs is crucial, organizations should also focus on nurturing technical leaders who possess both technical prowess and effective people management skills, contributing to a broader culture of flexibility. The demand for alternative career paths in tech, coupled with the evolving technical and business landscape, underscores the rising value of middle managers who can bridge technical expertise with leadership.

Some organizations are redesigning their recruitment processes to initiate microculture development from the initial contact with potential hires. For instance, a global life sciences company emphasizes rapid decision-making, specific skills, and the unique role's value proposition when recruiting tech talent. Employing specialized tech recruiters who can expedite the hiring process is particularly vital for companies in traditional sectors looking to strengthen their talent pipelines.

Building strong interpersonal connections within teams appears especially critical to tech professionals. A recent Deloitte survey revealed that 47% of tech workers consider their colleagues a significant factor in their decision to stay in a role, compared to only 30% among the general workforce. This underscores the importance of fostering a supportive team environment to retain tech talent effectively.

The significance of diversity, equity, and inclusion in retaining tech talent is underscored by recent research. It indicates that tech workers value support not only from leaders and organizational policies but also from their colleagues. A lack of inclusion can drive tech workers, particularly those from underrepresented groups, to seek new opportunities. For instance, in a study of tech workers aged 18 to 28, half indicated they had left or considered leaving a tech job due to discomfort with the workplace culture. This trend was more pronounced among racially and ethnically diverse groups, with 53% of Asian and female respondents, 56% of Black respondents, and 58% of Hispanic or Latino respondents reporting discomfort linked to their gender, ethnicity, or socioeconomic background.

Beyond formal organizational policies, allies play a crucial role in creating a safe environment. Research suggests that allies who address noninclusive behaviors are perceived seriously and face fewer penalties. This support extends beyond individual cases, contributing to systemic improvements across the organization.

Looking ahead, as the role of tech talent expands within organizations and the demand continues to outstrip supply, leadership faces increasingly complex challenges. The transformation needed is ongoing rather than event-driven. Leaders must anticipate future tech talent needs, foster adaptability, and prepare for market shifts. Key principles include embracing complexity, integrating continuous workforce planning to meet business goals, seeking strategic partnerships to augment tech capabilities, and empowering managers to cultivate tech talent microcultures.

Ultimately, a strategic approach to tech talent transformation can yield reduced costs, enhanced innovation, and improved growth. By nurturing a resilient and adaptable workforce, organizations can effectively navigate dynamic market conditions and capitalize on emerging opportunities.