Organizations need to address IT talent challenges now or face talent crisis when economy strengthens

Toronto, December 8, 2009 — In response to the most challenging economic conditions since the 1930s, many organizations have been forced to take drastic actions to streamline their IT workforces and keep IT labour costs in check. Yet according to new research from Deloitte, many organizations continue to face talent shortages in critical areas — even in the midst of hiring freezes and layoffs — and these shortages are expected to reach critical levels as the economy becomes more robust.

The findings are the result of a global survey of 306 IT and business leaders conducted by Deloitte and CIO Magazine to understand the latest trends and challenges in IT talent and what organizations are currently doing to address them. One hundred respondents from North America, including 30 from Canada, took part in the survey.

Key findings of the survey include:

• 51% of survey respondents strongly believe talent issues have limited their organization’s productivity and efficiency
• Half of the respondents say the talent shortage is limiting their ability to innovate, which is the core benefit that technology brings to a business
• Significant numbers of respondents indicate that IT talent issues are having a material impact on other key dimensions of business success – growth (58%), speed to market (54%), quality (53%) and customer relationships (53%)
• The majority of IT respondents expect to expand their workforces over the next three to five years. Nearly half of the respondents (47%) expect to see at least 5% annual growth in the IT workforce over that period – even as the pool of experienced and qualified IT workers in many countries gets smaller

“The IT talent crisis is not a new phenomenon. But when the economy turns around, it will likely worsen as companies scramble to rebuild their workforces and position themselves for growth,” says Heather Stockton, partner in Deloitte’s Human Capital practice. “The crisis will be further heightened as a strengthened economy will lead top talent to seek new opportunities unless their existing organizations meet their demands for personal development, challenge, pay, career succession, and in many cases, mobility.”

Managing talent in a recovery
While the global recession has temporarily eased concerns about the talent crisis, most surveyed leaders say the challenges persist and many key roles are still difficult to fill. In fact, the challenges are becoming more acute as the IT workforce continues to evolve into one that has many different types of people —employees, contractors, outsourced resources and offshore resources — who all need to work together efficiently and effectively to satisfy business needs. To address both short- and long-term IT talent challenges, organizations need improved IT talent strategies (particularly an increased focus on executing talent programs and strong leadership from IT), along with increased collaboration with the human resources function and talent leaders to ensure the strategies are successfully implemented.

Here are some practical things Canadian organizations can consider to help them manage the IT talent gap and enhance their talent strategies and program execution:

• Take care of top performers and critical IT workforce segments. Communicate one-on-one with these employees, as they are attractive targets for the competition. Let them know you value their continued dedication in tough times and they will not be cut. Pre-empt competitive offers by providing them with valuable development opportunities that are worth more than money.
• Hold managers accountable for retention. Make IT leaders and managers explicitly responsible for retention. Tying managers’ performance and compensation to retention can give them a real incentive to keep their employees both productive and happy, and not focus solely on short-term financial performance.
• Offer an engaging career path. Make sure there is a clear career path for IT employees and invest the time to send the formal and informal messages necessary to keep them secure and happy. Although outsourcing or resource supplementation may be necessary during these tough economic times, be aware of the impact of outsourcing on retained employees’ morale.
• Do not kill survivors by drowning them with extra work. After layoffs, do not pile all of the old work on the few people who were lucky enough to keep their jobs. Accept the fact that some of the old work simply will not get done and make sure employees get the training they need to succeed with their new responsibilities.
• Be careful about cutting compensation. Think carefully about your company’s culture and how your people are likely to react before introducing across-the-board pay cuts. Employees in organizations that rely on contributions from people at every level tend to favour a shared approach to the pain of cost-cutting, but employees in organizations that emphasize individual performance might actually prefer layoffs.
• Find smarter ways to develop people. Instead of cancelling all development programs, which can undermine your organization’s long-term competitiveness, consider shifting to less expensive approaches — such as knowledge sharing, job rotations, special assignments, communities of practice and web-based learning. Programs like these keep people learning and growing without breaking the bank.
• Tell the truth. If you tiptoe around the truth, people will spend their time speculating and worrying about what is really going on, and your best people will start formulating exit strategies and contingency plans.

About the survey
Deloitte, in collaboration with CIO Magazine, conducted a global survey of 306 IT decision-makers and executive business managers at companies with revenues of US$500 million or more. Additional insights were obtained through personal interviews with selected respondents. The U.S. version of the survey (70 respondents) was completed among qualified members of the CIO Magazine audience. The Canadian (30 respondents), European, and Asia-Pacific versions of the survey were completed among an international panel of IT and business professionals. In addition, Deloitte conducted the survey among select companies in South Africa. The survey was conducted between March 17, 2009 and April 1, 2009. For a copy of the global report, and for the latest information about talent strategies, innovative talent and work solutions, please visit Deloitte's Human Capital website.

About Deloitte
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services through more than 7,700 people in 57 offices. Deloitte operates in Québec as Samson Bélair/Deloitte & Touche s.e.n.c.r.l. Deloitte & Touche LLP, an Ontario Limited Liability Partnership, is the Canadian member firm of Deloitte Touche Tohmatsu. Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

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