The past few years have been really challenging for tech hiring. The rapid evolution of technology and digital transformation have intensified the demand for specialized skills, while mismatches between traditional education and employer needs have contributed to persistent software developer shortage. Additionally, the rise of remote work has expanded the talent pool but has also made it challenging for companies to identify and attract top talent amidst increased competition from both local and global players.
According to current estimates, the global talent shortage already amounts to 40 million skilled workers worldwide. By 2030 this shortfall could double in size, potentially approaching 85 million unfilled roles.
Whether it's the commitment to sustainability of the Nordic countries, Japan's advancements in robotics, Israel's prowess in cybersecurity, or the diverse tech landscape of the United States, the demand for skilled individuals all over the world is outpacing the available talent pool, necessitating strategic approaches to talent acquisition and retention.
The State of Software Developer Shortage in the US
Despite being the world’s leading startup hotspot, the United States struggles with huge shortages of skilled IT talent. The main reason for this is that 90% of all operations in an average organization are supported by software, so there is a lack of tech experts ready to deliver quality services.
Computer and mathematical occupations account for 5 million jobs nationally, representing 3.4% of total US employment. Over one-quarter of these technology-focused roles – 1.3 million specifically – fall under the computer systems design and related services industry. Other major sectors housing substantial numbers of computer and mathematical positions include management of companies and enterprises (331,220 jobs), software publishing (286,760 jobs), and employment services (190,030 jobs).
These industries collectively take up a sizable share of the country's current tech talent pool. However, as digitization continues to accelerate across diverse sectors such as manufacturing, healthcare, education, and more, virtually every economic domain now faces a significant disparity between the number of open tech positions and the availability of qualified candidates.
|Current number of jobs
Projected number of job openings a year
Software Developers, Quality Assurance Analysts, and Testers
Computer and Information Research Scientists
Computer Network Architects
Computer Support Specialists
Computer Systems Analysts
Database Administrators and Architects
Information Security Analysts
Network and Computer Systems Administrators
Web Developers and Digital Designers
The latest labor statistics bring major concerns about the talent shortage. The number of unfilled tech jobs is soaring to a staggering 1.4 million. With 344K new vacancies projected to open annually, the skills gap is going to become a persistent issue over the next decade.
The software developer shortage already places the US economy at risk of an unrealized output of $162 billion. This figure represents not only a financial setback; it's a stark reminder of the critical role that tech talent plays in driving innovation, productivity, and sustainable growth. Business development and digital transformation are impossible without new talent, which intensifies the gap between tech talent supply and demand.
The US Tech Talent Shortage Statistics
The demand for technology professionals across nearly every industry is projected to rapidly outpace supply over the next decade. Quantifying current and anticipated talent shortfalls within America's STEM workforce reveals the depth of the digitization-driven skills crisis.
- The Bureau of Labor Statistics indicates that by 2026, the shortage of developers in the US will exceed 1.2 million. Additionally, 545K of the current software engineering workforce will have left the market by that time. (BLS)
- The USA is facing some of the world’s greatest year-over-year skills gap increases. Between 66% and 90% of US employers struggle to find the skills they need, with tech positions being among the top 10 hardest roles to fill. (ManpowerGroup)
Global Talent Shortage || Source: ManpowerGroup
- Only about half of people who majored in engineering (52%) or computer, mathematics, and statistics (51%) pursued a career in STEM. (Census.gov)
- Unable to fill tech vacancies, employers shuffle off additional duties to current employees, which leads to burnout and has a negative impact on business development. Over 30% of respondents surveyed admit that this issue accelerates staff turnover. (Indeed)
- Over the next decade, the number of STEM jobs will grow by 10.8%, with positions in computing, engineering, and advanced manufacturing leading the way. Software developers, quality assurance analysts, and testers are projected to experience a 25% increase in employment opportunities from 2022 to 2032, representing the highest rate of job growth among all occupational groups. (BLS)
- The American tech sector has a staff turnover rate of 13.2%, which is the highest attrition index among all industries. This not only sets back the development of the IT market but also imposes replacement costs on employers with the expense of backfilling a vacant role ranging from 50% to 250% of the departed worker's salary. (Visual Capitalist).
- The overwhelming skills shortage has resulted in an increase in software developer compensation and transformed IT into the highest-paying industry. The average salary of computer programmers in the US is $122K a year, which is twice as much as the national median wage. (Glassdoor)
- Software companies are forced to sacrifice their demands in pursuit of closing the IT talent gap: only 29.4% of candidates for software architect positions and 39.6% for DevOps job openings fully meet employers’ requirements. With over 50% of businesses hiring tech employees despite the mismatch between requirements and actual skills, the quality of products and services provided decreases.
- It may seem that only regions with substantial tech sector presence, like Silicon Valley, face talent gaps. However, 4 out of 5 top tech giants in the US are headquartered outside the Valley, which validates that the engineer shortage spans the entire country rather than being concentrated in major tech hubs. (ArcGIS)
The US tech industry ecosystem
Solving the Talent Shortage in the US: Exploring Weak Areas and Potential Solutions
Challenge #1: Poor Computer Science Education
The primary reason for the scarcity of software engineering talent to fill crucial roles in the nation's tech sector stems largely from the educational system's failure to provide ample paths for enough Americans to pursue degrees in computing fields.
Only 13.2% of schools in the US offer advanced placement computer science courses. Moreover, 2 out of 10 instructors admit their students receive no computer science training at all. The primary factors contributing to poor computer science education in primary schools are the lack of foundational CS curriculum frameworks and insufficient funding.
Higher education also faces persistent barriers in preparing students for future technology careers, including outdated technologies, overcrowded classes, and faculty shortages. Despite 77% of all jobs in the coming decade requiring proficiency in technical skills, the supply of computer science grads continues to lag. Even with enrollment expansions, colleges and universities nationwide are struggling to generate enough specialists with up-to-date coding, engineering, and analytics expertise to satisfy the needs of the 21st-century digital economy.
Unless systemic issues within educational training programs are tackled – via modernized learning materials, enhanced support resources for instructors, and growing the qualified teacher workforce – the tech talent shortage will result in a widening skills gap across all crucial industries.
The situation can be improved by increasing both governmental and private sector funding and launching initiatives aimed at capacity-building and access expansion. Microsoft serves as one example of private commitment toward addressing these challenges. The tech giant has a dedicated program that has already helped to train over 200K teachers, broadened course availability across 29 states, and boosted female engagement in STEM studies.
Challenge #2: Over-the-Top Requirements to Candidates
Employers prefer to hire accomplished software engineers with broad expertise across various industry domains and programming languages. However, in hopes of finding ideal candidates, companies often tend to list inflated or excessive competency demands.
Though proficiency in artificial intelligence, machine learning, and data science represent some of the most in-demand software development skills, it’s next to impossible to find professionals with high enough qualifications on the US tech job market. Yet, talented developers can still integrate sophisticated data-driven features into products without pre-packaged PhDs in these advanced domains.
Tech companies should introduce more flexibility, expanding their recruitment outreach. Businesses can gain value by considering candidates who meet core competency bars and are capable of quickly upskilling in emerging technologies. Broadening the criteria for hiring beyond the search for the ideal coding professional empowers US tech firms to tap into a pool of highly capable existing talent.
Challenge #3: Limited In-Service Training
Enterprises provide insufficient training, which encourages employees to find external sources for professional development. Given the ever-changing market demands and emerging technology trends, failing to continually re-skill talent puts companies at risk of losing technical talent – with at least 25% of most organizations' roles vulnerable to disruption as key capabilities fall behind. According to McKinsey, businesses working in financial services, high tech, and telecom are poised to undergo the most transformative level of role evolution.
Talent shortage by industry || Source: McKinsey
Innovations prompt the need for new internal functions, skills, and models at scale. Employers can solve the skills gap problem by keeping up with the general tech development trends and providing employees with relevant training and reskilling programs. Staff should feel they have room for professional growth within their company as well as the opportunity to build new marketable skills.
Challenge #4: Excessive Salary Expectations
Excessive salary expectations make it difficult to fill open positions, slowing down the hiring process and elongating vacancy gaps. Trying to meet inflated salary demands can strain labor costs, while rejecting such conditions may lead candidates to accept better-matched offers elsewhere. This dilemma puts employers in a tough spot as they try to attract talent while balancing their budgets amid workforce scarcity.
In order to solve the talent shortage gap, employers can expand their search radius and hire developers from other countries. Many companies have been looking for technical talent in the CEE, a region with a large number of experienced developers at a better price.
US Tech Talent Shortage Experiences
We’ve communicated with several C-level executives based in the US and found that all of them face difficulties when searching for software developers. Here are some of their comments on the programming job market and the growing software developer shortage gap in the US.
“The job market is definitely the biggest challenge. The demand for developers has grown significantly over the past few years and competition in Boulder/Denver has become really high. Companies need to have a great package on offer to get the attention of potential candidates. 401(k), unlimited time off, full health benefits, etc. are a dime a dozen these days."
Co-Founder and COO at PasswordPing
“It’s always difficult to find skilled software engineers. They’re located in San Francisco and Los Angeles for the most part. That said, SF is the most competitive place because engineers can pick and choose between so many incredible companies.”
Director of Growth at Open Listings
“It’s very hard to find talent that is affordable for building apps for my level of clients. I ended up hiring freelance people — this way you get someone who is really excited about your project at the beginning, starts building it, and then sort of fades away. One day I said, “Let’s look at some of these companies that help you hire IT specialists and create a remote team for you.” We hired Tetiana, and everything changed. Tetiana came into a big mess, but she straightened it all out, and put it all together.”
globalHMA/Workhorse Development Owner
Worldwide market and technology trends are the main factors affecting the rising global shortage of skilled developers. According to a recent survey, 87% of organizations are already experiencing a talent gap or are expecting to face it within a few years.
Most organizations are already trying to address the talent problem. It can be done both internally, by prioritizing reskilling programs and responding to employee desires for career growth opportunities amidst the Great Resignation shifts, as well as externally, by broadening recruitment radiuses to access wider talent pools.
The number one recommendation for organizations struggling to secure skilled talent would be to rethink their hiring and retention strategy, which covers everything from compensation packages to in-house training opportunities. Up-to-date learning opportunities will help employees upgrade their skills and adequately respond to the many challenges a modern tech industry presents.
Hiring developers as contractors and freelancers is the most widely used tactic to bypass domestic hiring difficulties. Given the wide array of communication and management tools available today, you can establish cooperation with software engineers in any part of the world and feel no difference between remote and local cooperation.
It’s true that offshore product development requires thorough planning and prior research. The best way to avoid all the pitfalls and ensure a smooth integration of your in-house and remote development teams is to establish cooperation with a reliable tech partner, like Grid Dynamics.
We bring over 15 years of experience in helping companies accelerate their product development initiatives when they lack specialized skills or capacity internally. We have engineering centers in the United States, Central and Eastern Europe, Mexico, and India. This allows us to utilize a "follow-the-sun" delivery model, ensuring 24-hour productivity by handing off projects between teams across time zones.
Over the years, we have developed a well-rounded service system to enhance our clients’ growth and help them utilize market opportunities to the fullest extent. We provide the most resilient pathways toward bridging your present needs and future-proofing your business development through the following services:
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