7 Reasons Why Companies Struggle To Retain Tech Talent
Every year, countless job openings are posted for software developers. While many organizations manage to find candidates who perfectly match their job criteria, others often have to settle for what they can find. One of the primary reasons for this is the ongoing competition for top tech talent between large enterprises and mid-sized organizations. Finding the right tech talent is challenging, but retaining this talent has proven to be even more difficult.
According to a recent survey, 79% of developers are open to new opportunities. At the slightest chance, software developers are ready to switch jobs, roles, and organizations, even despite the significant layoffs that have shaken the technology industry.
A report from McKinsey shows that about 80% of CEOs are prioritizing innovation. This means that tech leaders are focused on adopting emerging technologies and need tech talents who possess the right skills to bring their vision to life.
However, the shortage of software engineers may be a hindrance to fast software delivery among Software as a Service (SaaS) companies and other businesses. In fact, the United States Bureau of Labor Statistics reports more than 153,900 job openings across different tech roles, such as quality assurance, software developers, and many others. The primary question is how tech leaders can retain their top tech talent and reduce developer turnover to ensure the smooth progress of software projects and increased speed to market.
By the end of this article, you will fully understand the reasons companies are constantly battling to keep their high-performing talents and software developers.
Is There Still a Developer Talent Shortage in 2024?
The simple answer is yes. Though there have been massive layoffs since 2023, with over 240,000 tech workers losing their jobs, there is still a talent shortage in the tech industry. As of the time of writing, the term "software developers" lists over 142,000 job openings in the United States, as shown on LinkedIn. This number does not include searches for specific terms such as artificial intelligence engineers, DevOps engineers, or even entry-level software developers.
Undeniably, companies still need tech talent to drive new initiatives, especially with high customer expectations and the growth of artificial intelligence. About 64% of IT executives believe that the tech talent shortage is a hindrance to the rapid adoption of emerging technologies. By 2030, if not addressed, there will be a global talent shortage of 85 million people, potentially leading to a loss of $8.5 trillion.
Beyond the lack of qualified talents, there is the issue of retention. Over 90% of employers highlighted retaining talent as a major challenge in a Deloitte survey. With retention in mind, tech industry leaders also grapple with finding people with the necessary technical skills to fit into their work culture. The implications of this include increased costs of software development, slower speed to market, project delays, and failures. In many cases, other staff members try to compensate for the talent shortage by taking on duties outside of their scope of work and requirements, leading to burnout, high turnover, and a negative impact on business growth.
Why Are Companies Struggling To Retain Tech Talent?
Businesses must prioritize retention to achieve improved software development speed, growth, and efficiency. Adopting a strategic approach to retain top tech talent is crucial for encouraging productivity and enabling software developers to perform at their best. However, the first step is to identify the primary causes and implement strategies to avoid losing the right tech talent. In this section, we explore the primary reasons why retention might be proving difficult.
Highly Competitive Market & Industry
As the technology industry continues to experience rapid growth, more companies will need developers with technical experiences that match the job requirements. With this, companies are competing for the few experienced professionals with these skills. This situation is favorable for tech experts looking to advance their careers, as it allows them to move from one role to another. However, this is disadvantageous to employers and leads to project delays and lengthy recruitment times. The talent pool is limited, and the competition makes it challenging for most companies to offer the most attractive packages and opportunities.
Bad Work Culture and Environment
The environment and culture of a workplace play a crucial role in the retention of employees. Tech talents are increasingly demanding a better work-life balance. The Covid-19 pandemic and the subsequent Great Resignation shed more light on the needs of employees. Many sought better working conditions and higher pay. The pandemic-induced shift to remote work also led workers to value flexibility. Forbes reports that employees who worked remotely 100% of the time were 20% happier than those who didn't have that flexibility. Another report showed that people who worked from home experienced a 77% increase in their productivity. Companies whose work culture has not accommodated the needs of workers are likely to suffer from high employee turnover.
Innovation and Technological Growth
Emerging technologies such as artificial intelligence, machine learning, and cloud computing are revolutionizing the industry. Workers are drawn to companies that create new learning and growth opportunities. Is your company scaling up and fostering new growth opportunities for existing employees? These are some of the key areas that workers consider in terms of career advancement. When employees sense slow growth or feel stuck, it can negatively impact their motivation and satisfaction.
Poor Management and Leadership
A company's management and leadership set the tone for how software projects are done and handled. Effective management communicates the vision, policy, and process to the entire team, ensuring that everyone understands how their role impacts the organization. The common phrase, 'People don’t quit companies, they quit bosses,' has proven to be true over the years. About 84% of U.S. workers say that bad managers are the major cause of stress and unnecessary work. Hence, managers and leadership play a crucial role in retaining top tech talent. Questions such as: 'What does success look like for this role?', 'What are the growth opportunities for this role?', 'Who does this role report to, and why?', and 'How does this role contribute to the business?' can help employees feel included and valued. However, oftentimes, management and leadership are so focused on other business objectives that they neglect the little details that add value to the tech talent, frequently leading to high employee turnover.
The tech industry is fiercely competitive, with various companies offering highly attractive packages that include benefits such as 401k plans, comprehensive insurance (including vision and dental), as well as hybrid and flexible work environments, advanced tech setups, and more. However, not all companies can match this level of competition and offer such substantial compensation packages. This disparity often leads to a scenario where employees, being aware of better benefits available elsewhere, are tempted to move to organizations that can provide these more lucrative offerings.
Many tech companies have expanded their benefits to include educational bonuses, wellness programs, and stock options to bolster the growth of software developers. Companies that fail to keep up with industry standards in terms of compensation and benefits risk falling behind in retaining tech talent.
Ineffective Communication and Feedback Mechanisms
In the tech industry, clear and consistent communication is key to keeping team members aligned and engaged. A lack of effective communication channels can lead to misunderstandings, decreased morale, and a feeling of disconnection from the company's goals and vision. Regular feedback sessions and peer-to-peer reviews are essential to assess each person's work and role. This is important not only for career growth but also for job satisfaction. Many companies shy away from feedback sessions, focusing more on switching between various projects to launch them to the market. However, the workers who dedicate their time to these projects would greatly appreciate hearing from both direct and indirect managers about their performance so far. This can make them feel valued and recognized in the organization.
Lack of Diversity and Inclusion
Diversity and inclusion in the workplace are increasingly important to tech professionals. A lack of diversity in teams and leadership can lead to a narrow perspective on projects and decision-making, which is especially detrimental in a field that thrives on innovation and creativity. An inclusive culture that respects and values different backgrounds, experiences, and viewpoints is essential in attracting and retaining a diverse talent pool. Employees are more likely to stay with a company where they feel included, respected, and where there are equal opportunities for everyone, regardless of their background.
What happens next?
Tech industry leaders will need the right, effective strategies to help reduce tech talent turnover in their organizations. Realistically, developers are still hard to find, and the software developer shortage persists. From the data, it appears this shortage might not be going away anytime soon, particularly with the Great Resignation continuing to impact the industry. In light of this, companies will need to seek other alternatives and use tools and technology to their advantage. An ideal solution would be to hire third-party staff augmentation and software outsourcing vendors that can help improve the speed of projects and ensure continuous development without hitches. By considering outsourcing developer roles, you gain access to a global talent pool and have software developers available on demand, either for specific projects or on a full-time basis.