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Supply vs. Demand of Software Developers and Engineers: The Economics of the Tech Talent Shortage in 2022

The scarcity of software developers has made it more difficult than ever to find engineering expertise. We examine the facts and causes of IT talent shortages in the United States, as well as how remote hiring might assist organizations in navigating a competitive domestic market.

The scarcity of software developers has made it more difficult than ever to find expert software developers. We will examine the facts and causes of tech talent shortages in 2022 in the United States. Plus, we will discuss how remote hiring can help organizations to navigate competitive domestic markets. This problem becomes even more critical when we begin to see skill shortages in tech fields like cybersecurity that are essential to running businesses properly.

According to a report by IMF, the tech talent shortage will swell to more than 85 million tech workers by 2030, which in turn can potentially translate to lost revenue of over $8 trillion annually (Source: Korn Ferry). The United States does not produce enough IT graduates every year.

Therefore, international students continue to be the country’s main resource for tech talent. Without new talent, business development and digital transformation are not possible, widening the gap between supply and demand for tech skills.

State of the Global Talent Shortage in 2022

The software supports 90% of all operations at almost every firm, so there is a shortage of tech experts able to provide excellent services. The factors affecting the global skill shortage are the international market and technological advances. 

The US alone has seen an increase in its reliance on tech for GDP growth. However, the supply of skilled tech workers does not match this surge. Even during the COVID-19 pandemic of 2020, most sectors experienced stagnation in their outputs and productivity, but the demand for developers, engineers, and other tech professionals remained high.

The high demand is led not just by sectors like tech, media, and financial institutions. It also includes smaller companies looking to streamline their growth and build innovative products as well as services. Health and education saw a steep rise in their demand for skilled tech experts. 

These experts are not strictly constrained to programmers who code all day. There is a growing demand for software engineers, cloud computing experts, mobile app developers, cybersecurity developers, data scientists, and other areas of tech that have managed to permeate growing and established sectors alike.

Since the skill shortages in 2021, companies and institutions have resorted to offering attractive compensation packages and renting out trophy offices to entice people. In their endeavor to tackle the tech talent shortage in 2022, some companies also offered equity to attract new hires.

By 2022, there will be a shortage of 70, 000 IT or digital-related skills in Sweden alone. Meanwhile, Israel has a 15% software developer deficit. Israel is one of the top three fastest-growing digital startup nations in the world. The industries that will suffer from the skills gap and IT talent shortage include data analytics, IT, mobile, web design, etc.

There are currently just 65 potential workers for every 100 employment openings. In the pre-pandemic years, when there were about 85 unemployed candidates for every 100 job openings. This figure is far too low. Every year, however, the number of persons applying for jobs declines.

Regardless of industry, today’s skills scarcity has made it difficult to find talented labor. According to a McKinsey & Company survey, over 44% of well-known organizations predict a significant talent gap in the next five years. Unfortunately, 87 percent of these businesses are already feeling these terrible effects.

The United States Talent Shortage Statistics

According to ManpowerGroup’s US skills shortage figures, 69 percent of US companies struggled to fill positions in 2020. Tech jobs are among the top ten most difficult to fill. 

The pandemic’s global issue has had an impact on the American tech market. It accelerates the country’s digitization processes while simultaneously widening the tech talent divide. The IT talent gap continues to rise as machine learning technologies advance, and 92 percent of organizations expand their cloud workloads.

The IT industry in the United States has the highest attrition rate, at 13.2 percent. It’s one of the primary impediments to the growth of the US tech market. Furthermore, high turnover is expensive for companies since they have to pay 50–250 percent of the income for replacement.

According to the Bureau of Labor Statistics, the scarcity of engineers in the United States will reach 1.2 million by 2026, while 545K software developers will have left the market by then.

The severe developer shortage has resulted in a rise in software developer pay, transforming IT into the highest-paid industry.

The US bureau of labor statistics mentions that between 2022 and 2030, the need for software developers will increase by 22%. This figure is over 4% higher than the average career growth rate.

In addition, there will be roughly 189,200 job opportunities for software engineers in the next ten years. As a result, there’s no denying that the need for software engineers is skyrocketing.

Shifting Hiring Trends

As high-quality, local developers become increasingly scarce, companies are beginning to examine innovative approaches to hiring. Employers used to conduct technical interviews with university graduates in the past.

Businesses are beginning to accept candidates who have pursued more unorthodox pathways since there is a scarcity of professionally educated graduates. After all, why should they be bothered about their academic credentials if they exhibit that they are more than capable of doing the job?

As a result, people who re-skilled while working in other professions or attended a programming boot camp are now being evaluated for software engineering roles. Is this going to help developers bridge the gap? Certainly not straight away. 

There needs to be a change in the educational model executed by institutions to guide students. Moreover, there needs to be more learning resources for aspiring software developers.

The sector will benefit from an influx of junior software developers, who will naturally mature over the next few years. While it may be a brief reprieve, nearshoring is expected to become the norm soon as development costs continue to rise inexorably.

Causes of Software Engineer Shortage

  • A Higher Demand for Innovation Software 

Nowadays, small businesses require websites and applications to facilitate operations and consumer interactions. Even health insurance firms need software to manage enrollments and maintain all customer policies digitally.

Furthermore, the operation of many products on the market necessitates the use of specific software. As a result of the growing need for mobile-friendly apps and websites, software engineers are in high demand.

  • The Limited Life of Software Code

Companies are required to update their software regularly due to constant changes in coding standards. A code typically has a life of only a few years, and firms need the help of software developers to get a new one for a much-needed technological shift.

  • Advancements in Technology

While the epidemic may have prompted corporations to postpone investment plans for a while, they are now gradually reallocating their technology spending. This strategy is increasing the demand for software engineers in the United States and around the world.

In addition, many venture capitalists are looking to invest in companies as a result of supply chain disruptions. Different firms are convinced to hire more and more software developers as a result of this move.

  • Weak CS Education

Education is the most pivotal factor that can assist solve the skill shortage problem. At the same time, education is the country’s biggest challenge. Few students are eager to seek tech employment, as only 13.2% of schools offer AP computer and science classes. Seventy-seven percent of employment in the next ten years will demand tech abilities, and educators are already aware of this. More than 88 percent of teachers believe that computer science is essential for students’ future success.

Two out of every ten professors admit that their pupils do not receive any computer science instruction. The lack of supportive educational programs and insufficient budget are the main causes of poor CS education in primary schools.

  • Over the Top Employer Expectations

Employers prefer to recruit experienced software engineers, but this desire frequently results in overly stringent candidate standards. AI, machine learning, and data science are rapidly evolving technologies, but they are still in their early stages of development. As a result, finding experts with sufficient qualifications in the US software development job market is difficult.

  • Inexperienced in In-Service Training

Companies provide insufficient upgrade training, which motivates employees to seek professional development from outside sources. Dissatisfied personnel frequently decide to change their growth area, putting organizations in danger of losing tech expertise not only on a corporate level but also in terms of the broader tech workforce.

Weak Areas in the Software Industry

  • Mismatch of Skills between Academia and Industry

Unfortunately, many university computer science schools fail to tailor their curricula to industry needs. They fail to prepare students for the real world by not attempting to assist them in comprehending the actual application of software engineering. Most computer science departments concentrate on the theoretical parts of their disciplines and neglect to teach their students the necessary skills.

Many departments also opt to teach Scheme instead of other programming languages that fulfill industry standards. Furthermore, students are frequently not taught practically with exercises and examples that will prepare them for employment in the software business after graduation.

  • Underdeveloped Tech Apprenticeship/Internships

Unfortunately, there is a lack of tech apprenticeships in the American Education System. People who wish to take up software engineering careers are concerned about not getting enough experience. The lack of training adds to employee stress. 

Internships are available at some companies. However, they are almost always unpaid. Given that software engineering is a technical sector, a competitive starting salary is a key draw.

Many people may fail to perform well in a section of their jobs if they do not have it since apprenticeships and low-tech experience do not exist. Before landing a dream job, paid internships are essential. Software engineer internships are crucial for gaining the necessary skills and knowledge in the relevant field.

  • Unreliable Quality of Coding Bootcamps

While coding boot camps appear to be an excellent way to break into the technology industry, they frequently fail to provide adequate support for prospective students. Not all coding boot camps provide prospective software engineers with a high-quality education. Many of them provide attendees with minimal skills and expertise while charging exorbitant fees.

Because of inconsistencies in the quality of coding boot camps, only a few people can fully comprehend coding. The rest are more likely to have a theoretical or unguided experience, leaving them without the skills they came for in the first place. Unfortunately, a lack of quality in coding boot camps leads to a wider educational gap and a greater software engineer shortage.

That being said, a coding boot camp is an excellent way to learn how to become a software developer. You just have to choose the program that is the most suitable for your needs.

The Impact of the Shortage of Software Engineers

The shortage of specialized software engineers has a variety of consequences for enterprises. To begin with, the scarcity of software developers has operational consequences that affect hiring budgets and deadlines. According to a survey, hiring talent for tech professions takes 50 percent longer than hiring talent for other sectors. According to the survey, it takes an average of 66 days to locate a suitable person to fill a technical position.

Moreover, a scarcity of software developers is stifling innovation and limiting business expansion. According to research, over half of CIOs have said that a shortage of skills has made it difficult for their organizations to stay up with the latest technologies in the last five years. Furthermore, 60% of CIOs said that a skills shortage made it difficult for their organizations to stay up with their competition.

Companies may find themselves stuck when looking for the “ideal” developer. A lengthy hiring procedure can throw plans off, obstruct software rollouts and updates, and reduce customer satisfaction. All of this has an impact on companies.

It’s one of the reasons why 74% of organizations that started updating their legacy IT systems never finished them, and seven out of ten companies fail to fulfill their goals. A lack of internal expertise and knowledge can put core company functions in danger, lead to a loss of trust, and accelerate turnover in other departments due to frustration, in addition to blown timelines and cost overruns.

Hiring Challenges Faced by Employers

According to a recent poll conducted by Westmonroe in the United States, 77 percent of CEOs confront several problems during hiring because of the scarcity of programmers. Furthermore, these issues are common across the board.

Let’s talk about some obstacles that business leaders should consider when hiring a software developer for their startup.

  • Costs of Recruitment

Many business owners waste up to 40% of their time on operations that offer minimal value. An example of this is the phase of software engineer recruitment. Furthermore, filling a job vacancy within 42 days might cost a company up to $4,129. Even if you’re dealing with seasonal demand, this time range is insufficient. 

In other words, the type of commitment businesses make in the middle of the ongoing software developer talent scarcity can be overwhelming. Especially if the ROI isn’t outstanding, even after hiring a software engineer

  • Limited Availability of Software Specialists

Every IT-based company knows that filling vacancies is tough due to a lack of qualified candidates in the market. Even if you identify a suitable applicant, they may lack the requisite skill set to meet your company’s needs, objectives, and vision. Remember that the growing number of graduates who have done bachelors in computer science does not alleviate the tech skill shortage issue.

  • Higher Salary Demands

The US Bureau of Labor Statistics predicted nearly 1.4 million additional software development jobs in 2020. In the same year, we only had 400,000 new IT graduates who could fill the vacancies. This wide gap elaborates why the existing software developers and engineers will continue demanding higher salaries.

However, the software engineer salary that a business can offer on a software development job depends on the talent’s level of expertise, location, and tech stack. Nevertheless, keep in mind that retaining a full-time developer will cost you more than remote software developers.

  • Strict Hiring Competition

Did you know that 75% of potential candidates that HR managers encounter don’t bother to give that extra push when negotiating employment offers? Most of these candidates are already offered multiple jobs, with added benefits such as better salaries, a working environment, and general compensation schedules.

Companies and enterprises are facing issues in hiring software developers. Outside, every company, big or small, is looking for the perfect software engineer. That means you’ll need to improve your perks to attract the best software developers.

  • Ukraine – The Tech Hub of Eastern Europe

When compared with the United States, Ukraine is experiencing exceptional growth in its tech workforce. There are already 200K software developers on the market, with 36K new tech graduates added each year. You can locate software experts who specialize in popular programming languages  (Java, JavaScript, C#, PHP, etc.) or add a rarer stack (Ruby, Go, Scala, C, etc.) to your projects using the Ukrainian tech talent pool.

The programming job market in Ukraine is quickly expanding—the outsourcing market grew by 20% in 2017 and is predicted to reach $8 billion by 2025.

Ukraine boasts:

  • 4000 tech firms
  • International firms/MNCs have 110+ R&D centers.
  • Events for IT professionals, investors, and startups are held every year

A large pool of technical expertise, a convenient location, and a good business climate all entice multinational business owners to establish development teams in Ukraine. Offshore collaboration necessitates meticulous preparation and study.

  • The Great Resignation

According to the Bureau of Labor Statistics, about 4 million people left their jobs in July 2021. In addition, April saw a surge in resignations, resulting in 10.9 million job openings in July. These startling figures paint an alarming picture of a trend that will continue in 2022.

In the tech business, resignations are also at an all-time high. The percentage grew by 4.5 percent in comparison to 2020, according to the US Bureau of Labor Statistics. One of the main reasons for this is that tech-related occupations necessitate a lot of work experience, which leads to burnout and excessive workloads.

More people plan to quit their employment in 2022, according to some expert projections. According to them, 1 in 4 workers plans on quitting in 2022, as Great Resignation continues.

This tendency is likely to persist for a variety of reasons. Here are a few examples:

  • People have had enough time since the outbreak to reconsider their job choices and assess their long-term aspirations in light of their present work/life balance.
  • One of the most common reasons for leaving a job is discontent with low compensation, a lack of work-life balance, and poor treatment by employers.
  • Women are frequently compelled to make rash decisions and retire from their careers due to a shortage of caregiving services.

Leaders must act now to lessen the impact of the resignation period, which will last until 2022. One of the major concerns for retaining employees will be to create a welcoming and amicable work atmosphere. Furthermore, startups should strive to provide competitive compensation and benefits to employees, as well as ensure that each employee’s demands are met.

Why is there a shortage of tech workers?

The pandemic caused due to COVID-19 generated a labor shortage in the United States, which some have dubbed “The Great Resignation.” In 2021, almost 47 million people left their employment, many in quest of better work-life balance and flexibility, higher pay, and strong business culture.

But surprisingly, the tech shortage is not a new stress factor added to the industry. In fact, according to surveys, CEOs have been expressing their fear of tech talent shortage for 10 years. By 2019, the fears came true. 79% of people were also worried about the issue of finding and hiring tech talent.

You’d be surprised to find the number of tech talent shortage statistics and studies that prove that there is indeed a serious tech talent shortage. In the United States, two-thirds of IT professionals will be considering quitting their jobs by 2023. Approximately 40% of individuals believe that restricted prospects for advancement play a role. 

Non-flexible work hours, a lack of remote working possibilities, feeling underappreciated, and a poisonous work atmosphere are all prevalent factors. A staggering 85 percent stated their organization was more concerned with acquiring fresh talent than investing in existing employees. Unsurprisingly, 58 percent of respondents talked about struggling with stress and burnout in the workplace

Final Thoughts

The software developer hiring process can become rather lengthy. Recruiters have specific requirements for software developer duties. It is one of the reasons for the severe tech talent shortage in 2022.  At the same time, the demand for software developers keeps rising.

That is where online hiring platforms such as Gaper bridge the gap between startups and software engineers. Gaper is a marketplace for the best software developers. You get top-notch talent according to the company budget. 

At this point, the severe shortage of programmers has become one of the most prominent startup woes in 2022. The tech skills shortage is here to stay for the foreseeable future. Businesses should start working on solutions to address this problem. The most important thing is that startups should start enrolling their employees in tech training programs to keep up with the latest tech trends. 


Q1. Is there a global talent shortage?

The tech talent shortage in 2022 has reached unparalleled proportions. Employers are feeling the pinch. This IT talent gap has been exacerbated by the Covid-19 outbreak and an elderly population. There were more than 10.5 million job opportunities in the United States in November, up from 3.8 million a decade ago.

The 2019 COVID pandemic create huge issues for the tech industry. Employers as well as employees were left in a state of confusion and bewilderment. In the United States, two-thirds of IT professionals will be considering quitting their jobs by 2023. This is due to the lack of initiative and salary to keep them working at the same company. 

Q2. What is causing the talent shortage?

The pandemic of 2019 created unfavorable conditions for businesses to invest in training their employees. For a while, the whole world was shocked by what had hit them. Slowly, businesses and startup founders began working their way through the tough situation.

The Great Resignation was a time when tech employees started to leave their jobs in search of better opportunities. It was a term coined in 2021. The main reasons why employees were resigning were the lack of job satisfaction, employee burnout, and the absence of workplace recognition. 

Q3. What job has the biggest shortage?

69 percent of US companies struggled to fill positions in 2020. Tech jobs are among the top ten most difficult to fill. The rate of tech industry growth remains high. However, the supply is not meeting the demand. 

Tech companies and startups are worried about filling vacancies for dedicated software engineers. The lack of talent in the tech world has been amplified by the fact that many IT professionals are resigning from their posts. The software developer hiring stage has become a cumbersome process for recruiters. This is because they are not able to find talent that matches the software developer skill set that the company is looking for. 

Q4. How many tech jobs are unfilled?

The US bureau of labor statistics mentions that between 2022 and 2030, the need for software developers will increase by 22%. This shows how digital transformation and technological trends are affecting businesses. With the growth of technology, there will be more need for experts who can work according to changing startup needs. Examples of popular tech careers include data scientists, iOS app developers, android app developers, cybersecurity engineers, etc.

According to the Bureau of Labor Statistics, the scarcity of engineers in the United States will reach 1.2 million by 2026, while 545K software developers will have left the market by then.

Q5. Is there an IT worker shortage?

The US Bureau of Labor Statistics predicted nearly 1.4 million additional software development jobs in 2020. In the same year, we only had 400,000 new IT graduates who could fill the vacancies. The Covid pandemic, the changing state of world economics, and inflation acted as accelerators in the IT worker shortage issue.

The frosting on the cupcake is that IT workers are leaving their jobs due to unhappiness, and being overburdened with work. 

Since companies can’t hire suitable software developers, they put extra pressure on existing tech teams.  In the United States, two-thirds of IT professionals will consider quitting their jobs by 2023. 

The worst part is that many startups are returning to the working-from-office model. This has further demotivated software developers and IT workers. As a result of this, the tech skill shortage gap will become even wider.

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