How Skill-based Hiring can Help the IT/ITeS Sector fix their Talent Management Headaches

About a decade ago, the IT and ITeS sector grabbed the spotlight. Since then, it has transformed the world of work as we knew it.  

Today, the IT services market is estimated at $1.20 trillion, and is expected to reach $1.81 trillion by 2029, growing at a CAGR of 8.38% during the forecast period (2024-2029). The sector employs over 55 million people worldwide. Organizations invest billions of dollars every year in IT/ITeS.  

Yet, the sector isn’t immune to talent-related challenges affecting other industries. 

A recent report by EY and iMocha revealed that a staggering 81% of organizations are facing a shortage in skilled tech workers and only 19% organizations have established a skill taxonomy.  

These talent-related challenges are because of multiple structural shifts we are seeing in the global IT/ITeS industry.

Dynamic Trends Influencing the IT/ITeS Sector Operations

Here are some of the trends that are causing a shift in the way the IT/ITeS sector operates:

• Rapidly evolving and swiftly advancing technology  

As new technologies emerge and existing ones evolve, the demand for skills changes accordingly. This trend is further fueled by globalization and digital transformation, which require a workforce that can quickly adapt to new technologies and ways of working. There is a need for employees to adapt by acquiring new skills or enhancing existing ones to remain competitive. Similarly, organizations must tweak their talent acquisition and talent development strategies to keep up with the advancements in technology. Additionally, the pace of technological change is accelerating, leading to shorter lifecycles for skills. Consequently, training programs must be designed to be shorter yet equally effective, and this might mean more personalized and adaptive learning approaches, such as micro-learning and on-the-job training, that can quickly upskill employees in response to changing skill requirements. 

• The advent of AI and GenAI  

Most of us now use AI and generative AI in our daily work. This widespread use of AI means that organizations must consider the role AI can play in assisting or replacing human effort. Today, a lot of basic tasks are handled by AI, so organizations must plan their talent pipeline and do their talent sourcing, keeping in mind tasks that require human skill and effort. While AI now adeptly handles many routine tasks, organizations must strategically plan their talent pipeline and sourcing strategies with a keen eye on roles that necessitate distinctly human skills and abilities. 

Job descriptions need to be redefined, and the way candidate sourcing is done needs to be recalibrated. Aligning talent management strategies with the realities of AI integration is essential for organizations to effectively harness the power of AI to drive innovation and growth while ensuring that human skills and abilities remain at the forefront of their workforce. 

• Change in employer-employee dynamics  

Over the last few years, we have seen a change in the dynamics between employers and employees. Today, employees are gaining control of the situation. In the tech and start-up segment, in particular, employees demand better employee experiences (EX), good career growth opportunities, and multiple benefits and perks. This shift has created a highly competitive landscape with employers vying to attract and retain top talent by offering increasingly attractive packages and cool work environments. Employees can now choose from various job opportunities and negotiate with employers to secure the best possible terms. As a result, employers are pressured to continuously innovate and improve their offerings to attract and retain talent, leading to a more employee-centric approach to workplace culture and policies. 

• The rising popularity of remote and hybrid work 

While the IT sector had been working on a remote/hybrid model since before the pandemic hit, the sheer scale has changed in the last few years after the pandemic forced everyone to work remotely. This sudden shift towards digital communication, and remote work is increasing the demand for newer and faster solutions. Not many organizations have reverted to a 100% onsite model yet because they have seen the benefits of a remote/hybrid work model and also have the IT infrastructure in place to support hybrid work. As a result, there is a need for talent that can work efficiently and productively in a remote/hybrid set up. This involves not just getting their job done effectively but also learning remotely on-the-job, adapting to changing requirements, etc.  

These aren’t just flitting trends; there will be a significant shift in how companies in the sector approach talent management.  

Key Challenges IT/ITeS Companies Are Battling 

The recent trends in the IT/ITeS sector will have a direct impact on the workforce and talent management plans for any company in the sector. Here are some key issues that organizations will have to address right away:  

• Skills shortage and poor talent fit 

With the talent landscape changing, companies are seeing a sharp drop in the availability of the right kind of talent. Job roles are opening up, but not many companies are able to find the right kind of person for the roles, and at the right time. There are thousands of talented individuals looking for jobs, and there are thousands of job vacancies waiting to be filled, but the two seem to be on different planes. As a result, organizations are having to rework their hiring process to ensure that they find the right fit. Making the wrong hire would add another layer of complexity, because hiring someone with just the right qualifications doesn't mean they'll succeed in your company culture. A skills mismatch in the early stage of the hiring process also unnecessarily prolongs the hiring cycle and drains company time and resources.  

With the advent of AI, it is critical to find employees with the skills required to work with technology and AI and add value to what machines provide. The teams of the future must include people who can collaborate with each other and with machines efficiently.  

• Increase in attrition  

We’re no longer in a world where people stick to their employers for decades. Job hopping has become quite common, with people switching jobs every few years as they seek better employee experiences, better salaries and benefits, and richer career growth. This makes talent retention a major challenge for any organization. Most companies have very similar opportunities and benefits on offer, so employees easily switch from one job to another. The simplest and smallest of things could trigger change. This churn can disrupt project timelines, increase recruitment costs, and erode institutional knowledge within organizations. 

As a result, companies are faced with the need to prioritize EX, ensure that compensation and benefits are competitive or above market standards, offer perks such as remote work or flexible work options, provide opportunities for career advancement and interdepartmental training, and also build a strong employer brand so employees take pride in being part of the organization.  

• Constant need for upskilling/reskilling  

Technology is advancing at an unprecedented rate. Companies in the IT/ITeS industry in particular, have to be extremely nimble when it comes to adopting the latest technologies so they can meet customer demands, stay ahead of competitors, and drive innovation within their organizations. This is, however, easier said than done, because the workforce needs to be upskilled based on the technology that’s in vogue. Skills become outdated quickly, and employees must consistently acquire the knowledge and expertise to use the new/emerging technologies effectively in their day-to-day work. 

This can be challenging for employees, as it requires them to invest time and effort in learning new technologies while balancing their regular work responsibilities. It also puts pressure on organizations to provide the necessary training and resources to support employee upskilling efforts. Companies will have to actively introduce methods and resources to ensure that employees get to learn at work without having to set aside too much time or effort for upskilling.  

• Need for a diverse workforce  

We now live in a digital world, where geographical borders are disappearing. Add remote work and hybrid work to the mix, and you can almost forget the time when people had to be in a common physical space to get work done. Now, everything is handled online, with people working on the same project from around the world.  

With this kind of a team structure and work culture becoming more common, it is critical for companies to hire people who can work efficiently and productively in such a set up. In addition to hiring based on skills for the role, companies need to make sure employees are skilled to handle online collaboration tools that they need to use for remote work. They also need to assess how the employees are with collaborating and working with a diverse, distributed workforce. It is no longer sufficient to just be great at the actual work and be highly skilled, employees need to demonstrate their ability to work in the new digital workplace.  

A Skills-based Approach to Hiring   

A change in the approach to hiring and the way talent management is strategized is essential to battle all the challenges that companies in the IT/ITeS sector face.  

The norm today with hiring in the IT sector is to evaluate a person for a job based on their educational qualifications and previous work experience. However, shifting this to a skill-based approach can help ease a lot of the problems that companies face with hiring.  

We live in a world where skills are now at the center of everything, and a person’s skills are almost more important than what their professional certifications say. For example, a person’s ability to adapt to change, their proficiency with hybrid/remote working, their interpersonal skills and willingness to work with a diverse workforce, are all extremely important factors to consider in the hiring process.  

Taking a skill-based approach to end-to-end talent management and using next-gen AI-powered HR technology can help IT and ITeS companies navigate these challenges.  

• Using an AI-Based skill ontology for talent management 

This AI-driven approach leverages machine learning and NLP define relationships between skills and helps organizations place the right talent in the right role at the right time. Organizations can also customize the relationships, add new/ edit skills, and define skill levels and how they map to roles/ jobs. Adopting this will help organizations battle challenges related to hiring, by reducing recruitment cycles and ensuring that the business isn’t affected by skill shortage.  

• Skill-based talent search for internal job placements 

A next-gen talent management system can use AI to conduct an exhaustive search to find internal talent from organization/talent pool fit for the role. Skill-based talent searches can help both with long-term placements and project-based staffing to improve operational productivity at the team or project level. This can help reduce the time taken to fill vacancies. It also empowers employees to explore new roles within the organization, thus improving employee engagement and curbing attrition. 

• Personalized career pathing, and learning & development (L&D) 

Taking a skill-based approach to career development planning for employees will help deliver more relevant and personalized career pathing options for employees. Organizations can use employee listening tools to assess an employee’s skills, learn more about an employee’s career aspirations and tailor L&D programs accordingly.  This can help solve issues related to talent retention. AI-powered skill-based talent management can also help nurture talent in the organization by identifying the skill & competency gaps and bridging them using L&D programs.   

• Succession planning and leadership development 

 A skill-based approach will help organizations understand their talent pools better – they can study the skills available and other parameters to identify growth opportunities and plan their talent pipeline accordingly. A skill-based approach to succession planning can enable organizations to identify potential leaders and key contributors more accurately. By investing in the development of employees' skills, organizations can create a more robust talent pipeline, ensuring that they have qualified candidates ready to step into key roles when needed. 

Also, a skill-based approach can help organizations identify high-potential employees who may not have been identified through traditional performance evaluations. By looking at skills rather than just performance, organizations can uncover hidden talent and provide these employees with opportunities for growth and advancement. 

A talent management system that is built on top of an AI-based skills ontology can enable organizations to handle all these issues effortlessly, and minimize the impact of external forces on their workforce. Darwinbox’s unified HCM platform with an AI-powered skill-based talent management solution is built keeping in mind the requirements of companies in the IT/ITeS sector. To learn more about the product, schedule a demo with our specialists.