The Great Resignation has hit the tech industry. Workers across all sectors are increasingly leaving their jobs due to a combination of unsatisfactory wages, lack of recognition and the absence of work progression, as well as failure by their employers to recognise the new normal of offering remote or hybrid working. Tech professionals progressively demand the same benefits as their peers in other industries and, given the way the labour market looks, they are likely to get it.
“The demand for skills has never been higher,” Ian Storey, director at Hays Technology UK and Ireland, the recruitment agency, tells Verdict. “It’s absolutely never been higher. We have record flow of jobs coming in. Most candidates used to have three or four interviews before deciding, now it’s three or four job offers before they’ll decide on a role.”
However, to some, this might sound like a familiar tune. Science, technology, engineering and mathematics (STEM) positions are famously difficult to fill.
“The tech sector has been perpetually short of great talent for so long that the Great Resignation is less pronounced than in other sectors,” Runar Reistrup, the CEO of YunoJuno, the work platform for elite tech and creative freelancers, tells Verdict. “Hiring tech talent is always very difficult, even for the best hiring managers at the best companies.”
That being said, the trends that have coloured the Great Resignation and created an unparalleled exodus of skilled workers have undoubtedly made sourcing tech talent more challenging.
So what’s going on here?
What is the Great Resignation?
The Big Quit is intimately related to Covid-19. At the start of the pandemic, nothing seemed out of the ordinary. People expected unemployment to soar as businesses were forced to send employees home to weather out the contagion.
For millions of people, that meant losing their jobs. The biggest sectors affected included hospitality, childcare and education – sectors predominantly dominated by women. This has motivated talk about a so-called she-cession.
In the UK, female unemployment spiked to 5% in October and November 2020, according to the Office of National Statistics (ONS). However, it has since dropped to almost pre-Covid levels of 3.7% at the start of 2022.
None of this was surprising. Labour market experts expect market uncertainties to make people reluctant to leave their jobs, fearing that they may not be getting a new one.
However, something odd started to happen at the start of 2021. Despite the pandemic still raging across the world and social distancing restrictions were still being enforced, people began to quit en masse.
It became a worldwide phenomenon. In the US, a 20-year record of four million people quit their jobs in April, 2021. In July, job vacancies in the UK soared to an all-time high of over one million jobs being advertised. As of January 2022, 64% of Londoners are considering handing in their notice.
Anthony Klotz, associate professor of management at Texas A&M University, noticed this trend and ended up coining the phrase the “Great Resignation” in May 2021.
Speaking with The Washington Post, Klotz explained that there were several reasons behind the seemingly sudden exodus of workers. The primary one was a backlog of people who would’ve left their jobs earlier if the coronavirus hadn’t wreaked havoc across the world.
“In 2020, because of the pandemic, a lot of people who might have otherwise quit their jobs stayed put in their jobs,” he said. “And so, as the economy improves and we hopefully reach the end of the pandemic, some of those people will probably enact their plans to leave.”
Klotz also identified burnouts and people deciding to do something different with their lives as contributing factors for the change. Other experts have noted a similar trend.
“People now expect more from their professional lives, and they want ‘line of sign’ between their work and the outcomes that matter to them – which might include saving lives, reducing carbon emissions or addressing societal issues,” Parmar says.
What may surprise some bosses who are eager for staff to return to the office, a big chunk of the exodus has been linked to people having become accustomed to remote working over the course of the pandemic.
“Many are excited to return to the office, but a number of them are not,” Klotz said. “And so, there is some percentage of those employees who are going to quit rather than go back to the office.”
The pandemic itself could also be a contributing factor to the Great Resignation in another way: with many employers demanding that staff only return to the office if they’ve been jabbed, some anti-vaxxers are choosing to flee from work rather than getting a little prick, no matter how safe it is.
“Employees are resigning as an avoidance mechanism for the Covid-19 vaccine,” David Stone, CEO and co-founder of international technology recruitment firm MRL Consulting Group, tells Verdict. “A 2021 survey by the Kaiser Family Foundation, a think tank concentrating on health issues, found 72% of unvaccinated workers vowed to quit their jobs if their employer mandates vaccines and doesn’t offer the testing option.”
What does this mean for the tech industry?
Unsurprisingly, these trends are echoed in the tech industry where workers on both sides of the Atlantic have left old employers.
“There is a fundamental change happening in the workforce primarily caused by technology and changing expectations,” Ken Charman, CEO of Unilever spinout uFlexReward, tells Verdict.
While there has always been a skills shortage in the tech sector, the same factors that have exacerbated the Great Resignation have also sent shock waves through the tech industry.
There were 2.5 million open cybersecurity jobs worldwide at the beginning of March 2022, according to Microsoft. And more people may choose to quit soon, with only 29% of IT workers being interested in staying in their current roles, according to Gartner.
“The main skills gap is concentrated on STEM careers, so technology companies and tech-focused roles are suffering the most,” Rashik Parmar, IBM fellow and European VP of technology, tells Verdict. “Clients and partners are taking actions to respond to the Great Resignation, which shows it’s a real issue for many organisations – but, in the tech sector specifically, we’ve primarily seen this across cloud engineering, data management and artificial intelligence roles.”
In other words: despite tech workers not having quit to the same extent as other sectors, demand for their skills is at a record height. That means employers have their work cut out for them when it comes to sourcing talent.
“In this candidate-driven tech recruitment market, the power lies with the applicants and companies have to do more than dangle a financial carrot to attract the best tech candidates,” Aude Barral, CCO and co-founder of developer recruitment platform CodinGame, tells Verdict.
What do tech workers want?
Tech workers have always been in demand. Consequently, businesses have often attempted to lure them in with lavish benefits. For a few years, visiting startups and Big Tech campuses meant having to sidestep ping pong tables, nurseries and free beer taps. However, that’s not all software engineers and other tech workers want these days.
“People still like to have it,” Storey says. “When it first came with the likes of Google and Facebook, there was such a novelty. I think people want to work when they’re in the office, they want to work in nice, aspirational premises. The look and feel of the office is always going to have a bearing, but I don’t think it’s such a key piece as it once was.”
If employers want to source high quality talent, they should look into the factors that caused the Great Resignation. For starters, that means they should compensate tech workers fairly for their services.
“Few stay in a role just for the money, but after years of under-investment in these jobs times have changed and salaries are at a premium, so you have to be at least ‘in the pack,'” Martin Tyley, head of UK cyber at KPMG, tells Verdict.
Leading companies have also realised this. In February, Big Tech firms like Amazon, Pinterest, Intel and PayPal all acknowledged they could risk losing talent to competitors who offer more appealing job benefits, such as remote or hybrid work, according to securities filings.
“Organisations that say you have to be in the office five days a week – it’s far harder to attract good candidates for those kind of clients,” Storey says.
With the skyrocketing demand for tech workers, employers should expect to only rope in workers at a premium – and not just in the big cities. With more companies offering either remote or hybrid working, tech workers are not as geologically locked in as they once were and neither are their salaries.
“Organisations based outside of London need to be particularly mindful of the salaries they are offering talent,” Tyley says. “With hybrid working meaning jobs are becoming more location-agnostic, salaries across the board must be more in line with those in the capital. In fact, we will probably see a narrowing of the salary gap across the country.”
On the flip side, this means employers can also access talent in new markets where they haven’t looked before.
“But it also means that competitors can access maybe their talent pool as well,” Storey says, suggesting employers who are accustomed to hiring among the local talent pool, could end up competing with other organisations from elsewhere.
It should be noted that remote working also comes attached with cybersecurity concerns. One of the main reasons why digital defence providers have seen a massive influx of capital over the past two years is because more businesses have been forced to strengthen their cybersecurity because of people working from outside their offices.
The number of financing, M&A and public float deals reached a fever pitch at the height of the pandemic. Back in 2017, GlobalData recorded 641 deals worth $103.29bn in total. Jump forward to 2021 and the number of deals had jumped to 1,383 deals worth $220.93bn in total.
Given the challenges of finding tech talent, companies are also encouraged to diversify their pipeline. For instance, they could consider upskilling people already working within the business but who don’t have tech experience.
Similarly, they could attempt to attract young job seekers to them. However, research from strategic communications and public affairs consultancy Finsbury Glover Hering suggests that Generation Z believes they may already be too old to enter the tech sector. Having surveyed 2,400 young people between the ages of 16 and 24 in the US, the UK, China and Germany, the consultancy found that between 46% and 51% believed that, since they didn’t study the right subjects in school, they cannot enter the sector.
“Barriers range from issues of diversity and accessibility, as well as the work environment itself – all of which have come under greater scrutiny in the wake of the Great Resignation,” Sophie Scott, global technology lead at Finsbury Glover Hering, tells Verdict, encouraging companies to do what they can to remove those barriers for entry in order to access more candidates.
Will only big businesses be able to afford tech talent?
Bigger pay cheques, reinventing the recruitment pipeline to source talent at a global scale and rethinking how to upscale existing staff sound like remarkably expensive endeavours to pursue. This raises the question of whether tech talent is only something colossal corporates will be able to afford. However, Storey believes the changing market could actually benefit more agile startups.
“Let’s say you’ve got all your dotnet developers on 40´k and the market rates are 50,” he explains. “If you’re a small company that’s 20k across two heads that you have to increase your salary by. If you’re Santander there, that’s potentially another million pounds on the wage bill if you’re increasing all those salaries in one go to to to come up to market rate.”
Similarly, he believes reimagining talent pipelines is less expensive and can be done quicker by a smaller startup than by a massive big business. In other words, he believes the trends behind the Great Resignation could actually end up even out the playing field. In either case, it’s fair to say that tech workers will benefit from the skyrocketing demand for their services.
“I think Covid has forced us to do things differently and it’s altered the tech recruitment market and tech skills market forever,” Storey concludes.
GlobalData is the parent company of Verdict and its sister publications.