What Does “Cloud First” Have to Do with the Skills Shortage in IT?

26.01.2024

Topic: Skills Shortage | Cloud

The U.S. Korn Ferry Institute predicts that there will be a shortage of 4.3 million IT workers across the globe by 2030. According to a report by Swedish IT and Telecom Industries, this means for Scandinavian countries like Sweden, for example, that they will not be able to fill 70,000 jobs in the technology sector by 2024. Poland, on the other hand, is currently reporting 100,000 vacancies in IT and Germany (as of the end of 2022) 137,000. The demand for IT specialists is therefore continuing to rise worldwide. But what can IT managers do to mitigate the situation?

IT specialists: rising demand, declining supply

The shortage of skilled workers in IT is being fueled by two developments: Demand for IT experts is on the rise, while the overall supply of personnel is shrinking. The increasing demand for IT specialists is due to the ongoing digitalization of many spheres of work and the growing need for innovative technologies, such as low code or artificial intelligence, in order to stand out from the competition or to compensate for bottlenecks in human resources in specialist departments by means of digital automation.

At the same time, however, the overall supply of labor is declining due to a shift in demographics. The following two examples illustrate this point: In the U.S., births per one thousand women were more than twice as high at the end of the 1950s compared to the level in 2018 (Source).

In Germany, 1.36 million births were recorded in 1964. In contrast, there were only 773,144 newborns in 2020. If we factor out effects such as immigration, this means that around twice as many people are retiring as are entering the workforce. The ratio has been like this for a number of years and will remain at this level for some time to come. The IT sector in particular is increasingly struggling to secure the ever more scarce “human resource”.

S/4HANA migration still pending for 3 out of 4 companies

For SAP user companies, this situation is exacerbated by another factor: The upcoming end of SAP ERP maintenance in 2027. A clear majority of companies have been putting off the migration to SAP S/4HANA, but most intend to implement it over the coming years. For example, 58% of our customers are currently planning to migrate to S/4HANA between 2024 and 2027 (Source). As a consequence, the demand for qualified SAP migration project consultants will likely also increase significantly over the next few years.

IT departments are transforming

IT departments need to evolve in order to meet increasing business requirements with the same or even fewer staff. The strategic focus must therefore rest on outsourcing as many tasks as possible. In fact, many companies have already outsourced their hardware-based infrastructure and now rely on IaaS and private cloud scenarios. This trend will continue in the future. Companies will be looking for more and more opportunities to outsource activities. This brings SaaS solutions and the public cloud to the fore because with this service model, the provider takes on a large part of the administrative work.

So when companies say they are adopting a “cloud first” strategy, this it what they are aiming at: On the one hand, they want to use cloud technologies to become more agile, innovative and scalable. On the other hand, however, many IT departments are also facing the challenge of no longer being able to meet increasing requirements fully on their own due to the shortage of skilled professionals. Therefore, “cloud first” is no longer really a choice, but a critical necessity.