COVID, BREXIT, And IR35 Create UK's IT Skill Shortage Superstorm

    

According to a recent McKinsey study, 94% of the UK workforce lack the skills that will be required in 2030: "Without concerted action by employers, two-thirds of the UK workforce could lack basic digital skills by 2030, while more than 10 million people could be under-skilled in leadership, communication, and decision-making,” the report said.

This alone is a drastic issue to deal with — which only is made worse by new, additional challenges the country is facing: the wide-reaching effects on the general workforce and IT environments created by COVID and by the exit from the European Union at the end of the year (BREXIT), and new labour laws like IR35 which further narrows access to available resources. Let's have a closer look at the situation before we talk about some ways you can start to mitigate the associated risks. 

IT_Skill_Shortage_Superstorm

COVID Is A Catalyst For Change, Further Accelerating Skill Shortage Problems

Although the UK went into lockdown much later than a lot of other countries, most larger organizations switched to working remotely very quickly. While there were some initial problems, like having to scramble to get employees equipped to work from home, overall the experience will most likely shape the way people work long-term.

76% or organizations plan on making long-term IT changes due to the pandemic and the shift to remote workIn fact, three out of four organizations (76%) said they plan on making long-term IT changes due to the pandemic and the shift to remote work according to Spiceworks. The same report also states that more than 50% of organizations plan to keep flexible work policies in place permanently, and 44% expect to accelerate digital transformation plans.

Spiceworks is not alone in these predictions. According to a new Gartner survey, 74% of CFOs have already reported they intend to make the shift to remote work for some employees a permanent one. About 4% of survey takers said they would leave 50% of their workforce remote, 17% of respondents said 20% would remain offsite, and another 25% said 10% of workers wouldn’t return to an office.

Several large companies have already taken the step. For example, Microsoft has announced it will offer remote work options permanently to its employees

However, shifting thousands or even tens of thousands of employees to Work-From-Anywhere requires a different set of IT skills as well as resource distribution. In 2020, many executives found themselves scrambling with their backs against the wall, so in going forward it is important to proactively plan for this shift. Over the past years, we have seen many enterprises reduce IT headcount by up to 30% due to cost cutting and lack of planning ahead for changing needs in terms of skills required. 

IR35 & BREXIT Cause Wide-Spread Damage To The Flexible Workforce

In the beginning of March, IDC had already noted a large disparity between organizational needs and available resources. IDC research manager Martin Sundblad said: “There is a shortage of skills in IT specialist roles throughout Europe. This is partly due to digital transformation making IT more integral to every business process, but also to rapid technology development. Demand for skills in areas like cloud, automation, and AI simply outpaces the supply.

Organizations will need to invest in the development, sourcing, and matching of skills to remain competitive.” IDC estimates that the demand for resources needed to alleviate this problem — in particular machine learning designer/developer/engineers, data scientists, and data engineers — are increasing by 12% CAGR.

This now gets exasperated by BREXIT, which will significantly shrink the pool of highly skilled IT resources the UK can draw from starting in January 2021 when the country leaves the European Union. While visa options are available to bring new talent into the country, the lengthy process and larger commitment required by the applicant make the United Kingdom a less attractive option compared to Germany, France, and other European countries looking for skilled resources.

In addition, new off-payroll working rules known as IR35, which were introduced in 2019 and updated in March 2020, change the way companies can use any "employee" that is 

  • a worker who provides their services through their intermediary,
  • a client who receives services from a worker through their intermediary, or
  • an agency providing workers’ services through their intermediary.

IT has always brought in a large amount of contractors with specific skill sets for certain projects, e.g., a Windows 10 transformation project. Doing this is useful as you need these highly skilled professionals only for a period of time. If you cannot leverage contractors, you now have to find and hire them and — after the project is over — let them go or re-train them for another task. This puts additional pressure on finding the right people at the right time.

Mitigating IT Skill Shortages

At this point, the situation is already dire and it will be much harder to dig ourselves out of this hole from this starting point given all the challenges. But, with careful planning, lots of training, some in-between solutions to bridge the gap quickly, and automation wherever possible, it is attainable!

Being in this industry and working with Fortune 100 companies for the past 30+ years, my advice is to be strategic:

  • Work with your HR department to create a long-term (5-year) IT skill development plan. Determine which skills you will need and when you will need them based on your technology investment strategy, and plan out how you will provide adequate resources to fill the demand you will face.
  • Create a mid-term solution (12-36 months) for tackling the worsening skill shortage situation. This could be implementing a more attractive company culture to attract and retain talent, or developing internal or finding external training courses.
  • Find automation opportunities wherever possible to free up resources from tedious, repetitive, and labour-intensive tasks. This not only allows you to materialize huge savings, but also makes your employees happier because they get to work on tasks that are fulfilling. 
  • Look into reputable on-shore managed services, like the ones Access can provide, to help you bridge the IT shortage gap in the short- to medium-term. This not only will allow you to buy time until you have everything else in place, but it will eliminate the risks of not getting your projects done in time. 

One of Britain’s best-known executives, Sir Martin Sorrell, recently told Reuters: “It’s going to be a tough 5 to 10 years. We’re going to be 5 to 10 years before the economy fully recovers from the Brexit withdrawal and the industrial changes that will need to take place to re-skill, to re-educate, [and] to invest in the necessary infrastructure.”

Having a solid plan in place to tackle IT skill shortages is one of the most important ways to turn these challenging times into an opportunity to digitalize and grow rather than get left behind. 

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