Software Developers and Engineers Shortage in the US: The case for Global Talent

August 24, 2022
Reх Huхford
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The software developer shortage has made it harder than ever to hire engineering talent. We go over the statistics and causes of tech talent scarcity in the US and outline why global hiring can help companies overcome a heated domestic market.
Software Developers and Engineers Shortage in the US: The case for Global Talent

According to the U.S. Bureau of Labor Statistics, the world suffered a shortage of millions of skilled workers concluding with December 2021. It's even more worrying that this data trend indicates the number will rise to 85.2 million by 2030. If that happens indeed, companies may lose around $8.4 trillion of revenue within this time.

The stats are alarming because there's been a lack of candidates to fill open job positions in the last couple of years. In 2019, the U.S. companies had around 1 million IT jobs unfilled throughout the year, failing to find the workforce necessary for the scope of work.

The situation doesn't look too bright for 2022 either. If the software developer shortage continues to rise, global technology development may come to a halt. What causes this tech talent shortage, and how can we combat it? Learn all the details in our article.

The Current Situation of the Software Engineer Shortage in 2022

Since 2022 has just begun, the talent shortage in the year is more of a prediction. However, some data on software engineer shortage appears right away. For instance, Nordics have already reported a talent and software developer shortage at the beginning of this year. According to findings, Sweden alone will suffer from significant talent lack in the public sector.

At the same time, Israel is going through a software developer shortage of 15%, which is unexpected from a nation considered home to the most developing IT startups. Here are some other surprising stats that may give you a broader insight into the current problem of talent shortage:

  • The Great Resignation led to 4.5 million workers leaving their jobs. Although that trend is expected to slow down in 2022, companies may still lose billions in revenue.  
  • Currently, there are only 65 potential workers for 100 job offerings. This number is too low compared to pre-pandemic times when there were around 85 unemployed candidates for every 100 job offerings. Unfortunately, the number of people applying for a job decreases every year.
  • Regardless of niche, talent shortage has made it quite hard to find skilled workers today. According to a report by McKinsey & Company, almost 44% of renowned companies expect to experience a huge skill gap in the upcoming five years. Unfortunately, 87% of these companies can already feel the impact of the shortage and fear experiencing the worst in the future.
  • As per another report, the job openings for blockchain positions in India and other Asian regions have increased to almost 50% since December 2020. However, the unfilled job vacancies are around 12,000, and this number does seem to increase in 2022.

U.S. Software Developer Shortage Statistics in 2022

According to a CNBC report, the software developer shortage will be alarming in 2022. The rate of unfilled IT jobs increased to 918,000 vacancies at the end of 2021.

Another report noted that by 2030, the number of software job vacancies would rise by almost 22%. The average growth rate of software developers in the USA is only 8% right now, and that clearly emphasizes there is already an overwhelming and severe shortage of skilled workers.

As per the Bureau of Labor Statistics, the software engineer shortage in the USA will increase to almost 1.2 million by 2026. This pattern has increased the salaries of software developers in the USA. The salary of a median computer programmer is around $110,140 a year, way more than the regional pay.

Despite the increased salaries, most software engineers are not ready to work and benefit the economy through their immense talent and skills. It's an unfortunate scenario for the USA and the rest of the world, but why does it happen? Continue reading to find out.

What Is the Demand for Software Engineers and Developers in the U.S.?

According to the U.S. Bureau of Labor Statistics, the demand for software developers, including software engineers, will increase to 22% between 2022 and 2030. This percentage is almost 4% more than the growth of average careers.

Also, in the next ten years, there will be around 189,200 job openings for software engineers every year. Thus, there is no doubt that the demand for software developers is increasing at a very high pace. Below are a few reasons for that.

An Increased Demand for Innovation Software

These days, even small startups require websites and applications for easy operations and customer interactions. Even health insurance companies need software to manage enrollments and digitally administer all the customer policies.

Additionally, many products in the market require specific software to operate. Therefore, the brands' high demands for mobile-friendly apps and websites have driven the demand for software engineers.

Code's Limited Life

The constant change in code is driving companies to update their software now and then. Typically, a code has a life of just a few years, and to get a new one, companies require the assistance of software engineers for a much-needed shift in technology.

Increased Technology Growth

While the pandemic may have forced companies to hold their investment plans for some time, they are now gradually relocating their technology budgets, increasing the demand for software developers in the USA and globally.

Additionally, due to the supply chain disruptions, many venture capitalists look to invest in startups. This move has also persuaded different organizations to hire more and more software developers in their teams.

Project Complexities

The increase in project complexities resulted from a rapid technology change. So, to provide their customers with exceptional results and performance, companies need more software engineers now than they required a few years back. It's hard for companies to understand the complexities of projects themselves, and so they prefer hiring software developers who excel in this field.

The demand for software engineers in the USA is rising quickly. However, the accelerating worker shortage is quite concerning. There are many reasons behind the software engineers shortage in the USA. The section below will help you explore some of them.

What Causes the Shortage of Software Engineers in the U.S.?

Gartner released an interesting report in 2018, in which it listed talent shortage as one of the top five emerging risks for companies. While the software developer shortage was just a prediction four years ago, many organizations can experience its impact today.

There are many ways a shortage of talent affects different businesses in the USA. For instance, software engineer shortage affects timelines and hiring budgets. According to one report, the time taken to hire technical employees is 50% longer than in other positions. The same study also points out that it takes around 66 days to find the right software expert for a job.

Besides, the software developer shortage is also quite harmful for innovation and business growth. According to CIO, almost 50% of Chief Information Officers (CIOs) agreed that the lack of skilled labor makes it difficult for their companies to grow and compete.

The effects of software engineer shortage are rather impactful, so it's imperative to find ways to control this problem. Before that, though, it is essential to understand the reasons behind this shortage. Below we have explained a few prominent ones.

Unequal Access to Computer Science in Education

Do you know that only 51% of high schools in the USA offer at least one computer course or class? This implies that only half of the USA schools allow students to learn about technology and software from a very young age. Youngsters attending the schools that don't offer this facility have to wait to go to the university to develop a liking and understanding of computer science. Essentially, unequal access to computer science means that many people fail to get into the field of computer science, which influences the job market.

Shortage of Qualified Faculty to Teach Computer Science and Software Engineering

Software engineering is a profitable field, so many experts with doctor degrees choose to work alone or join an enterprise rather than pursue an academic career. Unfortunately, this trend creates a gap for teaching faculty that excel in software and computer science engineering.

With fewer experts available to teach, many youths do not consider taking software engineering as a major in their university. Also, few professors mean that the number of students under one teacher also decreases. So, even when people aim to get into software engineering, they often fail to get admission due to limited spots.

In a nutshell, without a strong teaching faculty, a person can't develop an interest in software engineering, so the shortage of teachers is one of the concerns that require urgent attention.

Skill Mismatch Between Industry and Academia

Unfortunately, there are many computer science departments in universities that fail to curate their curriculum according to the demands of the industry. They don't put in efforts to help students understand the practical use of software engineering, failing to prepare them for the real world. Instead, most computer science departments focus on the theoretical aspects of their subjects and skip developing the right and required skills in their students.

Many departments also prefer to teach programming languages such as Scheme instead of ones that do meet the industry requirements. Moreover, students are often not taught practically with exercises and examples that can prepare them to work in the software industry after graduation.

Underdeveloped Tech Apprenticeship/Internship Programs

Sadly, the USA's education system doesn't promote apprenticeships in the technology field. The lack of training is a significant discouragement for people who want to pursue software engineering but fear that they won't get any experience before landing a job.

Some companies do offer internships, but they are usually unpaid. Considering software engineering is a technical field, good initial pay is a big motivator. Without it, and because of the non-existing apprenticeships and low-tech experience, many people may fail to perform well in a part of their careers. Therefore, paid internships are critical for gaining that much-needed skill and awareness about software engineering before landing a dream job.

Inconsistent Quality of Coding Bootcamps

While coding boot camps seem like a perfect opportunity to break into the technology sector, they often don't provide enough support for prospective students. Not all coding boot camps have a high-quality curriculum for aspiring software engineers. Many of them give limited skills and knowledge to the attendees yet charge at unbelievable rates.

Inconsistency in the quality of coding boot camps means that only a few people get to understand coding properly. The rest usually experience it theoretically or without any practical guidance, ending up without the skills they came for in the first place. Unfortunately, the quality deficiency in coding boot camps leads to a larger educational gap and a higher engineer software shortage.

Shift to Remote Work Has Disrupted Entry-Level Developer Pipeline

These days many people have shifted to remote work, and this trend is making it hard for companies to find entry-level or even experienced developers for their projects. In addition, due to Covid-19, many skillful software developers are either working alone on their projects or prefer organizations that only offer freelance work environments. While this trend helps the government curb the impact of the deadly virus, many companies find it hard to hire the right in-house technical staff for their projects.

There's also another factor for the employee shortage. Many companies often wait for the shortage of workers before they start recruiting. Instead of actively looking for the perfect candidates and anticipating needs, they only hire when necessary, which can be late, costly, and unsatisfactory.

To summarize, one of the significant reasons behind a shortage of software developers in the USA is the failure of different learning institutions to implement fast transformation and cater to the high demand for skilled and technical workers. The education sector is failing to move and advance at the same pace as the tech world. This lag creates a gap that makes it hard for graduates to join the tech industry and perform different roles using their skills.

Difficulty Finding Developers Also Reflects a Job Desirability Problem

While our education system needs improvement, the software engineer shortage is also a result of poor job desirability. Workers have a few good reasons for quitting their jobs or skipping some opportunities altogether. Let's discuss some of them.

The Great Resignation

As per the U.S. Bureau of Labor Statistics, almost 4 million workers quit their jobs in July last year. In addition, April saw a massive peak in resignations, which resulted in 10.9 million open jobs in July. These staggering statistics draw a shocking and concerning picture of a trend that will continue in 2022.

The resignations are pretty high in the tech industry too. According to the U.S. Bureau of Labor Statistics, they increased by 4.5% compared to 2020. One of the main reasons behind this is that tech-related jobs demand extreme work experience, which results in burnout and unnecessary workloads.

As per some expert predictions, more people plan to resign from their jobs in 2022. According to these, almost 23% of USA citizens may leave their current employment and seek new positions in 2022.  

There are many reasons for this trend to continue. Here are a few:

  • The pandemic has given enough time to people to rethink their career choices and evaluate their long-term goals with their current work/life balance.
  • One of the biggest reasons for quitting jobs is sheer dissatisfaction with low pay, poor work-life balance, and insufficient treatment from employers.
  • A lack of caregiving facilities also persuades women to take the big decision and resign from their jobs.

Since the phase of extreme resignation will continue in 2022, leaders must act to reduce its impact. Creating a friendly and inviting work environment will be one of the top priorities for retaining employees. In addition, startups should work towards providing good salaries and benefits to employees and ensure to give the needs of each employee the utmost attention.

‌Related: What Is The Best Way to Hire Good Developers?

Remote Was a Top Perk and Is Now Expected

Way before the pandemic hit our world, almost 300,000 software employees chose to work from home. These professionals expressed the desire to avoid the office nearly seven years ago. In 2022, the demand for remote work has increased significantly and not only in the tech industry. As a result, remote working is more of a necessity than a perk right now.

According to the Ipsos survey, around 30% of workers would quit their job if asked to work from the office instead of their homes. This clearly shows that an inability of your company to provide the facility of work-from-home can discourage skilled workers from being a part of your organization. However, this is something that you can easily control.

Leaders can work towards changing their mindset regarding remote working, especially considering the demand and preferences of the global workforce. Instead of worrying about the low remote work productivity, leaders can create tools for helping employees enhance their pace of work. Strong collaboration and communication tools support team building and successfully increase workflow management.

You're Competing with Big Tech for Compensation

Uncompetitive salary is one of the biggest reasons that persuade engineers and developers to leave their current companies and work for those that give them high pay and benefits. That said, it is pretty hard to create a job desirable by matching the salary standards of the industry.

When you have venture capitalist-funded startups and big tech companies as your competitors, it's challenging to offer the same salary to your employees as they do. However, many skilled workers don't see that as a problem and prefer to change jobs as they see a better opportunity.

Global Remote Hiring Is How You Overcome a Heated Hiring Market

It's pretty challenging to survive in a heated hiring market, but you do have options. Global remote hiring can help you stay competitive and avoid the impact of software developer shortages.

What is global remote hiring? It's a method that allows you to hire workers from different parts of the world, other than your own country (the USA in this case), and build your team according to your limitations and skills. Global remote hiring helps you explore international talent and, at the same time, overcome the Great Resignation that might have affected your organization in many ways.

Here are some other ways in which global remote hiring can help you:

A Planetary Approach Increases Your Supply of Talent

As per Evans Data Corporation, there are almost 26.9 million software experts and developers around the globe. Interestingly, this number will probably grow to 27.7 million in 2023 and nearly 28.7 million in 2024.

There are almost 4.3 million software developers in the USA alone, and that's the highest number of software experts in a country. That said, many fantastic software developers and engineers are located in other parts of the world. For instance, Germany gets at the top of the list with 9,014 software developers, which is the highest number in Europe. Similarly, the UK and France are almost among the top three countries in Europe with the number of software experts.

Additionally, Ukraine has more than 200,000 software professionals, which will only increase in 2022. According to the IT Ukraine Association report, the country is experiencing a significant boom in the tech sector, creating excellent jobs for the locals and the outsiders.

In India, there are around 5.8 million developers. Similarly, Singapore has approximately 200,000 IT experts.

These figures indicate a massive talent outside the USA that you tap into for growing your organization. By getting more remote workers on board, you also get to experience development through a diverse and unique workforce.

Your Budgeted Compensation Is More Competitive Outside the U.S.

Considering the average yearly salary of a software developer in the USA is around $110,140, the country has the highest salary rates for the industry. Add to the equation that you may need to increase the median wage to stay competitive, and you're looking into high employment costs.

Global remote hiring can help you avoid such hefty costs. The average yearly salaries of software developers in Eastern Europe go from $25,958 to $41,170. That's way less than what experts in the USA expect companies to pay them. The salaries in some other countries are even more shocking. An entry-level software developer in India may earn around $5,000 per year, and a more experienced developer with some years of experience can get approximately $8,000 per year.

Managing your budget by hiring on a global scale is far easier than employing developers from the USA. This factor allows you to grow your startup and arrange attractive benefits for your employees.

Why You Should First Consider Latin America for Remote Hiring Outside the U.S.

While Europe and India are the first regions that come to mind when thinking of hiring remote tech experts, the workforce in Latin America will benefit you in more than one way. This region has more than one million skilled and experienced software engineers. Moreover, the maximum average salary of software developers in Latin America is around $50,000 per year.

As Latin America has a lot of software engineers, experts in the region do not expect as high salaries as they do in the USA. But some other reasons may persuade you to hire from Latin America.

Same or Similar Time Zones as the US

Hiring employees in the same or similar time zones can help you handle the remote workforce. As you and your teams work in the same timeframe, you'll conduct meetings, collaborate on tasks, and perform other operations at mutual convenience. There will also be fewer misunderstandings and missed deadlines.

Similar Culture

The culture of Latin America is quite similar to that of the USA. The shared work customs make communication easier and eliminate risks of poor efficiency on the job.

Lower Expense for Tech Talent

As stated above, the average salaries of software developers in Latin America are much lower than what you may have to pay to engineers in the USA. So hiring a workforce from Latin America can help you reduce your expenses and generate better output for your business.

How Revelo Can Help You Source, Hire, and Pay Latin American Engineers

As overcoming the software developer shortage becomes increasingly challenging, a little expert help can help you go a long way. Revelo is a talent marketplace that offers support every step of the way. We help you find, hire, and manage the talent you need to succeed in a highly-competitive market.

Revelo connects US-based tech organizations with qualified Latin American software engineers, building remote teams in a cost-effective, convenient and quick manner. We listen to your needs and requirements and connect you with the best possible candidates. After the initial recruitment stages, you get to conduct interviews and make a final choice. It's as simple as that.

We help you achieve your business goals and reduce the time and effort needed in the process. Instead of wasting resources on the recruitment process, you can rely on Revelo and focus on other crucial business tasks that need your attention.

Start hiring remote employees today or contact us to learn more about how Revelo can help you overcome the software developer shortage.

Need to source and hire remote software developers? Get matched with vetted candidates within 3 days.

Reх Huхford

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