The Shortage of Software Engineers in 2020

A shortage of software engineers is not breaking news. For years, the IT Talent crisis and reports of 700,000+ unfilled tech jobs in the U.S. have saturated industry news. 

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Take a look at Gartner’s emerging risks report. In Quarter 3 of 2018, Garter reported “talent shortage” as one of the top 5 emerging risks that organizations face globally. The risk topped the list the following quarter and remained in the top 5 for four consecutive quarters. (Once a risk has been in the top for 4 consecutive quarters, it’s no longer considered “emerging” and removed.) 

Pie graph showing that 63% of senior executives said the talent shortage, including the shortage of software engineers, was a key concern.

Despite the consistent concern, the tech talent gap remains a top pain point for organizations. 

The Impact of the Shortage of Software Engineers on Businesses

But, how exactly does the talent gap affect your business? 

Of course, there are operational implications, affecting hiring timelines and budget.

This image shows the operational impact of the shortage of software engineers. There are three data points, the first 2 from iCMS’s Benchmark Report on Hiring Tech Talent and the 3rd from Devskiller True Cost of Hiring a Recruiter. The leftmost statistic shows a green calendar icon followed by text that reads “66 Days Average time to fill a tech role.” The middle statistic shows a clock icon and reads “50% longer to hire for tech roles than other positions.” The rightmost statistic shows a descending bar graph and reads “$33K loss in productivity during developer recruitment.”

If these effects are not compelling enough, perhaps a more striking concern is that the shortage of skilled software engineers is halting innovation and affecting business growth

This image shows insights on the shortage of software engineers from KPMG’s Annual CIO Survey. On the left, there is a pie graph that says “67% of CIOs in 2019 indicated that the skills shortage was preventing their company from keeping up with the pace of change.” On the right, you see a line graph showing how the concern has changed from 2015-2019 -- 2015 (58%), 2016 (65%), 2017 (62%), 2018 (65%), 2019 (67%). The text that reads “For the last 5 years, over 50% of CIOs have reported lack of skills prevents their company from keeping up.”

In today’s saturated marketplace, the inability to respond to market changes and customer demands can be ruinous.  

What is causing the shortage of software engineers?

Looking at the data, it appears to be pretty straightforward: there are more technology positions open than there are engineers to fill them. 

Specifically, there are over 920,000 unfilled engineering positions in the US and only 165,000 potential applicants. 

These numbers are insights from CNBC. In November 2019, they reported an estimated 920,000 unfilled tech openings from July – October. They then compared that data to the total potential applicant pool which included annual graduates from computer science programs and coding boot camps and the maximum number of allotted visas for international workers to fill the roles. Even still, there were just over 165,000 potential applicants.

This image shows the shortage of software engineers by comparing open positions to applicants in the workplace. There are 92 people icons, each representing 10,000 open positions o2 920,000 open technology positions. 16.5 are shaded in green to represent the 165,000 applicants for these jobs. These applicants include College and bootcamp graduates and the maximum number of international employees that can get H1B visas to fill the roles.

Ok, it seems clear enough. But if you dive deeper into those numbers you will find things are a bit more complicated than that. 

In fact, the number of applicants for technology positions (43 applicants for every hire) is over double that for other types of openings (21 applicants for every hire).    

So why do over 700,000 technology positions remain unfilled? 

The shortage of software engineers is not because of an overall shortage of talent. Rather, there is a shortage of qualified engineering talent. 


We see this play out 2 ways: specific positions that are particularly difficult to fill and the scarcity of in-demand skills. Comparing the most difficult to hire jobs to the most in-demand and scarce skills, there is a clear parallel between missing skills and hiring difficulty. 

This image contains 3 graphs comparing the shortage of software engineers’ roles and skills. The top is a bar graph with data from the State of Software Engineer’s Report that shows the demand growth for top engineering roles. Blockchain Engineer (517% growth), Security Engineer (132%), Embedded Engineer (76%), Data Engineer (38%), Backend Engineer (33%), Machine Learning Engineer (27%), Mobile Engineer (15%), Full-Stack Engineer (7%), Frontend Engineer (4%). Below you see a bar graph listing KPMG’s CIO Survey’s most scarce skills: Big Data and Analytics (44%), Cybersecurity (39%), Artificial Intelligence (39%), Enterprise Architecture (34%), Business Analysis (31%). On the bottom right is a list of LinkedIn’s top in-demand skills: 1. Blockchain, 2. Cloud Computing, 3. Analytical Reasoning, 4. Artificial Intelligence, 5. UX Design, 6. Business Analysis.

Notice anything else about these in-demand skills? They correlate with the latest emerging technologies and new, trendy tech languages. We are confident in predicting that as new technology trends emerge, these hard-to-fill jobs will follow suit.

Why? Well for skills like AI, BlockChain, Cybersecurity, etc., you’ll be hard-pressed to find an engineer that can just “wing it.” These positions require specific skills and languages that take education and practice to refine. 

And unfortunately, the tech world moves faster than the ivory tower. So, education (both formal institutions and more recent solutions, like boot camps) are playing catch up. 

This leaves business scrambling to get ahead of the latest technologies and fighting for the same few engineers that have the right skillset. 

Which companies win these in-demand engineers? 

Companies that have the prestige and budget to attract these recruits are getting first dibs. 

When competing for cutting edge talent with the likes of Google, Apple, and IBM, smaller companies rarely win out. 

And this doesn’t just apply to the Technology industry. Other industries like Healthcare, Finance, and Retail also have skin in the game as they attempt to stay relevant by developing new technologies and reinventing their services to keep up with their evolving customer demands.

How can you get ahead of the talent shortage? 

Didn’t think we’d leave you hanging, did you? Lucky for you, partnering with companies like KMS puts you at an advantage. 

By leveraging outsourcing, you can tap into a whole new talent pool. And since you are not competing with some of the Western tech giants, you have access to the top engineers globally.

Other companies see the potential too. According to KPMG’s 2019 CIO Survey, 41% of organizations were planning to increase their outsourcing spend. 

Close the talent gap and cut costs? It’s a win-win. 

Ready to supplement your team with Vietnam’s top talent?


Curious to know more about how outsourcing benefits your bottom line? Check out the Economics of Outsourcing.

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