As we discussed on the 3Q21 Index call, one of the biggest areas of concern in our market right now for both buyers and providers of technology services is talent. Take a look at the Data Watch chart below. As you can see, attrition abated during the pandemic – but it’s back in a big way and shows no sign of receding in the near term.
Providers are pulling every lever they can to address this challenge: increasing campus hires, hiring laterally, pushing more work to subcontractors – and of course automating more. However, it takes time to ramp up campus hires and automation programs; lateral hires and subcontractors are ready to deliver, but they are more expensive.
This attrition challenge is exacerbated by the fact that demand is strong. For example, over the past 12 months, the industry has added around $4.5 billion of engineering and applications ACV – we estimate that work will require around 100,000 more resources skilled in these areas.
The industry has a long track record of managing 20 percent turnover when growth is in the low single digits; but when growth is strong, like it is today, effectively managing the supply side becomes mission critical.