What’s the cost of the IT skills gap? One analysis says $5.5 trillion by 2026

Dive Brief:

  • Tech talent shortages will cost organizations $5.5 trillion by 2026, according to IDC market research. The analyst firm, which surveyed 811 enterprise IT leaders in the U.S. and Canada, said the losses will stem from product delays, the inability to compete and loss of business.
  • Skills gaps in IT operations, cloud architecture, data management and software development triggered digital transformation delays of up to 10 months for nearly two-thirds of organizations, the report found.
  • While the problem has intensified, generative AI capabilities are filling some gaps, Gina Smith, research director for IDC’s IT skills for digital business practice, told CIO Dive. The firm trimmed $1 trillion from an estimated $6.5 trillion in revenue losses it forecast two years ago, largely due to “AI coding technologies, personalized learning and other improvements.”

Dive Insight:

In the ongoing enterprise push to root out technical debt, modernize systems and use IT to drive growth, sourcing the necessary skills has become a perennial pain point. IDC expects 9 in 10 organizations to feel the pinch by 2026, according to the report.

Talent woes have intensified over the last decade, Smith said, pointing to IDC’s survey data. “What’s different now is the accelerating pace of new technologies,” Smith said. “IT leaders have always had trouble keeping employees up-to-date. Now the pressure is on.”

The downstream impacts of an IT staffing crisis can cut across the business.

More than 3 in 5 respondents said skills gaps triggered product delivery delays and missed revenue goals. Nearly as many reported quality problems and customer satisfaction shortfalls as a result of IT talent shortages.

The rush to deploy emerging large language model capabilities has only exacerbated the problem. AI proficiencies are now the most highly prized and difficult to source IT skill set, cited by 45% of respondents.

With the unemployment rate for technologists below 3%, organizations are responding to the challenge with training initiatives and using generative AI in the process.

More than half of respondents reported their organization was piloting or in full deployment mode with generative AI-assisted upskilling initiatives. But 41% said their organization had no such plans. 

Currently, the technology is most commonly used to analyze skill assessment data, update existing training protocols and create new courses, the report found. But generative AI may also help enhance some of what IDC describes as more effective upskilling strategies, such as gamified training modules and hands-on labs.

Generative AI coding tools will mitigate some of the damage from talent deficiencies, too. “Even though IDC sees the current IT skills shortage as widening in severity and scope, we believe that AI technologies will shave about a trillion dollars off skill dearth impacts by 2027,” Smith said.