The world is currently undergoing a massive talent shift as new technologies like AI, IoT, 5G, and 6G quickly develop. However, it seems like these changes are hitting Europe particularly hard as the region’s tech development moves slower than expected, stemming from issues beyond the ongoing supply chain issues and geopolitical tensions.
Europe had hopes of reaching a 20% tech market share by 2030, but leaders say they’d need to double the current workforce of 250,000 people to do so — a daunting task in the face of a growing talent shortage. Achieving these numbers is critical for the continent to keep up with tech growth worldwide, especially in places like North America, Latin America, and Asia.
Unfortunately, businesses don’t see the light at the end of the tunnel yet. A Computer Weekly report to IT workers in Europe revealed that 40% of them are struggling with a lack of AI skills, while 37% said the same for cybersecurity. They will have to navigate murky waters before reaching the shore.
So, how can tech companies find evergreen solutions that still create short-term impact to stabilize their workforce in the foreseeable future? Let’s discuss the root of this issue and how tech leaders can act.
The Consequences of a Wider Regional Problematic
As perplexing as it is, the talent shortage is a symptom of issues that go beyond the scope of businesses. In 2023, 75% of employers across 21 European countries said it was difficult to fill job roles, a 33% increase from 2018. Experts say aging populations are a major factor in this skills gap — there simply aren’t enough qualified workers.
For example, while the talent shortage reached 84% in Germany, the unemployment rate was 3%, which points to a lack of workers in the market.
Another significant reason for the tech talent shortage is rooted in declining tech investment, especially in the venture capital sector. Over the years, the EU has focused its efforts on funding R&D, losing track of commercial development beyond academia. Even if the global startup fundraising landscape isn’t at its strongest, countries like the US still more than doubled Europe’s investment in Q1 2024, with $35.2 billion and $11.7 billion, respectively.
An inability to hire more staff due to low fundraising and a workforce that garners more R&D rather than hands-on experience is keeping European companies on the sidelines of the global competitive tech market.
Businesses have also taken the brunt of tougher regulations that scare investors away and stunt technological growth. These factors, in addition to external aspects like supply chain issues, energy insecurity, and geopolitical tensions, affect the region’s companies even more.
Overcoming Scalability Obstacles With Upskilling
It’s no secret that successfully scaling a business comes down to country, or in this case, single market, regulations, investment, and a smooth supply chain. This is where European companies are facing an uphill battle more so than any other region in the world. In fact, in early 2023, 84% of CEOs cited that competitiveness had weakened due to regulations — executives are feeling the pressure of an environment that makes it hard for businesses to thrive.
However, while talent shortage isn’t an easily fixed issue, there’s one element companies can fall back on to alleviate it: upskilling and reskilling. Forty percent of companies globally are already doing so to redeploy employees rather than hire and onboard new ones.
Upskilling might seem like a financial stretch at first, but its benefits shine through in the long term, producing more satisfied and committed employees who can build tenure and bring more value to the company.
It isn’t the quickest solution for current difficulties, but European companies ought to take advantage of more upskilling opportunities and foster a learning culture. They can start by offering college courses, online certifications, or other short degrees for their employees to delve into tech like AI, cybersecurity, or even IoT. This way, they’re building resilient and attractive employees in a scarce job market.
Considering Offshoring To Fill In The Gaps
Beyond the long-lasting benefits of upskilling, Europe’s talent shortage needs a solution now. Offshoring has become the next best thing to hiring skilled local talent, and times are changing toward geographical preferences for this practice. Asia used to be the world’s darling when it came to offshoring tech talent, but countries like the US are already jumping on the new trend of hiring Latin American remote tech workers instead.
This is in part due to Latin America’s booming tech sector post-pandemic, which has brought about a well-skilled workforce looking to work remotely for global companies. A recent report using LinkedIn data showed that the region has around 2 million software developers, most of whom come from Brazil, Mexico, Argentina, and Colombia.
These workers are best suited for tech companies that work asynchronously to defeat the timezone barriers, but the benefits far outweigh the drawbacks. Latin Americans have proven to be highly adaptable to global cultures and working environments, and 74% of companies hiring international remote workers, including those in Europe, experienced productivity gains. Additionally, the exchange rate from EUR to Latin American currencies means businesses can hire quality talent at better prices.
Latin America is undergoing rapid digital transformation, which has facilitated more access to remote talent through better connectivity and remote payments with digital wallets — previous obstacles in the region. By adopting stablecoins powered by regional fintechs, European companies have it much easier paying remote talent with lower fees and favorable exchange rates.
European companies are going through a transformational period on several economic, political, and technological fronts. It isn’t easy to weather the storm of a talent shortage and an inability to scale due to external factors. However, there are more tools available for businesses to fulfill their tech talent needs with long-lasting and beneficial opportunities like upskilling and remote talent.