## Global competition for technology workers (TECH TALENT SCRAMBLE)

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**Canonical URL:** [Global competition for technology workers (TECH TALENT SCRAMBLE)](https://www.imf.org/-/media/files/publications/fandd/article/2019/march/global-competition-for-technology-workers-costa.pdf)

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### Scope and scale of the shortage
- Global tech spending was expected to grow to $3.7 trillion last year, up 6 percent from 2017, according to Gartner Inc.
- Technology and science jobs in the United States outnumbered qualified workers by roughly 3 million as of 2016 (Randstad NV).
- By 2030, there will be a global shortage of more than 85 million tech workers, representing $8.5 trillion in lost annual revenue (Korn Ferry).
- Projected country-level shortfalls (Korn Ferry):
  - Brazil: up to 18 million
  - Indonesia: up to 18 million
  - Japan: up to 18 million
  - United States: 6 million
  - Russia: 6 million
  - China: 12 million
- The tech share of US GDP has surged more than sixfold since 1980 (PwC), while employment in the sector has not expanded materially, indicating significant productivity gains.
- High-demand roles identified: data scientists, software engineers, programmers, cloud computing experts.

### How jurisdictions are competing
- Cities, school districts, and countries are offering targeted financial incentives including higher salaries and tax breaks to attract tech workers.
- Example of municipal/national recruitment initiatives:
  - Wellington, New Zealand: flew in 100 high-skilled workers and their families to interview with local firms; more than 48,000 people from 28 countries applied.
  - Amazon’s second headquarters competition: selected locations were to receive incentives worth nearly $2.5 billion (New York City and Arlington, Virginia); Amazon later abandoned the New York base.
- National and regional policy instruments in use:
  - Tax incentives: Netherlands allows foreign workers to earn 30 percent of their income tax-free (the “30 percent rule”).
  - Residency/citizenship offers: Portugal offering residency and the prospect of eventual citizenship to tech workers and entrepreneurs; Portugal started offering a path to a European Union passport for anyone willing to hire at least 10 workers or make other major investments in the local economy.
  - National training initiatives: India’s Skill India launched in 2015 to nurture tech skills in younger generations.

### Employer and firm-level responses
- Firms across sectors (including retail and financial firms) are aggressively recruiting tech talent, not just traditional tech companies.
- Remote work expands the hiring pool but increases global poaching risk for employers.
- Strategies when overseas recruitment is impractical:
  - Partnering with local universities and offering workshops and courses to groom new workers (example: First Atlantic Semiconductors & Microelectronics in Nigeria).
  - Relocating operations to regions with fewer competitors to reduce employee poaching (example: moved headquarters from Lagos to Owerri, a city of 1.2 million).
- Training initiatives by private tech firms and NGOs:
  - Google launched a free training program starting in March 2017 aimed at closing the digital divide and training 10 million high-skilled workers in Kenya, Nigeria, and South Africa.

### Case studies and outcomes
- Wellington, New Zealand:
  - Success in attracting talent through an organized recruitment campaign that brought candidates in for in-person interviews; domestic firm partnerships (e.g., Xero Limited) were crucial.
  - Individual outcome: Darren Kidd, age 32, moved in August to work as a developer for Xero Limited; pay comparable when adjusting for cost of living; quality of life and family transition support were key draws.
- Portugal and Mycujoo:
  - Pedro Presa moved operations and later expanded to Lisbon; Mycujoo opened an office in Lisbon two years ago, has 18 employees, and expects to hire three dozen more in the next year.
  - Portugal’s incentives and lower cost of living made it an attractive destination for tech firms.
- Greece:
  - Crisis-stricken Greece is partnering with venture capitalists to invest in homegrown tech companies; multinational tech companies like Oracle, Samsung, and Citrix have acquired Greek tech firms.
- China:
  - Sends millions of students overseas for secondary education in science and technology fields but has had limited success attracting them back; language and cultural barriers hinder inbound attraction.
- Nigeria:
  - Local firms struggle to match international salaries; training partnerships with universities are used to build talent pipelines, but retention remains a challenge due to multinational poaching.

### Implications and policy directions highlighted in the text
- Supply-and-demand dynamics will likely intensify competition and push up compensation for high-skilled tech workers.
- Public-sector involvement is increasing as governments recognize technological change as a potential source of being left behind.
- Effective strategies observed:
  - Combine financial incentives with quality-of-life and family-transition supports to attract and retain workers.
  - Invest in domestic training programs and partnerships with educational institutions to build local skill pipelines.
  - Use tax and residency incentives selectively to improve attractiveness to expatriate and foreign-born tech workers.
- Potential downside:
  - Reliance on remote labor and cross-border recruitment can accelerate talent poaching and make retention more difficult for employers in less competitive markets.

*Pedro Nicolaci da Costa, FINANCE & DEVELOPMENT, March 2019.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2019/march/global-competition-for-technology-workers-costa.pdf_