The Global Competition for Technology Talent – IMF Finance & Development Magazine | March 2019
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- Authors: PEDRO NICOLACI DA COSTA
- Published: March 1, 2019
Overview
- Countries, cities, and firms are increasingly competing to attract a limited pool of qualified technology workers as tech roles expand across industries.
- Tech spending was expected to grow to $3.7 trillion last year, up 6 percent from 2017, according to Gartner Inc.
- Companies and governments are using financial incentives, tax breaks, relocation packages, and targeted programs to recruit or train tech talent.
Global shortage and economic stakes
- 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 shortages by economy (Korn Ferry):
- Brazil, Indonesia, and Japan: up to 18 million workers apiece.
- 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.
Employer and government recruitment strategies
- City- and country-level initiatives:
- Wellington, New Zealand: flew in 100 high-skilled workers and their families to interview with local tech firms; more than 48,000 people from 28 countries applied.
- Amsterdam/Netherlands: offers a 30 percent income tax exemption for foreign workers (“the 30 percent rule”), making hiring expats attractive.
- Portugal: offering residency and the prospect of eventual citizenship to tech workers and entrepreneurs; programs to incentivize hiring and reinvestment.
- India: Prime Minister Narendra Modi launched Skill India in 2015 to nurture tech skills in the younger generation.
- China: sends millions of young students overseas for secondary education and technology training; has had limited success attracting them back and attracting foreign talent.
- High-profile corporate-location competition:
- Amazon’s second headquarters contest resulted in incentives worth nearly $2.5 billion from selected locations (New York City and Arlington, Virginia); plans for a New York base were later abandoned following objections.
Employer responses and mobility
- Firms across sectors (software, retail, finance, municipalities) increasingly compete aggressively for data scientists, software engineers, programmers, and cloud computing experts.
- Remote work expands the talent pool but increases cross-border poaching risks.
- Examples:
- Darren Kidd, a 32-year-old developer, moved from Perth to Wellington in August to join Xero Limited; pay comparable when adjusted for cost of living and quality-of-life factors were decisive.
- Pedro Presa chose the Netherlands over London and Berlin for ease of hiring expats and tax incentives; Mycujoo set up in 2014 and opened an office in Lisbon two years ago; Mycujoo now has 18 employees and expects to hire three dozen more in the next year.
Training, local development, and retention challenges
- Where recruiting from abroad is infeasible, companies and governments invest in local training:
- Google launched a free training program in March 2017 aimed at closing the digital divide; Google expects to train 10 million high-skilled workers in Kenya, Nigeria, and South Africa.
- Ndubuisi Ekekwe (First Atlantic Semiconductors & Microelectronics, founded 2010) partners with local universities to run workshops and develop courses to groom specialized workers.
- Retention tactics and constraints:
- High-skilled workers trained locally can be poached by multinational firms or foreign-funded start-ups.
- To reduce poaching, some firms relocate operations (example: Ekekwe moved headquarters from Lagos to Owerri, a city of 1.2 million people, to be farther from competitors).
- Wellington’s approach combined city-led recruitment with partnerships with domestic firms like Xero to boost success; natural amenities and quality of life were additional draws.
Key takeaways and policy implications
- The competition for tech talent is driven by pure supply and demand dynamics and is becoming a public policy priority for many governments.
- Successful strategies observed in the piece include:
- Tax incentives and targeted residency/citizenship offers to attract foreign talent.
- Large-scale recruitment campaigns and centralized hiring events to boost applicant pools.
- Investment in training and partnerships with educational institutions to build local talent pipelines.
- Nonwage factors—quality of life, family transition services, and cultural fit—play a significant role in attraction and retention.
- Risks include escalating wage pressures, uneven geographic distribution of talent, and persistent global shortfalls that could translate into substantial lost revenue.
The Global Competition for Technology Talent – IMF Finance & Development Magazine | March 2019
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