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Andy Peddar is CEO and co-founder of Deazy

The fact that there is a shortage of tech talent in the UK should be no surprise to anyone working in Financial Services (FS). It’s a problem that dates back years, if not decades, but the bad news is that it appears to be getting worse.

In Deazy research with UK Chief Technology Officers (CTOs) in Q4 2023, those working in FS said that a lack of IT resources to manage current projects was a major concern, while 80% said there was a lack of quality developers in the UK.

What is behind the latest downturn in the availability and quality of tech talent in the UK, what impact is it having and what can FS companies do to navigate their way through?

Tech talent in short supply

Technology powers almost every organisation in FS, from the biggest global bank to the most cutting-edge market disruptor. It’s the same for most other industries, so the competition is fierce for the best tech talent. It’s an issue on the minds of CTOs, with one-third of respondents in our research saying that this lack of tech talent kept them awake at night.

The reasons for this shortage of tech talent are a combination of short-term and long-term challenges. The UK education system needs to produce more quality candidates and tech moves so fast that it is difficult for candidates and their skills to keep pace. Other factors for the lack of quality tech talent given by FS CTOs were people being put off by the prospect of Artificial Intelligence (AI) doing much of their work, the industry putting off diverse candidates and Brexit shrinking the talent pool.

This combination of Brexit, GenAI, the lightning pace of tech, a lack of industry diversity and long-term issues around the education system’s ability to create strong candidates has created a perfect storm. It’s also not a problem that is going to right itself. Factoring in AI across the company and managing an increasingly complex tech environment were cited by FS CTOs as their main remit for 2024 – both require quality tech talent.

Filling the gaps

Our research showed that many respondents said the thing most likely to stop a technology project from successfully getting off the ground was insufficient budget, followed by the challenge of managing in-house development capacity and lack of resources. FS organisations need to put in place measures that address this in the longer term but also plug gaps in the short term to ensure projects don’t suffer.

Ways of filling these gaps can be broadly grouped into three categories – training, recruitment and augmentation.

Inhouse training – an increasingly common way of addressing the tech skills gap is for an organisation to train its own employees. By recruiting the talent first, they can train people in the areas the company needs most, rather than continuing an elusive hunt for workers who tick every box. Providing such training can also be a significant factor in convincing people to join a company.

Academies and other internal training schemes can be very effective, but they are measures for the long term. This is important, of course, but it is equally important to address the skills gap right now.

External recruiting – several challenges come with filling talent gaps, most notably the absence of good candidates. The UK needs more STEM graduates, and the pace of change in the technology sector is rapid, meaning that even finding enough skilled candidates is a challenge, let alone recruiting them. This is true elsewhere, too, and with the Brexit-driven smaller talent pool, the problem is exacerbated.

If an FS organisation can find a candidate of sufficient quality, other businesses will have done so, too. Therefore, the usual ways of attracting talent – competitive salary, benefits, bonuses, strong company culture, the right working environment, and being a purpose-driven organisation – will not be sufficient. Hiring in-house talent will always be vital to a sensible resourcing strategy. Still, it can be difficult to achieve for many reasons – salaries, time to find the right candidate, onboarding time, and recruitment fees.

Outsourcing and partnerships

Using freelancers, agencies and entire outsourced teams alongside in-house developers is not a new approach. But using partnerships to plug gaps is a fresh twist on outsourcing.

The flexible tech talent market has evolved significantly in the past five years with the introduction of employee record companies, talent marketplaces, and the shift to hybrid/remote working. This makes it much more reliable and allows FS organisations to access up-to-date skills, support agile ways of working, and access whole ecosystems of talent where the ideal partner for their needs is available.

Probably the most important change to outsourcing is the evolution of partners who are focused on driving meaningful outcomes. This allows an FS company to find strategic partners aligned with its values and goals. A recent Forrester report – The Future Fit Partner Strategy – suggests the future of tech talent outsourcing revolves around such partners who commit to and guarantee delivery.

The FS sector is facing a significant challenge around finding and retaining tech talent. To navigate this challenge in 2024, organisations must put in place short- and long-term measures and working with trusted partners who share their values is an important shift that can pay dividends.