April 12, 2023

Shortage of IT specialists: The cost of an unfilled position

Shortage of IT skills in Germany: Unfilled positions cost companies thousands of euros and compromise IT security. Approaches to solving this problem go beyond making labour law more flexible and recruiting skilled workers.

To put it mildly, things are not looking so rosy on the current German IT job market.

According to a recent study by Bitkom, the largest digital association for the development of IT markets in Germany, there is currently a shortage of 137,000 IT specialists across all sectors. That is almost 150 % compared to the previous year. This number has been rising steadily since the beginning of the measurement and is causing the business operations of German high-tech companies to slow down considerably in some cases due to a lack of IT experts. Our Austrian neighbours are also struggling with the same problems, with a shortage of 24,000 IT professionals. Compared to Germany, this seems considerably less, but in percentage terms the situation is much more dramatic.

(Fig 1: IT skills shortage in Germany, bitkom)

The situation has become so acute that Bitkom has proposed making German labour law more flexible for the IT industry in order to address the shortage of IT professionals in the short term. In addition, the association has advocated further facilitating the immigration of foreign IT professionals to fill the vacancies. Currently, this refers especially to the Ukraine crisis and the immigration of people from Russia and Belarus - the circumstance holds the potential of an estimated 59,000 IT jobs.

Obviously, Germany needs to take action to ensure that it can meet its demand for qualified IT professionals and close this gap to remain competitive in the global market.

Up to 73,000 Euros

Because an unfilled vacancy can be really expensive. A recent analysis by StepStone shows that the "cost of vacancy" - that is, the costs incurred by an unfilled position - is on average 29,000 euros. But for companies with over 250 employees, the costs even rise to over 73,000 euros. IT thus ranks second with about 37,300 euros and is only surpassed by the health sector, where the "cost of vacancy" is about 37,700 euros. This is followed by sales (36,600 euros), crafts (32,600 euros) and production (30,800 euros). An unfilled vacancy causes a significant financial impact for companies.

How are vacancy costs calculated?

StepStone uses both its own data and data from the Federal Employment Agency to determine vacancy costs. The average salary of a worker forms the basis. Another essential factor and multiplier is the vacancy duration (also "time-to-hire"), which is given by the Federal Employment Agency. In the IT sector, it takes an average of 118 days to fill a vacancy. Finally, the average turnover of a worker depending on the size of the company is included in the calculation. 

IT security

In addition, there is another literally unpredictable factor in IT - namely the aspect of IT security. This means that companies are not only falling behind in competition due to a lack of qualified employees, but also in coping with growing security requirements and legal regulations in the digital environment.

A lack of skilled staff can have serious consequences such as data protection and security breaches. This affects not only the operational, but also the organisational area. Companies need qualified employees who, as data protection and security officers, can monitor the implementation of necessary measures - including, for example, the requirements of the GDPR, the KRITIS Regulation or standards such as ISO 27001.

How can companies counteract the IT skills shortage?

The policy statement adopted by the Federal Government to amend the Skilled Workers Immigration Act represents a significant and positive step towards strengthening Germany as an attractive destination for qualified IT professionals.

In response to this, Bitkom has published the position paper "Closing the Gap: Recommendations for a Sustainable IT Skilled Workforce Location Germany", which provides valuable advice on how domestic and foreign potentials can be used. 

As an IT recruitment consultancy, we continue to take this issue very seriously and have written a series of articles to empower and encourage you to tackle this shortage head on.

We have explored the following topics:

What makes an IT job attractive?

Anatomy of a successful hiring process

ChatGPT: Application scenarios for tech recruiting

You can find these and more topics in our alphacoders Insights section.

We know that hiring IT professionals can still be a challenge for your company. With alphacoders, you get a comprehensive recruitment service that helps you discover the perfect candidates. Our service aims to give your company a technological boost by finding the right skilled workers. Get to know us better and take the initiative to fill vacancies effectively.

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