Why 2018 will be a dramatically different year for tech labor

by David Foote March 21, 2018

Group of workers collaborating at table with mobile devices

Two long time labor trends have quite dramatically shifted recently. First, market value volatility for tech skills is ebbing; the 945 certified and noncertified tech skills tracked in my company Foote Partners’ “Tech Skills and Certifications Volatility Index” have smoothed out after more than a decade of high volatility (see below graphic). Second, the constant frenzy surrounding short term skills gaps and unfilled jobs targeted at point solutions has quieted down according to our quarterly labor market benchmark research. It’s being overtaken by something more urgent and potentially catastrophic when it comes to managing tech professionals.

Sounds a bit ominous? It should if your company is unprepared for several early stage, game-changing emerging technologies that will soon alter the landscape of not just businesses but the private lives of billions of people. Among them are Blockchain, Internet of Things(IoT), AI/machine language, Automation, and a range of digital solutions.

The upshot is 2018 is shaping up to be a much-anticipated year when employers will finally take stock in how poorly prepared they are from a talent perspective for consuming these revolutionary though nascent technologies. And trust me, they will all be enthusiastically embracing them within the next five years.

The hard truth is that at too many companies the human resource management function supporting technology professionals has for years been unable to get in front of the unique demands of the technology workforce. They’ve been barely getting by with work around solutions and short-term fixes.

The next five years will test their people management capabilities will like never before. If these new blockbuster technologies existed independent of one another it would not be nearly as frightening from a labor demand perspective. But they don’t: they’re all part of one gigantic dynamic mesh. This mesh will demand an unprecedented level of talent that will place a stunning labor strain on employers regardless of whether they are developing, supporting, or consuming these pervasive groundbreaking technologies.

Here’s the thing---employers cannot aspire to capitalize on Blockchain, IoT, AI/machine language, Automation, and the rest without first climbing out of the deep hole they’ve been digging for years. That means replacing HR management systems and practices that lack the power, agility and flexibility necessary to do competitive combat in a labor environment substantially different than what has existed heretofore.

The good news is there is a window of opportunity right now while these new technologies are maturing.

We believe 2018 will be a breakthrough year for “people architecture” and agile compensation models. Companies sense this labor tsunami coming at them. They will finally commence the serious work of repairing broken or underperforming people management systems and practices.

We’ve observed that the only viable solution to this mess is applying architecture principals to the management of people. This should be a novel idea, but it is. It’s similar to how architecture thinking, and practices were applied to technology inventorying and acquisition in the early 1990s and to businesses since the day they began. Enterprise architecture later became its own discipline as technology and business converged over the last two decades.

Agile compensation is the answer to the chaos created by the proliferation of technology related job titles and lack of consistency in job definition and pay programs across the enterprise for the same work performed.

People architecture is similar in principle to traditional IT architecture initiatives but applied instead to workforce management and IT human capital. There are strategy and capability roadmaps, phase gate blueprints, benchmarks, performance metrics, and stakeholder management is critical. Governance issues need careful attention and business strategy drives it all.

But with Agile Compensation and People Architecture it’s about how key human capital management (HCM) elements such as job definition and design, skills demand and acquisition, compensation, incentives and recognition, professional development, and work/life balance plug into an overall optimized operational model. The model is tuned to new technologies, business strategy, organizational goals, and culture and performance philosophies, and it promotes flexibility and scalability, like any disciplined architecture approach.

People architecture approaches correct lack of job title standardization in the marketplace and too many job titles floating around IT departments, corporate departments, and business lines. With so many dimensions and variability in tech jobs, employers are unable to cope with the complexity of defining, determining pay, and laying out career paths for all these jobs. For many, serious retention and hiring problems are showing up for the first time. Recruiters are picking off your best people and candidates are suddenly rejecting offers. Tensions are palpable and that’s one of the factors driving People Architecture and Agile Compensation in 2018.

Let’s take a deeper dive into each of these emerging technologies to see why they’re going to succeed and what skills will be most in demand.

Internet of Things

Two of my earlier articles examined how IoT is disrupting tech staffing. Part 1enumerated hot skills and jobs in the “things” portion of IoT and in the connective tissue between the “I” and the “T”; Part 2 focused on Big Data opportunities related to IoT; on cross-skilling between hardware and software engineering and development; and on key communication, associative thinking/learning, and collaboration skills.

Blockchain

At a high level, blockchain technology is a way of securely managing access and information. What makes this distributed ledger technology so interesting to businesses and some governments is how it is positioned to make vast improvements in an almost endless array of transactional activities.

Modest prognostications are that it might have a widespread impact on the Four Horsemen of Capitalism: revenues, profitability, market share and customers satisfaction. More intrepid analysts including Foote Partners are suggesting that once the kinks get worked out—and they will—the blockchain platform, in concert with other key technology fueled developments such as Internet of Things, will propel a revolution at a deep core business process level.

Previously unattainable ways to reduce costs and improve efficiencies will become commonplace. Even more, it will enable practical solutions for saving human lives and easing suffering as its benefits are applied to, for example, food distribution and manufacturing supply chains and to healthcare.

Research analyst firm IDC forecasts that by 2021 at least 25 percent of the Global 2000 will use blockchain services as a foundation for digital trust at scale. Dozens of high profile companies—Maersk, Barclays, UBS, Walmart, Sony and Samsung among them—have already implemented or experimented with blockchain. Large vendors IBM, Microsoft, Hewlett Packard Enterprise, Amazon Web Services and SAP are queueing up with sizable investments that will no doubt facilitate countless blockchain solutions in their partner accounts. Aside from North America, we see big blockchain technology investments in the Middle East, Asia and in Europe where blockchain centers have already emerged in Berlin, Zurich, Singapore and London.

The explosive 2017 growth of bitcoin notwithstanding, we believe 2018 will mark the true beginning of a broader labor marketplace awareness of demand for specific blockchain skills. There will be more awareness of skills shortages for developers and especially architects who can design and build blockchain operating models. Understanding how blockchain integrates with IoT, artificial intelligence, machine language, robotics and other technologies is a plus now for architects but will be a requirement in the future as these other technologies mature and adoption rates increase.

Blockchain skills in short supply and therefore best bests in 2018 for tech professionals looking to gain entry into this niche include:

Ethereum’s smart contracts platform.
Cryptocurrency platforms. Filecoin (for storage), SparkleCOIN, Bitcoin.
Gameflip, a global marketplace for gamers to transact digital goods for games across all media platforms
Smart contract programming languages: Solidity; LLL; Serpent.
Java, C++, Go and Python developers with experience programming on a Blockchain platform.

Blockchain developers will need a minimum of two years professional experience as a software engineer; a solid understanding of ledgers, consensus methods, blockchains and cryptocurrencies; expertise in threat analytics, anomaly detection and performance management; strong understanding of algorithms, data structures, cryptography and data security, and decentralized technologies. Technical skills for developers may include strong demonstrated coding skills in at least one of these languages: Go, C, C++, JAVA, Python; a good understanding of distributed storage; at least some degree of experience creating blockchain frameworks and business applications; and soft skills common to any effective developer operating in any high-performance team setting.

Foote Partners latest cash skills pay premium survey data reveals Blockchain premiums are ranging from the equivalent of 12 percent to 17 percent of base salary, and averaging 15 percent.

Basically, the move to digitized transactions is unstoppable, and blockchain will be a part of that process. Blockchain skills are not at the top of our list of sought-after skills for 2018, and don’t mistake any uptick in demand next year for a tidal wave. This will be a moderate but steady climb 2018 and into 2019, expected to accelerate in mid-2019 as blockchain technology gains acceptance.

My next column will complete my tech labor forecast, focusing on automation, AI/machine language and digital product development. I’ll also talk about the key role the soft skills will play in these new technologies.