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Excess IT Labor Demand in the UK Signals Need for New Business Model

Posted 14 July, 2015by Mary McCoy

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Business is booming in the United Kingdom's (UK) IT market! According to CompTIA's UK State of the Channel Report (2015,) the IDC estimates that the UK IT market has reached approximately £97 billion ($163 billion), making up 4.5% of the global total. Unfortunately, as we're seeing worldwide, this market growth has triggered a higher demand for highly skilled IT labor than there currently is a supply of, driving the cost of labor sky-high. How can MSPs subject to these constraints not only survive, but thrive under such an IT skills shortage? 


Excess Demand of Highly Skilled IT Labor

Careers in information technology are hotter than ever. As a recent ComputerworldUK article establishes, the level of demand for staff in the UK IT and computing sector last month (64.8) exceeded the territory's average for all vacancies (62.7). Indeed, reports by the Recruitment and Employment Confederation and KPMG indicate that demand for IT staff continues to climb for both permanent and temporary workers. Whereas once IT was limited to computers, now with our ever-advancing digital landscape and new technological solutions being introduced into daily business processes, there's a lot more to master and manage. For instance, consider the rise of cloud and mobility adoption among small-to-medium-sized businesses. With all of the new IT infrastructure that's been developed over the years, companies need to have more highly-skilled, trained technicians oversee their complex networks. That's why they often outsource their IT department to MSPs. There are two potential hardships with this increase in demand for skilled labor:

1. Cost of Labor

You may have to hire new talent with these skills, and talent of this caliber doesn't come cheap. In fact, when there's excess demand for highly skilled IT labor, candidates with these skills can request premium salaries. When every employer needs your services and there are so few of you, you command the market equilibrium. As a result, the UK IT market is experiencing upward pressure on the cost of labor, and many MSPs can't afford it.
 


As for the second hardship, this brings me to the other piece of the labor puzzle... 


Shortage of IT Skills in Labor Market

There aren't enough candidates with the skills needed for your MSP business to remain competitive. The IT skills shortage is a global phenomenon and one that's especially prevalent in the UK. A CIO UK article cites a recent report to the House of the Lords, which finds that "[t]he standard of the computer science educational curriculum has steadily declined at all levels through from school to university over the past 10-15 years." With this lack of IT talent and the government’s cap on visas for skilled workers from outside the EU, many MSPs are faced with two grim business realities that drain their labor resources and budgets.

1. We'll Take What We Can Get 

Many of you hire candidates that simply aren't qualified for the job. As cited in CompTIA's study, among the top challenges in transitioning to a managed IT services business model are the "need for new kinds of technical training" and "hiring skilled staff to accomodate new lines of business." This "beggars can't be choosers" mentality is obviously problematic since the cost of IT labor will only rise with time. Spending this much on talent is only worth it if you get something out of it. Why hire dead weight? 

 2. We'll Make Do Internally

Rather than hire unqualified candidates, you may be tempted to rely on your current staff to manage complex IT projects and client demands. Investing in your team isn't inherently a problem. You should always train your employees to perform higher value work, whether that be receiving the latest certifications or learning sales and marketing best practices. You should invest in and reward your staff. The issue that arises is one of scalability. At some point, the rate your client base increases will surpass the rate at which yourinhouse team will be able toaccomodate the volume of client requests.
 

How then do you compensate for this IT skills shortage in a sustainable way?


Leverage a New Business Model - Labor Arbitrage

Let's review the labor challenges you're faced with in this burgeoning UK IT market:

  • There's an increased demand for highly skilled IT labor.
  • The cost of this labor is at an all-time high.
  • There's a shortage of highly skilled IT labor.
  • You must decide whether to hire unqualified candidates and train them or invest solely in your current IT team. 
  • You must scale your MSP business so as to support new clients and grow your practice.

As you can see, many of these items are at odds with one another, but they don't have to be. When you leverage an RMM platform integrated with a Network Operations Center (NOC), you get the unparalleled expertise of nearly 600 highly-skilled, certified engineers and technicians, available 24x7x365. If you're struggling to hire and retain IT talent, you'll want to explore this labor arbitrage solution. Unlike software-only solutions, a world-class NOC helps you scale by absorbing up to 90% of routine tickets and gives you the bandwidth to say "yes" to any client request. You do all of the interfacing with clients. The NOC helps on the backend by providing the round-the-clock coverage you need to be able to sustain continuous growth. Wouldn't you rather focus on higher value initiatives, like strengthening client relationships? 

To learn more about how our integrated RMM platform and unique labor arbitrage business model can help you scale your business, stop by our booth at Autotask Effective Leadership through Smart IT  on July 15th at The Royal Institution in London! In the meantime...

RMM 101: Must-haves for Your IT Management Solution

 

See also:

Meet Mary! Mary McCoy is a Demand Generation Programs Manager at Continuum, where she's worked for over two years. Mary primarily manages the MSP Blog and has consulted with hundreds of partners, lending website, blog and social media support. Before that, she graduated from the University of Virginia (Wahoowa!) with a BA in Economics and served as digital marketing intern for Citi Performing Arts Center (Citi Center), spearheading the nonprofit’s #GivingTuesday social media campaign. Like her school’s founder, Thomas Jefferson, Mary believes learning never ends. She considers herself a passionate, lifelong student of content creation and inbound marketing.


RMM 101: Must-haves for Your IT Management Solution
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