Hire or upskill? The cost of tech industry skill development
Compare the cost of hiring vs. upskilling IT professionals to fill technical skills gaps and open roles. Learn how skill development benefits organizations.
May 22, 2024 • 4 Minute Read
When it comes to open IT jobs, organizations have two options: hiring new talent or upskilling current employees. Depending on your organization’s unique needs, there’s no right or wrong answer, but data from our 2024 Technical Skills Report found that skill development tends to be more time and cost-effective.
Keep reading to find out more about the ROI of upskilling vs. hiring IT professionals.
Table of contents
Hiring new IT professionals: A short term tech skills solution
Organizations are hiring for tech roles. CompTIA research found more than 392,000 active job postings for tech occupations in the first month of 2024 alone.
But while organizations tend to think of hiring as a quick way to find top talent, is that really true? Here’s what our report found about hiring new employees for IT jobs.
Challenges of hiring IT professionals in the tech industry abound
97% of organizations have faced challenges when hiring new IT professionals. Some of these obstacles include:
Attracting candidates with the right skills. 51% of organizations struggle to find candidates who have the skills they need. As technology progresses and skill sets become more specialized, it will get even harder to find advanced skills in the market (and secure them from the competition).
Long onboarding and training processes. 50% of organizations say the time required to onboard and train new employees presents a challenge when hiring. New IT professionals need trained in their unique role and responsibilities, as well as the organization’s mission and vision.
Low retention rates for new hires. Half of organizations say new hires leave after a few months. They invest time and money in recruitment, onboarding, and training, only for employees to leave before they can make an impact.
Misleading resumes. 46% of organizations have experienced applicants who overstate their qualifications. As a result, recruiters spend more time sorting through applications and it’s harder for hiring managers to tell if someone really possesses the skills they need to succeed.
Inefficient recruitment processes. 44% of organizations say their recruitment processes could be more efficient, compounding other hiring challenges.
The cost of hiring new IT professionals
SHRM research lists the average cost per hire at nearly $4,700. But the true cost of hiring can be three to four times the position’s salary. According to the 2024 Technical Skills Report, the average cost of hiring new tech talent is $23,450 per employee.
Learn more about technical skill development costs in three different regions: the US, UK, and India.
How long it takes to hire new technologists
Despite the cost of hiring, many organizations assume hiring is a quick way to secure top talent with tech skills—which makes it a worthwhile investment even if it costs a little more.
In reality, 66% of organizations say hiring new talent takes longer or the same amount of time as upskilling existing talent. And the average time it takes organizations to fill open positions? Nine weeks. The average time to fill reaches up to ten weeks in the United States.
The longer requisitions stay open, the longer roles and skills gaps go unfilled. Little by little, productivity declines, workloads increase, and ROI drops.
Upskilling tech employees: A long-term skill development fix
Hiring isn’t the only option organizations have to close skills gaps. Upskilling employees is a viable solution—and it’s typically more effective in the long run.
Benefits of tech skill development
99% of organizations have benefited from upskilling their employees in some way:
Increased productivity. 55% of organizations say upskilling has increased employee productivity. When employees have the skills they need to use tools and technology effectively, they can streamline their work.
Higher retention. 52% of organizations have increased employee retention through skill development initiatives. Employees who have access to professional development and learning opportunities are more likely to stick around.
Smaller skills gaps. 51% of organizations say they’ve filled skills gaps in their organizations through employee training. For the organizations that haven’t filled gaps with employee training, conducting a gap analysis and assessing current skills can help your skill development program address critical needs.
Learning culture. 48% of organizations report stronger learning cultures. Investing in upskilling and supporting employee engagement with the program helps build learning habits across organizations.
Flexibility. 48% of organizations say upskilling has helped them build a more flexible workforce.
The cost of upskilling new tech employees
Perhaps unsurprisingly, upskilling existing employees is more cost-effective than hiring new talent. On average, organizations spend $15,231 on upskilling employees for IT roles. That’s $8,000 less than the average cost of hiring.
In addition, more than half of organizations (57%) say they spend less than $5,000 on training an IT employee.
Uncover the ROI of tech skill development in your organization
All things considered, upskilling tends to be more cost-effective and efficient than hiring. It helps you fill skills gaps, improve retention, and boost productivity—at a fraction of the cost of hiring.
If you’re still deciding between hiring and upskilling for open positions, our 2024 Technical Skills Report contains questions that can help you make the right decision for your organization.
Want to put skill development to the test in your organization? Sign up for a free trial of Pluralsight Skills for your team and give them the expert content and hands-on labs they need to fill critical skills gaps.
