Software Product Engineering Talent Shortage Deepens
October 18, 2021
talent shortage anticipated as adoption of next-generation
technologies—including cloud, AI/ML, IoT, analytics, cybersecurity, and
AR/VR—grows exponentially over the next few years.
Everest Group reports that although a talent shortage exists across the
overall engineering, research and development (ER&D) landscape, the
supply crunch is much more pronounced for emerging skills, such as cloud
engineering, artificial intelligence and machine learning (AI/ML),
internet of things (IoT), analytics, cybersecurity, and augmented
reality and virtual reality (AR/VR). According to Everest Group, the
exponential growth in the adoption of these next-generation technologies
over the next couple of years will cause a huge supply shortage in the
software product engineering world.
Enterprises globally spent US$1.27 trillion on engineering in 2020, and
more than one-third of that spend was on software product engineering.
Software product engineering has been the fastest growing segment of
engineering spending over the last four years and was the only segment
to witness positive growth in 2020, even as overall global engineering
spend declined by 2%. Contributing to sustained software engineering
spending are commercial software sellers and internet companies as well
as enterprises seeking to augment existing products with software-driven
features and functionalities.
In its newly published report, “Reaching New Frontiers in
Experience-centricity and Resilience –Software Product Engineering
Services State of the Market Report,” Everest Group examines the
dynamics of global software product engineering services trends
prevalent among leading service providers. It includes an overview of
the software product engineering market and an in-depth view of
outsourcing in this space.
Overall enterprise spend for software product engineering has been
growing at a robust pace, reaching approximately US$410 billion in 2020.
The supply crunch in the software engineering talent market is leading
to a price war, where enterprises are having to pay a premium rate to
access talent skilled in emerging software engineering themes.
talent shortage in emerging skillsets is also compelling enterprises to
explore non-traditional locations to access talent. As a result,
nearshore locations have steadily been gaining prominence for talent
Cloud engineering has emerged as the biggest spend area for enterprises,
with more activity around cloud-native engineering, platformization,
carve-outs of legacy products and verticalized solutions.
The software product engineering services market (i.e., outsourcing) has
grown at a rate of 16% over the past year to reach approximately US$23.5
billion, which is 5.7% of the overall enterprise spend.
The hi-tech verticals continue to hold a large share of the services
market, while the geography split reveals North America to be the