IT skills: Should you build or buy?

IT leaders these days are in fierce competition for top talent. Consider these three steps to determine whether you should focus on developing internal talent or look outside
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In the staffing industry, it’s often said that employers are hunting for a “purple squirrel” – an ideal candidate with an impossible-to-find mix of skills, experience, or other credentials. Employers hunting purple squirrels are no doubt well-intentioned, but such overly restrictive hiring practices lead to unfilled positions, overworked teams, and lost productivity.

These consequences are severe enough for companies under normal circumstances, but in today’s climate of sky-high resignation rates, tepid labor force participation, and rapid technological change, they can become existential threats. To avoid this, leaders should reevaluate the skills they recruit for in the market – that is, the skills they “buy” – and identify the skills they can train internally – or “build” – in their existing workforce.

This is easier said than done, however, and many technical teams still have a “buy-first” mentality. Research at Emsi Burning Glass shows that nearly 70 percent of existing tech workers with high-value, high-growth skills – such as machine learning or emerging cybersecurity skills – were sourced from outside their current organization. Employers are fighting for the same pool of scarce workers, forcing them to poach from one another and sending salaries into the stratosphere, which only hurts employers in the long run. They miss an opportunity to architect their workforce from the ground up.

[ What are today's candidates looking for? Read IT talent: 6 ways job expectations have evolved. ]

In contrast, building your workers through targeted learning and development enables you to grow the universe of workers with mission-critical skills, expand and diversify the talent pools you recruit from, and boost retention and employee morale.

3 steps to assess whether IT leaders should build or buy skills

That said, not all training initiatives produce the same return on investment, and some skills simply can’t be trained quickly or cost-effectively. Therefore, CIOs and other leaders should take the following three steps to determine which skills they should build rather than buy.

Step 1: Inventory skills across your team

You can’t prioritize skills to build if you don’t know what skills you have, so taking an inventory of your team’s current skills is foundational for all build vs. buy decisions. This may sound daunting – after all, most companies have long defined their workforce in terms of roles, not skills – but there are options for tracking skills that won’t break your back or your bank.

Some of the most common ways to take a skill inventory include worker assessments or surveys, competency frameworks, and analytics-driven skill inventories using market data. You can also ask your colleagues in human resources whether they already track skills. But whatever approach you take, it will save you money in the long run by avoiding heavy investments in reskilling – or worse, staff reductions – only to find the right skills were in place the whole time.

Step 2: Anticipate the skills you will need

Once you know your team’s current skillsets, you are ready to identify the gaps between the skills you have and the skills you need. This requires peering into your crystal ball to anticipate the skills you will need to be future-ready. You can do this by benchmarking your team’s skills against the skills hired by your most innovative peers, gathering data on the skills that are growing fastest in your industry, and assessing the capabilities you need to meet your business goals.

The lower a skill's supply and the higher its salary premium, the greater your training ROI is likely to be if you can build that skill internally.

As part of this step, it is useful to assess the value of each skill to your organization. You can do this qualitatively through conversations with hiring managers or other key stakeholders, or quantitatively through surveys and analysis of internal or external market data – such as the average salary premium associated with specific skills. This will help you prioritize the highest-impact skill gaps to address first.

Step 3: Compare the effort to buy vs. build

The last step is to determine whether it is more efficient to buy or build the skills your team needs by comparing the effort each of these will take.

To assess the effort to buy a skill, consider how prevalent it is in the market and whether it is likely to come with a salary premium. Is it a common skill that many workers have, or is it still rare? Will requesting that skill drive up the salary you must pay? The lower a skill’s supply and the higher its salary premium, the greater your training ROI is likely to be if you can build that skill internally.

Even if the effort to build a skill is prohibitive, you may still need to buy it, even if it is hard or expensive to find. Evaluate the time needed for a worker to learn the skill, as well as the prevalence and cost of relevant training solutions. Is it a targeted technical skill that can be learned in a matter of weeks, such as a specific programming language or software tool, or does it require years of deeper learning, such as PhD-level data science skills or knowledge of an emerging field like quantum computing? If it’s the latter, then buying may be your only viable option.

Don't think either/or

Plan your skill development strategy and answer this key question: Is the effort to buy a skill greater than the effort to build it? Build vs. buy decisions are rarely mutually exclusive, so a mix is often needed.

Moreover, the same skill may make sense to buy for one role and build for another. This may not always land you a purple squirrel, but it will help you diversify and differentiate your talent sourcing strategies and enable you to maximize the return on your workforce development dollars.

[Where is your team's digital transformation work stalling? Get the eBook: What's slowing down your Digital Transformation? 8 questions to ask.]

Will Markow is the Vice President of Applied Research – Talent at EMSI Burning Glass where he oversees the research and consulting team focused on strategic workforce planning and the impact of emerging technologies on the workforce.