What is the future of the IT industry after COVID-19?

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What is the future of the IT industry after COVID-19?

Table of Contents

  1. Impact of the COVID-19 crisis on the market

  2. Increase in the number of job seekers in the IT industry

  3. The shortage of human resources in the IT industry has existed since before the COVID-19 crisis

  4. How to solve the shortage of human resources

  5. What is required of engineers in the IT industry in the future?

  6. Remaining challenges for the industry


Impact of the COVID-19 crisis on the market

In many cases, the IT industry generates its business by taking on projects from other industries such as manufacturing and retail.

However, due to the effects of the new COVID-19 virus, many companies have decided to cut costs, and the number of orders is on the decline, especially for development-related projects. Since development projects tend to be large in scale and have huge budgets, they are more like investments for the future, which is why many companies decide not to start or postpone the project. The postponement or cancellation of on-premise projects seems to be particularly noticeable.


Increase in the number of job seekers in the IT industry

According to an awareness survey released on April 16, 2020 by Gakushou, the company that runs the job search site "ReJunkatsu" for people in their 20s, there seems to be a sharp increase in the number of people who want to change jobs to the IT industry. According to the survey, the number of people who want to change jobs to the IT industry is increasing rapidly.

The reason for this is that it is an industry and occupation that is easily adaptable to telework, and at the same time, it is expected to grow in the future.


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The shortage of human resources in the IT industry has existed since before the COVID-19 crisis

The IT industry has been attracting a lot of attention as a potential career change destination, but it has long been said that there is a shortage of human resources. In fact, the "Survey on IT Human Resources Supply and Demand" released by the Ministry of Economy, Trade and Industry (METI) in March 2019 reported that there is a gap between the supply and demand of IT human resources, and that changes in the IT demand structure are causing a shortage of IT human resources. The survey also estimates that the gap will widen year by year, and that the shortage will grow from 220,000 in 2018 to approximately 450,000 in 2030.

One reason for this is the rapid growth of the IT industry and IT market. For example, MaaS (Mobility-as-a-Service) is attracting attention as a "service that fundamentally changes the way people move" due to expectations of increased tourism demand in preparation for the Tokyo Olympics. Engineers are needed to develop related applications, and there has also been an increase in the recruitment of data scientists who are active in the tourism domain. The industry was also undergoing other major changes, such as the heating up of AI technology and the arrival of the IoT era.

Thus, where awareness and demand for digital transformation (DX) had already been growing, the COVID-19 crisis forced a paradigm shift that further accelerated the DX trend. This is a half-hearted evolution for Japan, which has been lagging behind the rest of the world in digitalization. While this is an opportunity for Japan to catch up with other advanced IT countries, it should also spur a shortage of human resources in the IT industry.

Companies that have understood the benefits of DX but have not been able to implement it are expected to increase their investment in IT as the COVID-19 crisis brings consumer purchasing behavior and the entire business online.

The shortage of human resources is, of course, partly due to the simple fact that there are not enough people, but the gap between supply and demand for IT personnel is also due to the fact that there are not enough people who meet the requirements that are being sought.

The number of new graduates entering the workforce is decreasing compared to the number retiring due to the declining birthrate and aging population, a phenomenon similar to other industries, but it is not just a matter of fewer people entering the workforce; the IT industry changes quickly and requires constant exposure to new information to acquire knowledge and skills. However, the older the engineer, the slower the update tends to be. This is one of the reasons why the number of "personnel who fit the requirements" is expected to decrease.


How to solve the shortage of human resources

So, how can we solve the shortage of human resources, which is expected to accelerate after COVID-19?

In the fiscal year 2020, programming education began in elementary schools. The goal is to develop logical thinking through the study of programming, so it is not a direct way to develop engineers, but it will definitely be a major trend to solve the shortage of human resources in the IT industry.

However, considering the fact that today's elementary school students will not start working for at least another 15 years, the solution for the next few years will be to actively recruit engineers from overseas, with a focus on Asia, such as Vietnam, which has been focusing on IT education, and India, which has the largest number of engineers in the world. Vietnam, which has been focusing on IT education, and India, which has the largest number of engineers in the world, as well as Europe, which is making remarkable strides as an exporter of IT services, are also worthy of attention. Recently, services that match overseas engineers with domestic companies have also emerged. With the spread of remote work due to the COVID-19 crisis, the hurdle for teams to work on projects remotely has been greatly reduced, and considering that distance has become meaningless, this trend is expected to accelerate.


What is required of engineers in the IT industry in the future?

Just because the IT industry is said to be a seller's market, it does not mean that any engineer will be in high demand. There is a tendency for the performance of individual engineers to become more visible due to the shift to remote work, and in the trend to assign more talented workers, we are seeing a concentration of demand on skilled engineers.

In the future, if the promotion of talented engineers from overseas becomes more common, the competition will become more intense. Even though the trend of accelerating DX throughout Japan is coming, the situation is not optimistic for all engineers and those who aspire to become engineers.

  • Engineers who can collaborate with and oversee overseas engineers

  • Engineers who have sufficient experience and skills to be able to perform upstream processes such as design and project management.

  • Infrastructure engineers with strong security skills, such as server engineers and network engineers.

  • Full-stack engineers who can handle development from scratch.

  • Engineers with the ability to respond flexibly through a combination of skills, such as "programming skills x accounting and accounting" or "fault handling x documentation skills.

  • Engineers with an understanding of marketing methods.

Engineers with unique strengths such as these will be in greater demand.


Remaining challenges for the industry

When the trend is to effectively consolidate and develop talented resources, regardless of whether they are in Japan or overseas, the focus will inevitably be on "optimizing current resources," and the perspective of education as a company will fade. This situation, where growth depends on the individual efforts of each engineer, will not have a positive impact on the development of the industry. The question of "who will train them" that arises when the overemphasis on hiring new graduates and the seniority system collapses is as big an issue for us to overcome as it is for COVID-19. Programming education is advancing as a major trend, but even so, the question of how to achieve the acquisition of skills beyond the basics within an overall structure is one that we need to consider in this chaotic but rapidly advancing age.