Make smarter tech talent decisions: The cost of hiring for IT roles

A new IT role has opened up on your team. Should you hire someone new or upskill an existing employee?

There are a few reasons why upskilling is better than hiring for tech jobs, including cost savings.

But don’t just take our word for it. By surveying 1,500 tech executives, IT professionals, and business professionals, we uncovered the advantages of internal hiring and the average cost of hiring versus upskilling.

Between upfront costs and long-term expenses, upskilling is almost always going to be more cost-effective than hiring for IT roles. Here's a closer look at some of the benefits of upskilling employees.

89% of organizations say hiring is more costly than upskilling. On average, US organizations spend $14,170 on hiring and training a new IT employee. When it comes to upskilling, they spend $5,770. That’s a difference of more than $8,000 per employee.

A similar story emerges across regions. UK organizations spend roughly £9,800 on hiring and £6,000 on upskilling per IT employee. And in India, organizations spend ₹64,200 on hiring and ₹41,000 on upskilling.

When organizations opt to upskill rather than hire externally, they can use the difference to fund new tools that will improve efficiency or invest in additional upskilling opportunities for their teams. This can improve job satisfaction and reduce employee turnover long term.

The cost of filling tech roles comes down to more than upfront hiring or training expenses. Time also plays a major role, and one of the advantages of internal hiring is that it's often faster than hiring externally.

According to SHRM, the average time to fill job vacancies is 34 days. But that number tends to be higher for technical roles. In fact, it takes an average of nine weeks for organizations to fill open IT positions.

Depending on the size of your organization and the skills and experience needed for the role, the hiring process can stretch even longer. The longer those roles sit open, the more productivity drops, skills gaps widen, and increased workloads put greater strain on your current employees.

The average employee holds 42% of unique institutional knowledge. That’s information that no one else in the organization knows, including things like workarounds that make processes more efficient, the reasoning behind certain decisions, and important context about a customer’s needs.

For large organizations, this has a real cost: They lose $47 million in productivity a year from inefficient knowledge-sharing. 

Upskilling increases the likelihood that institutional knowledge is shared between employees. When you upskill a current employee for an open tech role, they’ll bring their existing institutional knowledge with them. 

Having knowledge from other parts of the organization can make them more effective and better collaborators in their new role. They can also share their knowledge with whoever fills their old position so that information isn’t lost.

When you hire externally, you bring in someone who knows nothing about your organization, tech stack, or unique intricacies. Fresh perspectives can improve innovation, but you might lose productivity in the process.

While upskilling is the more cost-effective choice to fill IT roles, there are some situations where you have to hire. For example, maybe you need someone with deep expertise in a certain topic that none of your current employees are familiar with. 

In that case, streamlining the hiring process can help your new IT professionals contribute faster.

• Collaborate with HR teams: Review job descriptions for accuracy and ensure HR understands which skills new hires need. Even when you don’t have open job requisitions, share information about your team’s skills gaps and new roles you might need for future projects. When you’re approved for more headcount, you’ll have a head start on the process. 
• Avoid looking for the “perfect” candidate: Hiring and upskilling aren’t mutually exclusive. You don’t need to find a candidate who checks every box—you can upskill them after they’re hired. Instead, prioritize candidates with critical skills you can’t train for. This will widen your talent pool and likely shorten the hiring process at the same time.
• Assess your new hire’s skills: Once you’ve hired a new tech professional, understand their skills so you can assign them to the right projects, identify growth opportunities, and set them up for success in their role. Get a checklist to assess your team’s skills.

When a new tech job opens up in your organization, consider the upfront and long-term costs of sourcing talent internally or externally.

In most cases, you’ll be better off opening the role to internal candidates before searching elsewhere. If hiring is your only option, look for candidates you can train for specific skill sets.

Uncover more insights in the Tech Skills Report which features data from 1,500 tech executives, IT professionals, and business professionals across the United States, United Kingdom, and India.