Talent Shortages Persist in the Age of AI

While almost half of developers believe AI could make parts of the field obsolete, 87% of companies have reported current or expected developer shortages. Some expect this problem to get worse, leading to a deficit of 4 million developers by year's end.

The tech talent shortage isn't just another HR headache. It could lead to $8.5 trillion in lost revenue, waiting to derail growth plans by 2030. 

When you can't staff projects, innovation stalls and customer experiences suffer. Even security vulnerabilities pile up, and operational costs may spiral out of control.

Why Tech Talent Shortages Persist

Universities graduate thousands of computer science majors yearly, and bootcamps promise to transform anyone into a developer in 12 weeks. Yet many companies still struggle to fill positions, likely because graduates often lack the practical experience or specialized skills employers demand. 

Companies expect ideal candidates to have years of experience, but that can be rare, especially when they’re looking to hire for roles that work with emerging technologies. The tech landscape evolves at a relentless pace, and without a strong commitment to continuous learning, developers face critical skill gaps. 

Despite this, many businesses still expect candidates to be fluent in modern cloud architecture, have working knowledge of machine learning, and possess deep expertise in specific industry domains. 

The combination of high expectations and fast-paced change makes it increasingly difficult for companies to find talent that perfectly matches their criteria.

Meanwhile, Google, Meta, and Microsoft dangle seven-figure compensation packages. Startups offer equity that could make someone a millionaire overnight. And remote work means your local talent pool now competes globally. That can make it difficult for smaller dev teams to compete for top talent. 

But recruiting represents just one piece of the puzzle. Even when you land great developers, they only stick around for an average of two years. That's barely enough time to complete one major project cycle. You invest months onboarding them, they contribute for a year, then start interviewing elsewhere.

Can AI Fill the Talent Gap?

AI isn’t replacing development teams. But it is fundamentally changing how developers operate. 

A Clutch survey revealed that 53% of developers believe large language models already code better than most humans. However, they struggle to understand context and can have difficulty translating vague business requirements into technical specifications.

“We’ve built an AI-augmented SDLC to keep pace with how modern software is built,” says Andrew Kalyuzhnyy, CEO of 8allocate. “The way we work is pretty straightforward. AI handles the repetitive, time-consuming stuff: quick prototypes, code scaffolding, refactoring, writing tests, flagging issues in PRs, digging through large codebases; while people focus on the work that needs real judgment, like big architecture changes, tricky integrations, or security-critical decision.” 

Ultimately, real power comes from using AI to augment dev teams, not replace them. 

Where AI Excels 

Developers using GitHub Copilot report completing tasks 55% faster. It’s able to handle tasks like boilerplate coding, documentation, and unit tests, freeing developers to solve actual problems.

Traditionally, your team spends hours on repetitive tasks. It could be setting up new projects, writing CRUD operations, debugging syntax errors, or converting designs to code. But AI excels at these predictable patterns. Feed it examples, and it generates variations instantly.

But with strategy, architecture decisions, or understanding business context, AI falls flat.

• AI can generate a login form in seconds. But it can't decide whether you need single sign-on integration.
• AI writes SQL queries effortlessly. It won't know that your database should be denormalized for read performance.
• AI debugs syntax errors instantly. But it can't trace a memory leak through distributed microservices.
• AI creates API endpoints quickly. It doesn't understand your regulatory compliance requirements.

One developer with AI tools might match the output of three developers from five years ago. But you still need that one developer to guide the AI, validate outputs, and make judgment calls.

Consider code reviews. AI can flag potential bugs, suggest optimizations, and check style guidelines. But deciding whether a particular approach aligns with your long-term architecture requires human judgment. And understanding why a legacy system works a certain way? That needs institutional knowledge.

You've probably seen demos where AI builds entire applications from prompts. Impressive, until you need to modify that application six months later. Or integrate it with your existing systems. Or scale it to handle millions of users. AI-generated code often works perfectly for demos but crumbles under real-world complexity.

How Development Companies Are Building Full Teams

Despite the challenges in hiring qualified developers—especially for roles requiring emerging tech expertise—companies can’t afford to leave positions unfilled. Product deadlines don’t wait, and the pressure to deliver high-quality software on time remains constant. 

To stay competitive, development companies are finding creative, strategic ways to build complete teams. 

“Our primary strategy to attracting and retaining software development talent is the same as our strategy for attracting and retaining clients: build an authentic culture that is genuinely interested in learning about, building, supporting and enhancing amazing business software applications,” says Martin Pellicore, President of Pell Software. “By achieving this, and by building authentic relationships between people who genuinely care about building great software, everything else falls into place. As a result we provide a growth-oriented, high-performing atmosphere that works for retaining both talent and clients.”

From rethinking hiring criteria to investing in upskilling and leveraging global talent, organizations are adapting quickly to ensure they can meet demand and maintain momentum.

Offering Benefits to Boost Employee Retention

Retention beats recruiting every time. Training a new developer costs months of productivity. But keeping your existing team costs far less.

But ping-pong tables and free snacks don't cut it anymore. Developers want meaningful work and growth opportunities. They're not leaving for 10% salary bumps. They're leaving because they're burned out or see no path forward.

Remote work changed everything. Your developers can work from anywhere, which means they can work for anyone. If you force them back to the office without a good reason, you'll see them update their LinkedIn profiles. But if you offer true flexibility, they'll stay despite higher offers elsewhere.

Career progression needs clarity, too. Show developers exactly how to move from junior to senior to architect. Not vague promises about "opportunities for growth," but concrete milestones, skill requirements, and timelines.

Culture also matters more than you think. Developers know which companies have death march crunches and which respect work-life balance. They know who invests in training and who treats people as disposable. Even your Glassdoor reviews directly impact your ability to hire.

Stock options used to be golden handcuffs. Now they're table stakes. What actually retains people?

• Letting them work on interesting problems.
• Giving them autonomy over technical decisions.
• Protecting them from pointless meetings and bureaucracy.

Providing AI & Skills Training

Without continuous learning, even senior developers become obsolete within a few years.

Thus, AI training isn't optional anymore. Every developer needs to understand prompt engineering, whether they're building AI features or just using Copilot. So, set aside dedicated learning time. Not "when you get a chance" but scheduled, protected hours for skill development.

Create internal AI champions. Pick developers who are excited about new technology. Give them time to experiment, then have them train others.

Partner with online platforms. Coursera, Udacity, and LinkedIn offer enterprise subscriptions. But don't just provide access and hope people use it. Reward certifications and make learning part of performance reviews.

Run internal hackathons focused on AI integration. For example, give teams 48 hours to solve real business problems using AI tools. You'll discover capabilities you didn't know existed. Plus, developers learn better by doing than by watching training videos.

Your training budget should include the AI tools themselves. ChatGPT, Claude Pro, GitHub Copilot — these cost less than one team lunch but multiply developer productivity. Don't make developers pay for tools that help them work faster.

Offshoring & Nearshoring

Geographical restrictions are no longer a thing. Your next great developer might be in Warsaw, São Paulo, or Bangalore.

Offshoring isn't about cheap labor anymore. It's about accessing talent wherever it exists. “Operating in Eastern Europe gives us access to a talent pool of over a million skilled professionals, and combined with the strong people-oriented culture we don’t really face a talent shortage,” says Kalyuzhnyy. “In fact, we’ve adjusted our pricing models downward several times in recent years to reflect turbulent market conditions and efficiencies provided by AI, and pass on the benefits of cost optimization directly to our clients.”

But successful offshoring requires intentional structure. You can't just hire random freelancers and expect magic.

• Build dedicated teams with clear ownership.
• Invest in communication tools and overlap hours.
• Document everything obsessively.

Then there's nearshoring, which offers a middle ground. Teams in nearby time zones enable daily standups without anyone working at midnight. Cultural alignment also tends to be stronger. And travel for occasional in-person meetings remains feasible.

Many companies are also considering the hybrid model where the core team is local, and specialized skills are remote. For example, your architects and product owners may sit together. But your developers work from wherever they're most productive.

Development Teams are Adapting for the AI Era

The tech talent shortage won't disappear. It'll get worse before it gets better.

You can wait for the perfect candidate who never comes. Or you can build the team you need with the resources available. But the practical way to win is by fundamentally rethinking how you build and retain technical teams.

Your competitors aren't waiting. While you're posting another job listing, they're shipping products with AI-augmented developers in Prague, nearshore teams in Mexico City, and retention strategies that actually work. They stopped complaining about the shortage and started solving around it.

The math is simple: Companies clinging to old playbooks with office-only mandates, minimal training budgets, and local-only hiring will struggle to adapt.

The companies that thrive will be the ones that adapt fastest. Stop looking for unicorns. Start building the flexible, AI-enhanced, globally distributed teams that will define the next decade of tech development.

The shortage is real. Your response to it will determine whether you lead or fall behind.

About the Author

Hannah Hicklen Content Marketing Manager at Clutch

Hannah Hicklen is a content marketing manager who focuses on creating newsworthy content around tech services, such as software and web development, AI, and cybersecurity. With a background in SEO and editorial content, she now specializes in creating multi-channel marketing strategies that drive engagement, build brand authority, and generate high-quality leads. Hannah leverages data-driven insights and industry trends to craft compelling narratives that resonate with technical and non-technical audiences alike. 

See full profile