Upskill vs. Hire: A Decision Framework for Tech Leaders

Is your organization feeling the pressure to acquire new tech skills? Employers predict that new technologies will disrupt 44% of workers’ skills in the next five years, and 60% of staff will require reskilling by 2027. Whether your organization is weighing the cost of external recruitment or considering how to develop its existing personnel, a decision framework can help you make the best choice for your tech team. 

What Is the Skills Gap in the Tech Industry?

A skills gap indicates the growing discrepancy between the technical skills that companies require and those currently in the workforce. Tech leaders are concerned that their teams are unprepared to meet future demands. There are converging factors driving this issue, such as rapid breakthroughs in cloud computing and artificial intelligence. These new technologies are changing the definition of a qualified applicant.

Business priorities are also shifting, requiring tech professionals to adapt to new tools and workflows. The reason for the tech industry skills gap is complex, but 58% of tech employees believe the skills they require will significantly change in the next five years due to AI and big data — and business owners agree. A mere 39% of companies report feeling positive about the availability of talent during the same time frame, and 60% share that skills gaps are already delaying business transformations. 

Why Consider Upskilling Employees 

If your organization is facing persistent skills gaps in the workforce, upskilling is a strategic move in the right direction. Building from within delivers tangible benefits and cost savings. While it typically costs six to nine months of an employee’s salary to hire a replacement, the average cost to train an existing employee is just  $1,252. 

Internal talent already understands the organization’s systems, work culture and business goals. Upskilling preserves this context and empowers your team to adapt to new challenges. Investing in your team also sends the clear message that the organization supports its workforce, which can improve employee engagement and retention rates. A 2024 Statista report found that 71% of workers say they’re satisfied or very satisfied with their company’s reskilling and upskilling programs. Retention is higher when employees feel that leaders support and notice them. 

• Amazon’s Upskilling 2025 initiative is a $1.2 billion program to train 300,000 employees for higher-skill roles. Graduates have reported pay increases of up to 40%, making the program a win for employees, while Amazon is building a future-ready talent pipeline. 
• IBM’s SkillsBuild initiative provides a free education platform with over 1,000 courses in 20 languages to upskill underrepresented communities. The company’s goal is to equip 30 million people with in-demand skills for roles in AI, cybersecurity and data analytics by 2030.
• SAP’s Skills Transformation Programme matches employees with personalized learning paths that align with business needs. In just one year, account executives who completed targeted upskilling initiatives outperformed their peers by 55.5%. 

When to Consider Hiring New Talent

There are times when hiring new talent is the more strategic move. Adding new team members can help your team stay competitive when you’re battling deadlines or need to bring new tech innovation to the organization. The following situations might necessitate hiring external talent:

• When the work requires highly specialized abilities: Some roles, such as quantum computing and advanced cybersecurity, require significant technical expertise that may not exist in your current workforce. 
• When speed is a priority: Hiring someone who possesses the skills you require can accelerate progress, especially when upskilling your existing team may take months. 
• When the team needs creative ideas: Including talent from a different business or sector can help generate fresh concepts and provide a comprehensive viewpoint for challenges.

However, new hires can disrupt team dynamics if they don’t align with company values. Take the time to consider cultural fit before extending offer letters. It’s also important to take the talent shortage into account when considering hiring vs. upskilling. Recent data indicates that there are 9.6 million job openings in the United States, but only 6.4 million unemployed workers. This disparity further widens for highly specialized IT jobs, which emphasizes the necessity of upskilling workers to cover specific duties. 

A Decision Framework for Technical Leaders

Deciding between training existing employees vs. hiring new ones isn’t always straightforward. Having structured and data-driven approaches can help tech leaders make the best choices for their situations, such as 

1. Conducting a skills gap analysis to map current capabilities: Align strategic company goals with the skill sets your team possesses. Ascertain where you need to develop necessary skills by identifying upcoming challenges. 
2. Assessing internal growth potential: Determine who in the organization has the aptitude and desire to progress into new positions. Upskill members of your team who perform well.
3. Evaluating the urgency of acquiring new skills: Hiring might be the faster route if you need specialized skills in your team. If the organization’s goal is to improve retention rates and build a stronger team for the long term, upskilling should be your priority.
4. Considering budget constraints and return on investment: Assess the pitfalls of underusing internal talent with the financial risk of a poor hire. Investing in hiring should result in quantifiable gains in performance vs. training a current tech team member.
5. Aligning decisions with company culture and goals: Hiring new talent can bring fresh ideas and innovation but can also disrupt team dynamics. Upskilling promotes internal mobility and a stronger work culture, both of which can boost team morale. 

Implement a Hybrid Approach with Dice

Here’s a summary to consider before you decide whether to hire or upskill:

• Assess internal talent first by conducting a skills gap analysis and considering growth potential.
• Balance short-term needs with long-term company goals to build resilience.
• Think about how new hires and training initiatives may influence team dynamics.

Still not sure whether upskilling or hiring is the better option for your tech team? A hybrid approach can help you meet the immediate demand for niche skills while building long-term agility. Explore Dice’s hiring solutions today to get started.