Startups and small-to-medium enterprises (SMEs) are increasingly confronted by a significant obstacle: limited access to skilled labor. In the UK alone, approximately 46% of tech startups report that a lack of skilled staff is their primary concern, while 78% of tech companies highlight digital expertise shortages as a major barrier to progress.
In this blog, we’ll explore why limited access to skilled labor is such a pressing issue, how it affects startups and SMEs, and how strategies like staff augmentation can help bridge the gap effectively.
The shortage of skilled workers isn’t a new challenge for businesses, but several recent developments have intensified the issue. For startups and SMEs, the growing gap between the skills they need and the skills available in the labour market can be particularly problematic. To understand how to address this, we first need to explore the key drivers behind the skills shortage.
As businesses evolve in response to emerging technologies, three key factors are fueling the growing gap in talent:
While most industries feel the impact of the skills gap, some sectors are struggling more than others. The following industries are seeing the greatest difficulties due to the limited access to skilled labor:
💡 Recommendation: Thinking about outsourcing to overcome labor shortages? Go through our guide on outsourced talent and discover effective strategies for hiring.
As the skills shortage deepens, startups and SMEs are facing a range of challenges that affect their ability to grow and remain competitive. Below are the 3 most significant impacts:
Competition for high skilled workers has led to higher wages, especially in industries like tech and healthcare. For startups and SMEs, which often operate with tighter budgets, these labour shortages drive up operational costs, making it harder to scale their business or remain profitable.
Without the right talent in place, startups may find it hard to maintain labour productivity or drive innovation. Critical roles go unfilled, causing delays in product launches, reduced work quality, and slower adoption of emerging technologies.
When key roles aren’t filled, existing employees may be forced to take on additional responsibilities, leading to burnout. This can further exacerbate high turnover rates, creating a cycle of staffing shortages. In short, limited access to skilled labor leads to overworked employees who may feel undervalued, and this potentially means lower morale and reduction in productivity.
As businesses increasingly digitize their operations, the demand for workers with digital expertise has never been higher. Unfortunately, the supply of talent with these advanced technical skills is woefully insufficient, particularly for startups and SMEs that rely on digital platforms and tools for economic growth.
💡 Recommendation: Have a look at our guide about how much will it cost you to outsource business processes in case you turn to this option as a way out of skill shortages.
Startups and SMEs particularly need professionals with expertise in:
Now that we've explored the impacts of the skills shortage, let's turn our attention to practical solutions. One such solution that has proven effective for startups and SMEs is staff augmentation.
Staff augmentation is the process of temporarily bringing in external talent to fill skill gaps within your existing startup team structure. This allows businesses to access specialized skills on a flexible basis without the long-term financial burden of traditional hiring. It’s a cost-effective way to ensure that you have the talent you need when you need it.
Let’s take a closer look at some of the main benefits of staff aug:
As businesses continue to struggle with limited access to skilled labor, it’s clear that the right support can make all the difference. This is where Digipal comes in.
At Digipal, we specialize in providing startups and SMEs with handpicked engineers and IT professionals who have the specific skills you need to thrive. Whether you’re looking to fill short-term positions or augment your team for the long haul, Digipal offers the flexibility and expertise to meet your needs.
Here are 3 key reasons why partnering with Digipal can make sense for your business:
With Digipal’s on-demand workforce, you can quickly bridge the gap in your limited access to skilled labor, empowering your business to innovate, grow, and stay competitive.
To wrap up, the limited access to skilled labor continues to be a major challenge for startups and SMEs. Rising costs, reduced productivity, and employee burnout can hinder your ability to grow. However, solutions like staff augmentation offer a way to navigate these issues.
By partnering with Digipal, you can access a skilled workforce tailored to your needs, allowing you to remain agile and competitive in an ever-changing labor market. Don’t let the skills gap hold your business back—contact Digipal today and secure the expertise you need to succeed.
Skilled labor refers to workers who have specialized training, expertise, or education in a particular field. These individuals possess abilities that are often in demand, such as software development, data analytics, and engineering, which are essential for startups and SMEs to drive innovation and remain competitive.
The shortage of skilled labor is largely driven by rapid technological advancements, insufficient education and training systems, and global disruptions like the pandemic. For instance, the demand for expertise in AI, data science, and cybersecurity has surged, but the supply of workers with these skills has not kept pace, leading to significant talent gaps across industries.
Countries like Germany, Switzerland, and Singapore are known for their highly skilled workforces, thanks to strong vocational training systems. However, Eastern European countries, particularly in the tech and digital sectors, are emerging as affordable and skilled alternatives for startups and SMEs, offering expertise at a lower cost.
In the EU, the skills shortages are most pronounced in sectors driven by rapid technological advancements. Industries like IT, software development, cybersecurity, and data science face significant gaps, as demand for these digital skills continues to outstrip supply. Manufacturing and engineering also struggle due limited access to skilled labor in automation, IoT (Internet of Things), and robotics. Healthcare, especially in digital health services, faces similar challenges as the sector undergoes a transformation driven by aging populations and the rise of telemedicine.
The skills gap in the workforce refers to the mismatch between the skills employers need and the skills workers possess. This gap is especially visible in industries undergoing digital transformation, where the demand for specialized digital expertise (such as AI, machine learning, and cybersecurity) is growing much faster than the supply of workers with the necessary training. The gap is fueled by factors such as insufficient education in emerging technologies, outdated training systems, and global disruptions that have slowed labor market development.
To fill a skill gap and overcome limited access to skilled labor, businesses can use strategies such as staff augmentation, where external talent is temporarily brought in to provide the necessary expertise. Outsourcing certain roles or projects to external specialists is another option. Additionally, investing in reskilling and upskilling existing employees through training programs tailored to emerging technological needs can be effective. For startups and SMEs, flexible engagement models like staff aug allow them to access skilled workers without the financial burden of full-time hires, ensuring they remain competitive despite the skill shortages.
