Major Survey Reveals IT Companies Struggling with Talent Shortage and Rising Costs

IT Companies Grapple with Talent Shortage and Rising Costs

A recent survey conducted by M&A Capital Partners, led by CEO Satoru Nakamura, unveils pressing concerns among leaders of medium-sized system integrators and software development firms regarding the state of the IT industry, particularly focused on talent shortages and rising costs.

Survey Overview
The survey, titled "Challenges in Securing IT Talent and Future Perspectives," targeted 110 CEOs of medium-sized SIer/system development companies with fewer than 300 employees. The internet-based research, planned by IDEATECH, took place from November 11 to November 13, 2025.

Key Findings: Talent Shortages and Recruitment Challenges

- Over 53% of the surveyed CEOs reported experiencing a talent shortage, while approximately 41% admitted they struggled to meet their hiring goals in the past year.
- Worryingly, only 44.6% of respondents expressed satisfaction with their current workforce's skills, indicating that more than half have concerns regarding their employees' capabilities.

The survey revealed that the primary issue hindering recruitment is the lack of technical skills among candidates, noted by 44.4% of respondents. Other issues include a scarcity of applicants at 37.8% and insufficient experience among candidates and heightened competition in the job market, each cited by 31.1% of CEOs.

To address these recruiting challenges, many companies have adopted various strategies, with 33.6% focusing on enhancing salaries and benefits. Additionally, 24.5% have introduced flexible working conditions, including remote work options, while 20% have improved their overall employee benefits.

Interestingly, while nearly 29% of businesses reported an increase in labor costs over the past year, a staggering 53.1% admitted they could not pass these increased costs onto their service or product prices. Additionally, 60.9% of the companies stated their labor costs remained relatively unchanged, underscoring the difficulty in adjusting pricing to reflect rising operational expenses.

Ongoing Threats to IT Companies

The challenge of securing talent and rising labor costs are viewed as prominent threats to IT companies, with 35.5% of CEOs indicating they expect recruitment to become more difficult in the next three years. Another 32.7% pointed to rising costs as a significant concern for their future.

According to M&A Capital Partners, advancements in digital transformation (DX) across industries necessitate a skilled workforce, yet the talent gap continues to widen. The company's survey underscores the dual challenge faced by IT firms, where an increase in demand for tech solutions is juxtaposed with a dwindling pool of qualified talent.

Recommendations for IT Companies

In light of the survey findings, experts encourage IT company leaders to consider mergers and acquisitions (M&A) as a viable strategy to combat talent shortages. By integrating other IT firms into their operations through M&A, companies can bolster their workforce with existing talent and enhance their market competitiveness.

However, the survey also revealed reluctance among CEOs to utilize M&A as a solution, with only 4.4% considering it for business expansion and none viewing it as an option for business divestiture.

This suggests that while many recognize the potential of M&A to address human resource challenges, it has yet to be widely adopted as a strategic solution. IT executives are encouraged to explore all opportunities for growth, including M&A, to navigate the evolving landscape of the industry.

Insights from M&A Capital Partners
Ken Yamazaki, head of the Corporate Information Division, emphasizes the urgent need for solutions to the pressing hiring issues many companies face, advocating for proactive engagement with M&A strategies to ensure future success. With the ongoing evolution of digital technologies, organizations must adapt and evolve their approaches to nurturing and acquiring talent to safeguard against looming setbacks in the rapidly changing tech environment.