Major cloud providers have a talent shortage too

Introduction

A look at job postings shows that enterprises are not the only ones having trouble finding employees right now. Amazon Web Services Inc. is looking to fill over 24,000 positions, according to its website. The issue of hiring woes came up in the latest round of quarterly earnings calls for the major "hyperscale" cloud providers, indicating that technology can take you only so far when it comes to growth.

An explicit benefit of the cloud deployment model is efficiency: resources can be made available as needed, and compute and storage infrastructure can scale up and down automatically as demand increases and decreases. If only the same could be said of the people required to develop, sell and support these services. 451 Research surveys have seen a persistent and growing in-house skills shortage as an inhibitor to broader cloud adoption among enterprises, and the cloud hyperscalers themselves are competing for this talent, as evidenced by job listings on their websites. The impact of the labor shortage on growth came up in quarterly earnings calls, but executives pointed out that greater productivity enabled by technology can ultimately help overcome these constraints.

AWS, Microsoft Azure and Google Cloud are hiring

Amid rising inflation and falling unemployment in the U.S., many companies are struggling to fill positions. The big three hyperscale cloud providers are no exception: Amazon.com Inc.'s website indicates that over 24,000 jobs are open at AWS; searching for "Azure" on the Microsoft Corp. careers page returns almost 6,000 jobs; and a search for "cloud" on Google LLC's career page turns up over 1,500 jobs.

Of course, these cloud units are parts of much bigger companies. Estimating Amazon's total global headcount at 1.5 million, the AWS vacancies account for less than 2% of the total workforce. As of the second quarter of 2021, Microsoft had over 182,000 employees, putting Azure openings at about 3% of the total. Alphabet Inc., Google's parent company, came in relatively lean with about 150,000 staff as of the third quarter of 2021, so its cloud vacancy rate is only about 1%.

During their quarterly earnings calls, the three parent companies cited some common trends, including remote work as a continuing driver of cloud adoption as organizations adapt to a "new normal" hybrid work model due to pandemic concerns (and employee preferences). Supply chain disruption was another theme, which affected Amazon's bottom line in particular as the company doubled operations capacity to keep up with demand — its hires in the U.S. to support seasonal fourth-quarter activity led to increased costs due to higher base wages and bonuses to attract workers.

Developers take the wheel

Software development teams are critical to business innovation as companies become increasingly digitized and data-driven, and this is reflected in the nature of the positions available at the big three cloud suppliers. AWS — which has the most organized jobs listings, with non-overlapping categories — has software development as the top hiring category with over 6,764 positions, followed by professional services at 4,243, solutions architects at 2,068 and sales at 1,537.

The distribution of jobs at Microsoft Azure and Google is harder to discern, but searching across vacancies with terms related to these functions gives an interesting picture of the skills they are seeking. Software development and support roles are prevalent for Azure, while Google's top categories for openings include software development, solutions architects, sales and support.

In their third-quarter 2021 earnings calls, executives from Microsoft and Google called out the potential for software engineering to boost productivity and in some ways relieve the effects of the labor shortage on their customers. Microsoft CEO Satya Nadella, after commenting on the widespread soul-searching around work engendered by COVID-19, emphasized the company's focus on "the productivity of the people, whether they're on the front lines and the first-line workers, or the knowledge workers or even software developers, and making sure that they have the best tools … to help them be most productive." Alphabet CFO Ruth Porat, when asked about areas of increased spending by the company, said, "To support long-term growth across both Google Services and Google Cloud, we're continuing to invest at a meaningful clip across head count, compute, sales and marketing."

Another thread of cloud investment that has the potential to free up human resources is the rise of industry clouds — prebuilt offerings that are secure and compliant with regulations in industry verticals such as financial services, healthcare, retail and manufacturing. These appear to be an investment driver as businesses in those sectors seek to take advantage of cloud capabilities without having to deal with the nitty-gritty complexity of cloud operations.

^{This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.}