A mid-sized enterprise recently struggled to roll out a new application upgrade despite having a comprehensive modernization plan.
Not because the plan was bad. Not because the tech was impossible. But because they didn’t have enough people who could bridge legacy systems and modern frameworks.
And this isn’t a one-off. Multiple surveys and studies highlight the same skills gap that is stalling progress across industries. For example, one study revealed that 81% of surveyed organizations encountered a shortage in "power user or developer" tech skills.
This article delves into how the talent shortage is a bottleneck for application modernization. It explores why the shortage exists, how it impacts modernization efforts, and the strategies companies are employing to overcome this challenge.
The escalating skills gap and its impact on modernization
Modernization work is hybrid work. And that’s the whole issue.
Organizations are finding that professionals who can navigate both old legacy systems and new digital platforms are more critical than ever before.
Technology is evolving so quickly that job roles (and the skills behind them) are changing faster than most companies can hire or train for.
Recent research captures how some leaders believe this will be: over 87% of respondents expect skill shortages to have a moderate to severe impact on their business.
What happens next is predictable. Initiatives slip. Oerational friction increases. Costs rise. And, sometimes, projects stall entirely
Meanwhile, competitors keep shipping.
The demand for modernizing applications is not slowing down. On the contrary, industry forecasts predict strong market growth. One report indicated that the application modernization market sits at USD 22.91B in 2025 and could reach USD 42.60B by 2030.
However, without the right talent, this growth remains largely theoretical.
Understanding the root causes of the skill shortage
Several factors are driving the talent shortage in technology, particularly concerning CTOs.
One major cause is the rapid evolution of technology. The skills needed for newer technologies often move beyond what many academics and programs still teach.
As a result, professionals find themselves caught between outdated practices and the demands of emerging systems.
Salary pressures and intense competition among companies further intensify the problem. Organizations now compete fiercely for a smaller pool of highly skilled individuals.
Feedback from industry experts reveals that job roles and skill needs are changing so rapidly that leaders must completely rework how they manage talent.
The growing complexity of tech-driven work means traditional talent pipelines alone are no longer enough.
Also, many companies are experiencing a significant disconnect between the available skills and the skills required to maintain, update, and integrate legacy systems with modern technologies.
Consequences for application modernization efforts
Modernization is more than just a technical upgrade; it is a strategic imperative that affects competitive advantage.
When companies lack the necessary talent, timelines stretch and costs climb. They modernize the surface layer while the core systems stay brittle and expensive.
And then agility becomes just a promise (that never shows up).
One clear repercussion is the delay in updating applications, which can cripple an organization’s ability to adapt to market changes. Either side suffers (from performance bottlenecks in legacy environments to the underutilization of new capabilities that could drive innovation).
And leaders feel that pain. In a Gartner survey, a lack of talent availability was seen far more often as a barrier than implementation cost (29%) or security risk (7%).
The evolving marketplace now demands agility. Now, organizations must ensure that they can quickly adapt their technologies to meet shifting consumer expectations.
However, without skilled professionals who can effectively bridge the gap between legacy systems and modern environments, these modernization initiatives can turn into strategic liabilities (not competitive advantages).
Strategies to mitigate the talent deficit
Addressing the talent shortage means rethinking traditional approaches to hiring, training, and managing workforce skills.
- Companies are increasingly focusing on tailored training programs that upskill existing employees rather than relying only on new hires. This approach not only fills the skill gap but also promotes loyalty and deeper institutional knowledge.
- Some enterprises have turned to partnerships with educational institutions and specialized training providers to design skills that meet current industry requirements.
- To bridge capability gaps without over-hiring, companies are also rethinking how they use external vendors (shifting from time-and-materials contracts to outcome-based engagements).
- Additionally, many organizations are also strengthening mentorship programs that empower junior employees to rapidly upskill and evolve in their roles.
- Organizations are also relying on technology to mitigate the shortage. AI-driven learning platforms are being used to rapidly train employees in new systems and methodologies. Leveraging technology for skill development emerges as a pragmatic solution for many companies.
Rethinking vendor strategy as an application modernization effort.
As internal talent becomes harder to find and retain, organizations are increasingly viewing external vendors not just as executors, but as strategic extensions of their teams.
But not all types of providers deliver the same results…
Rather than defaulting to time-and-materials contracts that reward activity, leading companies are moving toward outcome-based engagements that prioritize results and accountability.
That’s why leading companies are moving toward outcome-based engagements. Fixed-price deliverables with guarantees. Milestone-based pricing. Performance incentives.
In other words: vendors with skin in the game. Like Wednesday Solutions.
Vendors are more likely to challenge flawed assumptions, flag risks early, and recommend simpler or faster paths to impact—even when that reduces scope.
And the best part: outcome-oriented partnerships also help close capability gaps without increasing headcount. Vendors become force multipliers, transferring domain knowledge, modern practices, and decision-making frameworks to internal teams as part of the different interactions.
Over time, this reduces dependency, accelerates upskilling, and strengthens internal execution.
For organizations navigating a persistent talent deficit, this shift reframes outsourcing from a cost center into a capability-building strategy—one that delivers immediate results while compounding long-term skill development.
