Even as demand for data infrastructure surges to an all-time high, Equinix is planning to lay off 3% of its workforce, suggesting a growing skills mismatch in the industry.
The data center provider, whose major competitors according to IDC are Digital Reality, NTT Communications, and QTS, operates more than 260 data centers in 33 global markets, and expects revenues of roughly $8.7 billion this year, up around 7% over 2023. It intends to invest up to $15 billion in new infrastructure to support AI.
However, it confirmed last week that it will lay off roughly 400 of its 13,000 employees worldwide. The news comes amidst reports that the company also plans to close its infrastructure as a service (IaaS) division Metal in 2026, and in the wake of the appointment of new CEO Adaire Fox-Martin and a shakeup in its C-suite that saw the departures of CIO Milind Wagle and CISO Michael Montoya.
The growing skills mismatch
Equinix is no doubt undergoing the kind of reshuffling that can be expected under a new CEO, but the move to reduce headcount during a data center boom is indicative of deeper industry-wide challenges, particularly around skilling.
“We’re seeing mixed signals with the overall tech labor market, with certain industries, including the tech sector, seeing bumpy hiring,” Forrester principal analyst Fiona Mark told Network World. “For many organizations, while budgets are ticking slightly up, it’s only in line with inflation, while new initiatives, including AI, need to be funded.”
According to Goldman Sachs, data center demand in the US alone is projected to nearly triple by 2030, driving more than $1 trillion in investment.
Equinix told Light Reading that the layoffs are a result of the evolution of its services to support changing customer needs, which requires internal adjustments and resource reallocation. At the same time, Equinix says it is continuing to actively recruit new talent.
There’s no doubt that there’s a skills challenge in the data center market and in IT at large. Studies by BCG and LinkedIn have found that one-third of skills associated with technology roles will be obsolete in five years, requiring new skills in their place. For instance, according to Forrester, app development is on the decline (after hitting its peak in 2021).
“Like enterprises writ large, data centers face major challenges in getting the right people with the right skills into the right roles,” Gina Smith, research director of IT skills for digital business at IDC, told Network World.
Forrester’s Mark agreed that it’s a much harder labor market to navigate for those without AI skills, leading to “higher layoff potential.”
“With an uneven economic recovery, and enterprises unsure about future market prospects, we’re seeing organizations look to reduce costs and maintain a tight focus on initiatives that produce value,” she said.
She pointed out that AI skills, including knowledge of copilots that support coding, and AIOps, which leverage predictive and generative AI to improve data center operations and reduce manual interventions, not surprisingly, command a premium these days. Skills in architecture are also in high demand, as power-hungry AI systems require rethinking of data center design. Additionally, the industry is looking for workers with knowledge of cloud architecture and engineering, data analytics, management, and governance skills.
Some enterprises “may be forced to go through the disruptive and costly cycles of layoffs and hiring of new employees with required skills into the organization, losing both institutional knowledge and creating organizational instability through continuous churn,” Mark predicted.
Reskilling a necessary next step
As AI alters the enterprise landscape, analysts emphasize the importance of upskilling and reskilling existing employees. While this requires investment on the part of enterprises, it is “far more efficient and less costly than looking for talent on the outside,” said Smith.
Going forward, she said, knowledge of machine learning, data analysis, and model training and engineering will be critical, as will skills around cybersecurity, automation technologies, cloud development, IT service management (ITSM), DevSecOps, and IT ops.
The best way for data centers to keep employees abreast of the latest technologies is to put in place a culture of continuous learning, said Smith. This requires C-level support and a mix of training types, such as self-paced learning, classroom learning, virtual instructor-led training, and in real-world settings including labs, games, hackathons, and quests.
“New gen AI-fueled tech training platforms won’t get rid of skills shortages,” said Smith, “but they can help data centers provide custom learning for individuals and teams.”
Source:: Network World