The capital behind data center construction projects is vast and the volume of work is hard to ignore—but there is a problem sitting underneath all of that growth. The people being hired into data center construction have to come from somewhere. And right now, a lot of them are coming from the rest of the construction industry that is getting left on pause.
Data centers are not creating enough senior talent. They are moving it.
One current pattern is that experienced construction professionals being moved from more traditional project types into mission-critical work.
That might mean someone coming off an airport project. It might be somebody who has spent years delivering major education or commercial projects. The data center builds need people who already understand large, complex construction. So, it’s expected that those are the people being targeted.
The issue is that hiring a strong project manager from one contractor does not suddenly increase the amount of experienced construction talent in America. You have just moved the shortage.
The data center project gets its person, but the project they left behind now has a gap.
It is construction’s version of robbing Peter to pay Paul, except Peter is already running three projects and wondering why another recruiter has just called him.
Mid-sized contractors could feel this hardest.
The biggest general contractors are in a strong position. When a billion-dollar mission-critical project needs somebody with proven delivery experience, the economics make it possible to pay a premium to get them. That makes the firms underneath them much more vulnerable. Regional and mid-sized contractors often have excellent people because those individuals have been given responsibility across complex work. Those are exactly the professionals that the bigger firms want.
Lose one person and you can probably manage it. Lose several senior people in quick succession and suddenly the problem is much bigger than recruitment. You have projects that still need to be delivered and clients expecting the same standard but with fewer experienced people available to do the work.
That is why I think retention is going to become just as important as attraction over the next couple of years.
Compensation pressure is only going one way: Up.
If you are a proven project manager or senior delivery leader in mission-critical construction right now, you are in a very desirable position.
These aren’t small projects where the contractor can afford to spend six months debating whether somebody is worth another $20,000. There can be billions of dollars of capital tied up in the successful delivery of these developments.
When a business needs someone who has done it before, that experience becomes really attractive. We are already seeing those people command a premium and I expect that pressure to continue. Companies will pay because the alternative is far more expensive.
Of course, the problem is that compensation alone does not solve the wider talent issue. You can pay more to move the same experienced person from company A to company B. You still have the same number of experienced people in the market.
Be careful about going all-in.
I am very bullish on mission-critical construction. That being said I would also be careful about betting an entire construction business on it. Those two views are not contradictory because construction always moves in cycles.
We have seen sectors become incredibly attractive, so companies reposition themselves around the opportunity only to have the conditions change within a few months. Anyone who was around construction during previous housing and multifamily cycles will know exactly what I mean.
When one market becomes the obvious place to be, it is very easy to assume it will stay that way forever. Which it rarely does. The firms I have seen come through difficult construction markets best tend to have genuine capability across more than one part of the industry. Mission-critical can be an enormous growth engine without having to become the entire company.
Diversification matters for talent, too.
There is another benefit to maintaining a broader project portfolio. It creates better leaders.
The people who will become most valuable over the next decade are the ones who have had exposure to complexity; have seen projects through from start to finish; have worked through difficult delivery environments and adapted when the playbook did not quite work.
All transferable experience and in part an answer to the talent shortage. Construction businesses cannot keep solving every senior vacancy by taking someone from a competitor. At some point, more people have to be developed into those roles.
That means giving strong people exposure to bigger projects earlier and allowing them to experience a full project cycle rather than moving every 18 months for the next salary increase – and this is coming from a recruiter.
It will be interesting to see who is leading these projects a year from now.
Mission-critical construction is going to keep pulling experienced people into the market because the demand is real and the projects are too valuable to wait around. The interesting part will be seeing where those senior leaders come from.
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