The tension between shrinking headcounts and ongoing talent shortages has created a “labor market paradox,” according to Bhushan Sethi, joint global leader, people and organization at PricewaterhouseCoopers.

“Firms are just looking at different levers that they can have in their control around redesigning process, around automation, because of the [talent] imbalances,” he said at a roundtable with reporters last week. “It’s at the high end around specialized talent.”

Amid economic uncertainty, executives across industries are preoccupied with finding and keeping talent, according to a survey of more than 700 executives by PwC conducted this month.

Among key business risks, 81% of respondents said talent acquisition and retention presented either moderate or serious risks to companies. However, 50% said they are reducing overall headcounts, 46% are dropping or reducing signing bonuses and 44% are rescinding offers.

The staffing imbalances arise from cases where organizations may have overhired in areas where they’re experiencing less demand. They may need to adjust headcounts through automation and process redesign in some areas, while continuing to fill other roles that require specialized skills, Sethi said.

Nearly two-thirds of businesses polled said they have changed or are planning to change processes to address labor shortages, up from 56% in January 2022. Overall, talent acquisition came in second as a risk behind cyber, for which 40% of respondents identified it as a serious risk.

Read the full report here