The rise of digital – what talent strategy is best?
|About the Author|
|Jon Stephansen is Armstrong Craven’s Practice Director – Financial Services|
If you are planning your strategy to take your organisation forward to 2025, you will need to understand demographic and talent trends in your current and future markets. Only then can you plan for successful growth over the coming years.
A severe shortfall in digital talent around the world is expected by 2020. As a result of this lack of required digital talent, a Gartner study expects 30% of tech jobs to remain unfilled.
Even today, the biggest perceived technology challenge is the lack of qualified employees. Digital talent is so highly in demand that large, traditional companies must reinvent themselves, or consider new locations, to attract enough of the talent they need.
Access to talent pools more important than cost
This is a trend we are seeing when companies are considering nearshore or offshore locations. Historically, cost has been the main driver, but going forward we believe access to talent pools will be more important than cost.
According to Business Insider, the top five high-tech cities are Tokyo, London, Silicon Valley (San Francisco-San Jose), New York, and Los Angeles, and in these cities several well-known technology leaders, such as SoftBank, Sony, Toshiba, TransferWise, Funding Circle, Apple, Facebook, Google and Tesla are hiring pretty much all available digital talent.
Most financial institutions are already large absorbers of digital talent and a major challenge for them is that they are regarded as second tier employers – compared to the large tech companies and tech start-ups.
There is therefore a clear trend to look for talent where it is available (in addition to other factors being favourable). As a result, companies like Baxter, Siemens, Deutsche Bank, UBS and Vodafone have set up and are continuing to grow technology centres in locations such as Romania, Poland and India.
To advance innovation in payments, Visa has set up innovation centres in Berlin, Dubai, London, Miami, San Francisco and Singapore. These centres enable Visa’s clients and partners to explore new technologies that advance commerce in areas such as authentication, digital, security and cloud.
Where will digital talent be available – and what industries will drive demand?
Armstrong Craven has recently completed numerous projects where we analysed current talent pool sizes and growth projections for digitally focused employees, as well as anticipated growth industries in India, the US, the UK, China, and Japan.
We found that India has the largest current talent pool of digitally-focused employees, followed by the US, the UK, China, and lastly Japan. When these figures are projected forward using individual compound annual growth rates, India will see the largest increase (45%), and, as such, will have the largest projected digital talent pool by far in 2025.
With over 460 million active Internet users, which still represents a low market penetration, all aspects of India’s digital economy are expected to grow considerably as Internet usage across the nation continues to increase. We have estimated that there are close to 1.25 million people currently holding digitally focused roles in India, a number projected to grow significantly to 1.8 million by 2025.
According to the UK-India Business Council, the industries that will drive demand for digital talent over the coming years, in addition to TMT and Financial Services, are expected to be Healthcare and Life Sciences, Construction and Infrastructure (including Smart Cities and industrial corridors) and Retail.
The US, with just over 1.22 million people holding digitally focused roles today, will see only marginal growth with numbers reaching 1.35 million by 2025.
According to the Bureau for Labor Statistics, US Robotic Industries Association, Statista and Research & Markets, the additional industries that will drive this demand in the US differs from India. They are Healthcare, Renewable Energy, Artificial Intelligence and Robotics, and Autonomous Vehicles.
In the UK, FinTech, MedTech and Digital Media are industries leading the way, and, in addition to TMT and Financial Services, they are expected to drive demand for digital talent. Digitally focused roles are expected to increase by 22% and reach almost 470,000 by 2025.
Slowing population growth and a shrinking pool of workers present a challenge to China’s economic growth generally. In addition, many Chinese citizens are taking up employment overseas on temporary visas.
China’s digital sector ‘tiny’ compared to traditional sectors
|Digital talent is so highly in demand that large, traditional companies must reinvent themselves, or consider new locations, to attract enough of the talent they need.|
Despite China’s growing digital sector, it is still miniscule compared to agriculture, manufacturing and other tertiary sectors which contribute the vast majority of the country’s GDP. China has the second smallest digital talent pool of the five countries we have studied, and by 2025 we expect that it will grow to approximately 425,000.
According to numerous sources, Renewable Energy, Healthcare and Life Sciences and E-commerce are some of the industries that will drive demand for digital talent in China over the coming years.
Japan’s ageing population and declining workforce has been widely documented. To enable growth in numerous sectors, the country will be dependent on migration. Net migration is on a strong upward trend with the largest inflow of migrants from China and South Korea.
As a result, Japan’s digital talent pool is expected to grow to 415,000 by 2025. According to the JapanGov Abenomics Update 2018, the industries that will drive this demand over the coming years, in additional to Financial Services and TMT, are expected to be Autonomous Vehicles, Healthcare, FinTech and I-Construction (Automation/IoT).
What are the consequences for corporations?
Talent pools will change more rapidly in the coming years than they have in the past and that is especially the case for digital talent. Corporations need to adjust requirements and organisational changes to fit the landscape, only then can they plan for the right skills and capabilities required.
Talent availability, talent migration, changes to and advances in technology, as well as socio-economic and political shifts are important external factors to consider. It will also be important to identify which skillsets and capabilities can be nurtured within the existing employee base, as digital talent must also come from the development of digital skills in existing roles.
Future talent scenarios must take a number of important factors into account, including:
- Will you be able to train/retrain enough existing employees to meet some of the demand?
- Is it likely that the skills you require from an external talent pool will be available?
- Will you be able to find talent with these skills where you need them?
- Will you be able to attract them?
- Will you be able to on-board them properly?
- What is your back-up plan if there is a shortage of talent with the required skills?
Talented people want to work for ambitious organisations and digital talent often gravitates toward organisations with ambitious plans for a digital future. Successful organisations must take steps to communicate their digital ambitions to build employer brand.
To future proof and position your organisation for successful growth over the coming years, you must formulate a clear digital talent strategy. It must meet both your organisation’s business objectives and the needs and preferences of the digital talent cohort.
You must, first and foremost, understand where talent will be available and diversify your recruitment approach to ensure that you will be able to attract the required talent.
Jon Stephansen is Armstrong Craven’s Practice Director – Financial Services