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The Digital Talent GapDeveloping Skills for Todays Digital Organizations
The shortage of digital skills in the current marketplace is unprecedented. It is estimated that over 4.4 million IT jobs will be created around Big Data by 2015; however, only a third of these new jobs will be filled1. Martha Lane Fox, the UKs digital inclusion champion, believes over 16 million people in the UK lack the basic digital skills to fully benefit from the Internet2. Even Millenials are a matter of concern. In a survey comprising over 800 middle to upper management executives from over 50 industries, nearly one in five Millenials in the modern workplace are perceived to be lacking in analytical skills3.
a Organizations that truly transform by leveraging digital technologies
The impact of digital technologies is now felt not only in the IT department, but across the entire organization, creating a huge demand for digital skills.
The War for Talent Has Gone Digital
The reasons driving this skills shortage are not hard to identify. The usage of mobile, social and analytical tools is permeating the length and breadth of every function across the organization. Unlike the past, the impact of these digital technologies and tools is felt not just in the IT department. This means that the magnitude of training and re-skilling that is required is enormous. Moreover, each new technology cycle has brought forth new requirements and these cycles are increasingly getting shorter. Employees must now refresh their skills more frequently if they wish to stay relevant in this rapidly changing digital environment. The head of India R&D Labs of software firm SAP succinctly states: The shelf life of a software engineer today is no more than that of a cricketer about 15 years. The 20-year-old guys provide me more value than the 35-year-olds do.4
Organizations are beginning to recognize the magnitude of the problem. Our own research with the MIT Center for Digital Business has revealed that 77% of companies considered missing
Figure 1: Digital Leaders or Digirati are already investing in digital skills and reaping the benefits
We agree/strongly agree we have digital skillsWe are investing in the necessary digital skills
All Others Digirati
Analytics Social Mobile
Digirati All others
82% of respondents from Digirati agreed,compared to 40% in other firms
Source: Capgemini Consulting MIT Center for Digital Business Research, The Digital Advantage: How digital leaders outperform their peers in every industry, 2012
digital skills as the key hurdle to their digital transformation5. Digital leaders or Digiratia are already investing in digital skills and reaping significant benefits in comparison to other companies (see Figure 1). On average, Digirati are 26% more profitable than their industry competitors.
This skills shortage is creating a war for talent, where companies have to compete for the best talent with new categories of players. Unlike in the past, the hunt for the best talent is no more limited to localized skills in certain departments. In this case, the talent war is manifest across the entire organization. The important questions are: Do organizations include digital skills as a key component in their workforce plans? Are HR departments equipped and skilled to bring innovative solutions to bridge the digital skills gap? How are Digiratis developing digital skills?
77% of companies consider missing digital skills as the key hurdle to their Digital Transformation.
Despite the skills shortage, only 46% of companies are investing in developing digital skills.
Only 4% of companies we interviewed are aligning their training efforts with their digital strategy.
Organizations are currently facing an acute shortage of digital skills. To find out the current level of skills shortage and reasons behind this shortage, we interviewed companies across the globe.
Companies are Not Investing in Digital SkillsOver 90% of the companies we interviewed stated that they did not have necessary skills in the areas of social media, mobile, internal social networks, process automation and performance monitoring and analysis6. That is not to say they do not realize the importance of such digital skills. Our research with the MIT uncovered that 87% of companies feel digital transformation is a competitive opportunity7. However, only 46% were investing in the development of digital skills8.
Training Programs are Out of Sync A key challenge that we uncovered was how out of sync the training efforts were. We found that only 4% of companies ensured that their training efforts were aligned with their overall digital strategy.
Current Approaches to Developing Digital Skills are Broken
The result of this lack of synchronization and alignment became clear when we analyzed corporate training budgets allocated to digital. We found that none of the companies we surveyed spends more than 20% of its training budget on digital. Such poor investment is clearly reflected in the limited reach of training initiatives. For an overwhelming 95% of companies, only 20% of their workforce benefited from trainings on digital8 (see page 4).
Many Companies Continue to Use Traditional Approaches for Sourcing Digital SkillsCompanies seem to be overly cautious and conservative in their acquisition of digital skills. We found that while companies are increasingly using multiple methods to source digital skills, they still rely heavily on traditional methods such as training, recruitment and partnership. In our survey, over 63% of companies are using such traditional methods to source digital talent10. On the other hand, only 13% of companies are using innovative methods such as targeted company acquisition or an incubator approach (see page 4). While traditional methods definitely need to be considered, other inventive avenues present many untapped opportunities. There have been many success stories of companies that have used innovative approaches such as acquiring companies and engaging startups through incubation.
The Human Resources Function is Not Actively Involved in Digital Skills Development An added challenge appears to be the fact that HR is not in the drivers seat when it comes to steering digital skills development. We found that only 30% of organizations have mentioned HR as being actively involved in skills development11. So, the question remains who is managing the transformation of skills if it is not HR? In over 60% of the companies we surveyed, it was the senior leadership, IT division, functional teams and employees who were spearheading digital skills development12.
This lack of investment and alignment with digital strategy is worrisome as it means that companies still have a long way to go before they can resolve their digital skills issue. Apart from the investment focus, a talent shortage of the magnitude that organizations face today requires a more proactive stance on the part of companies. Organizations need to tap into newer platforms for acquiring skills while also accelerating the pace of skills development. They need to understand that traditional skills and approaches are not going to help them in the digital age. In the next section, we take a look at the skills that organizations need in order to thrive in the digital world.
Yet, they are not investing in digital skills
Companies realize the digital skills gap and its importance
of companies align theirtraining efforts withtheir digital strategy
of companies are usingtraditional methodsto source digital talent
of organizations havementioned HR as beingactively involved inskills development
of companies have identifiedsenior leadership, IT division,functional teams andemployees as leading cohorts
of companies are usinginnovative methods
No company spends
Moreover, existing efforts to develop skills are out of sync
Companies Continue to Use TraditionalApproaches to Source Digital Skills
Human Resources Function is Not ActivelyInvolved in Digital Skills Development
4%Only of its> 20% training budget on digital
are investing indeveloping digital skills46%Only
Only of companies workforce benefits from training on digital20%
Current Approaches to Developing
Digital Skills are Broken
of companieslack digital skills
of companies feel digital transformation is a competitive opportunity
Over 50% of companies realize mobile is a key skill for digital transformation; over 80% of them face a talent shortage in mobile.
Only 13% of companies described their social media efforts as advanced.
Figure 2: Skill Evolution for the Digital Age
Strong understandingof Business Drivers
Knowledge of technical underpinnings
BusinessProfessionals Digital Age
Source: Capgemini Consulting Analysis
What Skills are Most Relevant for the Digital Age?
One of the common challenges that most organizations have faced in the past is how technical teams and business teams speak different languages. In todays digital age, this will prove to be a significant hurdle. The proliferation of digital tools and technologies across functions means that the business worker has to learn sufficient technical skills. At the same time, the technical engineer should be ready to speak the business language in order to be in sync with their marketing and product counterparts. In the long-term, the need is for an evolved pr