This article is brought by the London School of Economics and Political Science (LSE) and written by Nathan Kornish to cover two main questions around the digital Upskilling:
- What problems do firms face in the digital age?
- How can companies combat digital roadblocks?
What is the Digital Skills Gap and where did it come from?
The digital skills gap is a restricted supply of individuals with advanced technological understanding and a heightened demand for this very trait. This also includes currently employed workers who lack the digital skills to truly excel at their job. These high knowledge, high productivity employees in the digital realm are scarce; this means employers must shell out increasingly high wages, but many small businesses are unable to afford this and thus face serious problems for future growth. An EY survey found 73% of respondents said a shortage of skills is impacting productivity and profitability. The same study stated 46% of respondents said that the rapid pace of innovation and new technologies is the single greatest barrier to recruitment.
The digital skills gap stems from both the lack of people going into the industry and the inability of many to learn the new skills before they become obsolete. A study by the Digital Marketing Institute found 76% of marketers think that marketing has changed more in the past two years than the past fifty. This means by the time a student graduates university the industry they are studying has completely changed; 3 to 4 years is too long to upskill. Employees are slow to respond to market trends and demand, but the tech industry moves very quickly. The only way to keep up is with quick, efficient, and adaptable training.
What are the potential opportunities?
The biggest opportunity for businesses is to train their current employees for their specific needs. High turnover and acquisition costs are something that can be overcome by training employees in house instead of pursuing the small pool of top talent with exorbitant salaries. Higher skilled employees means more productivity and revenue. Sometimes a company must spend money to make money, but investing in employees has empirical success. A study by The American Society for Training and Development found that organizations that offer comprehensive training have 218% higher income per employee than those with less comprehensive training per an audit of 2500 firms.
Interaction with people continues to be phased out of the sales funnel. With the power of the internet people are less reliant on sales representatives because nearly all the information a potential customer could need is online. The Digital Marketing Institute found 81% of consumers conduct online research before making a purchase, and 70% of the buyer’s journey is complete before they reach out to a sales rep. In comparison, 28% of prospects that are cold called actually engage in conversations, and only 1% of those cold calls will ultimately convert into appointments. Additionally, 90% of all marketing roles now require digital skills. Marketing positions have evolved into almost exclusively digital when only 25 years ago the idea of an ad on the internet was novel.
Lastly, there is an initiative by the World Bank to get kids in developing countries involved with technology. South Asia and Sub-Saharan Africa have immense youth populations that have the potential to contribute to the digital revolution. The internet had made the world interconnected to the point that employees no longer have to be on same continent. Per QA Consulting there will be 1.2 million new technical and digitally skilled people needed by 2022 in the UK alone. In 2017 the World Bank Group launched XL Africa which selected 20 startups to receive early stage capital between $250,000 and $1.5 million. Additionally, the World Bank has been hosting Digital Youth Summit in Pakistan which intends to educate and inspire young adults in the high population density area. In Jamaica, where youth unemployment is about 30%, a World-Bank supported project provided training to 15,000 young for jobs in the digital and animation industries.
What does this all mean?
The current state of affairs with, respect to digital skills, is inadequate. Lack of ability by employees and lack of apparent efforts by employers to train their employees is stunting growth of big and small business alike. There is an immense opportunity for both young and old to upskill themselves into the next generation of digital skills.
- A deficiency in digital skills is adversely impacting productivity, profitability, and innovation
- The digital marketing industry is the perfect example for an ever evolving sector that demands new skills frequently
- Investing in training employees is a proven cost saving measure through increased productivity and decreased turnover
- In the future, there will be less person to person contact and more interaction with digital interfaces
- There are large pools of students around the world that may be the future of tech jobs