Digitalization Supporting a Diminishing Workforce

By 2030, the world is looking at a talent shortage of more than 85 million people in critical industries such as finance, telecommunications, and manufacturing. If left unchecked, this could result in unrealized annual revenues of US$8.5 trillion.

The talent crunch will be more pronounced in developing economies such as Indonesia and Brazil – with a shortage of 18 million skilled workers by 2030. Meanwhile, countries such as India will boast a surplus of more than 1 million high-skilled tech workers in the same period.

The onus lies on businesses to relook their workforce strategies, encourage employee upskilling, talent retention, and talent recruitment policies. To support this, governments will need to develop policies and provide subsidies to encourage skill development among students to fill the talent gap in the market.

Businesses and governments will also need to find ways to work together to find sustainable solutions to the impending talent gap. The sooner the better, as the right talent forms a crucial piece in also the climate and sustainability puzzle.

Greater digitalization and robotization is also imperative in this fight against talent shortage. It is vital that businesses and governments embrace technology in a way that not only compliments, but encourages growth in talent surplus.

This topic will be discussed at the upcoming Horasis Asia Meeting, being held in UAE, between 18-19 November 2024. This year’s meeting focuses on Dubai as Asia’s new economic hub, connecting Asia to the Middle East, Europe, and African regions.

What Can Businesses Do?

To cope with talent shortages, businesses must use adaptable staffing models that integrate digital solutions and new workforce paradigms.

As automation handles more routine tasks, businesses must invest in upskilling and reskilling programs to prepare their workforce for higher-value roles. Emphasizing digital and technical skill-building enables employees to adapt to new technologies, enhancing both productivity and job satisfaction. 

As part of its commitment to build an AI-ready talent pool in Southeast Asia, Microsoft, the global tech giant has announced a skilling initiative to equip 2.5 million people with AI knowledge, across Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. On the occasion, Dr Piti Srisangnam, executive director of the ASEAN Foundation, said: “We appreciate Microsoft’s commitment to upskilling ASEAN youth in AI, a pivotal step aligning with the ASEAN Digital Masterplan 2025. By fostering a sustainable digital talent ecosystem, it will contribute significantly to our regional development.”

Asian businesses are also resorting to gig work models to adjust staffing levels according to demand. A combination of full-time, part-time, and gig workers are enabling companies, particularly in India, to fill skill gaps flexibly without long-term commitments. A not-for-profit industry association, reveals that nearly two-thirds (65%) of IT companies in India employed gig workers in 2022 to address the shortage of tech talent.

How are Governments Mitigating Talent Shortages?

Governments are also playing a crucial role in addressing talent shortages and supporting businesses through policy, education, and workforce programs. A great example is of Singapore that started early on investing in training the trainer model to develop a high-quality teacher workforce. Teachers are entitled to 100 hours of professional development, which also includes project-based learning and ICT development. 

China also started early on developing its STEM ecosystem. In 2018, China announced its STEM Education 2029 Action Plan to promote STEM+ lifelong learning model and be open to collaborate with all sectors of the society to build an integrated STEM education innovation ecosystem. In 2019, a STEM Teacher Training Center was also inaugurated in Hong Kong to strengthen STEM education research by allowing the integration of domestic and international research strengths.

Asian governments are also considering introducing favorable immigration policies to balance labor shortages. Asian economies such as Japan and South Korea that are already faced with an ageing society and declining birth rates are streamlining visa processes and providing attractive settlement options to significantly mitigate local workforce shortages. 

Seoul Mayor Oh Se-hoon stressed on the need to develop an inclusive immigration system to boost the influx of global talent into South Korea. Giving the example of the new “Top-tier” visa introduced by the Ministry of Justice, Oh said that it “could provide a solid foundation for attracting and retaining highly skilled workers essential for enhancing Seoul’s global competitiveness and addressing future demographic challenges.”

The anticipated global talent shortage demands proactive strategies from both businesses and governments. Digitalization and automation offer powerful solutions to fill the workforce gap, enhance productivity, and create opportunities for existing employees to contribute to higher-value tasks. 

By embracing technology, supporting workforce transformation, and fostering cross-sector partnerships, businesses and governments can ensure a more resilient, sustainable, and efficient workforce, ready to meet the demands of a digitalized global economy.

Photo Caption: People crossing over in front of Shinjuku Station, Tokyo.