Beware of the Digital Skills Gap

Featured article by Euan Davis, Associate Vice President, Cognizant’s Center for the Future of Work

Capturing a company’s digital future means finding the right talent. Make sure your company has a plan.

When it comes to navigating the digital shift, companies are blending people, disciplines and technologies in startlingly creative ways, and with good reason: it speeds the innovation that is at the heart of digital – and corporate – success.

According to Cognizant’s recent survey of 420 decision-makers across the U.S. and Europe, conducted in partnership with the Economist Intelligence Unit, corporate leaders are investing in digital capabilities to generate higher rates of innovation, as collaboration and agility speed up the cycle of ideas inside, across and outside their organizations.

As a result, the question for CIOs is this: Are you prepared to radically redraw the lines of decision-making and accountability to survive the shift into the digital age? You should be. Research reveals that traditional, rigid approaches to organizational management are quickly giving way to more fluid, connected strategies for acquiring and developing technical talent.

The good news is that there are steps IT executives can take to ensure their companies thrive in the digital future. But first, the bad news: leaders overwhelmingly report that skills gaps are hindering their digital initiatives. A whopping 94 percent cite the gap as moderate or severe. Many also report they are critically under-resourced when it comes to specific technical skills, and struggle to keep up with the pace of change.

Topping the list as today’s most in-demand digital competencies are cybersecurity and web and mobile development. However, 43 percent of executives predict big data will reach the number-one spot in three years’ time, with the shift especially marked among manufacturing executives, tallying with Cognizant’s Center for the Future of Work’s previous research, The Rise of the Smart Product Economy.

What’s behind the skills gap? Top-ranked reasons include insufficient local supply of talent (50 percent) and internal opposition to creating new digital jobs (49 percent). 45 percent cite lack of clarity at the top of the organization regarding digital hiring—does it belong in CIO’s world or in the line of business? Moreover, 37 percent point to digital talent’s preference for start-up cultures over more established companies.

To refocus a workforce for the digital age, leaders are trying different approaches like adding digital skills and capabilities (55 percent) and positioning their companies as “digital employers of choice” to attract new talent (45 percent).

But the dearth of talent is also prompting companies to externalize much of their digital work according to Cognizant’s analysis. The projected growth of digital-related outsourcing and subcontracting over the next three years is striking. 47 percent of respondents plan to push more tasks and activities outside their organizations.

The upside of pushing more work to partners and contractors is the development of a more flexible, distributed workforce that adapts to the rapid cycles of business reinvention that technology innovation creates. Forecasts show that this labor market trend will continue in the near future.

Next Steps for Your Organization

Looking ahead, IT executives should consider the following steps to prime their organizations and people for the digital age:

– Refocus digital as a platform play. Digital platforms — software layers that gather and synthesize data — are the building blocks of success. The best examples include Amazon Web Services, Netflix and GE. All three succeeded by creating opportunities for entrepreneurial ecosystems to grow around them. Now companies are starting to build their own platforms as engines for continuous data exchange, insight generation and value creation – and profoundly changing the talent and skills needed both inside and outside the company.

– Start leaning into a global talent pool. The industry is witnessing a global explosion of talent clusters. These clusters are in effect, collections of entrepreneurial activity and offer new and emerging digital technologies and capabilities that can speed innovation and deliver game-changing impact. However, leaning into global talent pools requires organizational change. Accessing, teaming and co-creating with talent clusters typically demands a level of flexibility that complex, command-and-control organizations can’t manage.

– Invest in organizational firepower for innovation. Digital is about speed, collaboration and experimentation. Command and control structures, elongated decision cycles and silo-based mentalities will kill digital. The rigid approaches to organizational management typified by the 1980s value chain mania are giving way to more fluid, nuanced structures. As they break down silos, companies are improving knowledge flows and redrawing organizational power structures.

– Ask yourself, is your structure really fit for purpose? Companies are beginning to reform into multidimensional teams—we see this in our research. They’re drawing from sales and marketing, service, product development, production and technology and co-locating teams to focus on single customer segments or functional needs. A successful company needs to be where the action is, and a first step is to set up a small team to experiment with this new model.

Conclusion

The upshot for any leader is to carefully calibrate the speed of change as digital transformations accelerate. Tackle the transition too fast and leaders risk breaking the company and its culture; move too slowly and the organization risks being left behind as customer expectations shift, or a competitive threat blindsides. Digital technologies and the changes they enable—new business models, revenue flows and cost structures—are redrawing industry structures and talent firms need to thrive. In an age of opportunity, fortune favors the brave.

Euan Davis is an Associate Vice President at Cognizant Technology Solutions and leads the Center for the Future Work in Europe.