The world is facing a massive gap between the demand for digital skills and the supply of workers who possess them. Nearly 90% of executives say they have a shortage of needed skills in their workforce or expect to in the next few years, according to a global McKinsey survey. In the European Union, almost two-thirds of large businesses and just over half of small and medium-sized enterprises find it challenging to fill IT roles. These are among the some of the observations collated in a recent and ongoing Salesforce-commissioned study by RAND Europe that examines the evidence associated with various aspects of the digital skills gap. The divide has only deepened over the past year, as digital transformation has proceeded at breakneck pace.
Unless we take significant action soon, the digital skills gap threatens to become a full-blown crisis. Governments, nonprofits and educational institutions can't solve the problem alone. Companies have an important role to play in addressing the skills gap by revolutionizing education and training. They need to rise to the challenge not only to promote economic recovery in the short term, but also to enable sustainable growth and a more equitable future.
An educational system that lags behind technological evolution
The main driver of the digital skills gap is a growing chasm between the pace of innovation and static educational models. Rapid technological development and evolving customer expectations have fueled sky-high demand for digital skills in nearly every business. Customers are demanding personalized service on their channel of choice, putting pressure on companies to reinvent themselves as digital-first enterprises. The ability to use digital tools to communicate, manage information and deliver products and services has become integral to businesses of every size and across every industry and locale. The pandemic has only accelerated digital transformation by ushering in a work-from-anywhere mindset and intensifying customer demand for digital interactions.
Companies looking to compete in this changing landscape are clamoring for workers with technical skills in areas like coding, artificial intelligence and cloud computing. At least basic digital skills are now required by 90% of employers in Europe and nearly two-thirds of those in sub-Saharan Africa. In 2019, nearly 70% of job postings in the US, Canada, New Zealand, Australia and Singapore demanded digital skills. Equally important are the soft skills that enable people to translate technology into the real world in order to influence customers, manage employees and govern enterprises. A study found that the top skills for 2025 will not only include technology design and programming, but also social influence, leadership, creativity, resilience and active learning.
On the other side of the equation, traditional educational systems have not prepared workers to keep up with technological advances in order to fill needed roles. For example, the prohibitive cost of higher education has locked out many from seeking degrees in technology. With few exceptions, the prevailing model still assumes learning stops at graduation, even as innovation occurs faster than ever. As a result, only 58% of European citizens over 16 years old have basic digital skills. Countries like China, Indonesia, Mexico and Brazil are also struggling to keep up with demand for digital workers.
The cost of inaction
Investing in closing the skills gap is key for companies that want to emerge as winners in the digital-first environment. Customer expectations are constantly reset by positive experiences in any industry, so the bar for simpler, faster, more personalized service is always going up. Companies that lag on innovation because they can't find the skilled workers they need will only fall further behind.
On a larger scale, closing the skills gap is paramount for helping the global economy recover from the pandemic and achieve long-term economic growth. According to a recent Accenture study, the G20 countries could miss out on an estimated $11.5 trillion in cumulative GDP growth if they fail to address the digital skills gap. In the U.S., investing in digital skills, digital technology and digital accelerators could boost GDP by 2.1%, or $421 billion based on 2020 figures. Failing to address the widening skills gap would also fuel greater inequality. Women, lower-income workers, rural residents and those from underrepresented backgrounds are at highest risk of falling behind on digital skills. Those who aren't able to access the knowledge they need to thrive in the digital revolution will be left behind economically.
The role of companies in closing the skills gap
To solve the digital skills gap, we need a revolution in education. With technology evolving rapidly, it no longer makes sense for learning to end in your early twenties or to burden people with exorbitant costs at the beginning of their careers. Instead, we need education that's widely available, accessible and affordable. Rather than sitting in a traditional classroom, we need to move to just-in-time training that's integrated into our working experience and relevant to wherever we are on our career journey.
Until now, we've mostly left it to governments and educational institutions to reform education. But the private sector has an important role to play in pushing forward the innovation that will be needed to transform education. Companies are the ones that know what skills they need and are experts at innovation. They also have funds to invest and stand to benefit directly. McKinsey, for example, estimates that three-fourths of reskilling cases in the UK's workforce would be economical for employers. Between 71% and 90% of companies report positive impacts from building employee skills, including better ability to execute the company's strategy and improved employee performance and satisfaction. Moreover, failing to close the skills gap within five years is likely to negatively affect product development and delivery, as well as customer experience and satisfaction.
To date, startups like Coursera and the Khan Academy have demonstrated the promise of a democratized online education. Companies like GE have founded training initiatives that integrate continuous learning into their corporate culture. Salesforce offers innovative training through Trailhead, its free online learning platform, which lets people without a tech background skill up for digital jobs from anywhere. Salesforce's Trailblazer Community turbo-charges this learning through peer-to-peer knowledge sharing and mutual support. Salesforce is also helping to reduce the digital skills gap through grants that support distance learning, apprenticeships and the next generation of enterprise technology startups. Ultimately, every company must come to see itself as an education company.
An investment that lasts a generation
Enterprises today have a unique opportunity to add value to their business, contribute to economic growth and promote equity and inclusion. By reinventing themselves as innovative education providers, they can play an active role in addressing the deepening digital skills challenge. The commitment they make now to solving the digital skills gap will determine their ability to leverage untapped talent in the workforce and ensure no one gets left behind.
RAND Europe conducts independent and objective policy research to inform the public good. RAND Europe’s current ongoing work on behalf of Salesforce to examine the evidence of the digital skills gap should not be taken as a commercial endorsement of any product or service. All research findings were subject to RAND Europe’s rigorous evaluation process.