Cracking the Code to Bridge the Digital Skills Gap

We are living in an age when geopolitics, digitalization, decarbonization and global public health threats are now the rule, and not the exception. That is putting a lot of pressure on governments to come up with new ideas to address some long-standing problems.

For a case in point, we can look to the United Kingdom where government is looking for new ways to support and expand its technology sector.

The first thing you should know is the UK is experiencing an unprecedented surge of private capital investment in its tech sector.

In 2021, the UK tracked £27.4 billion (US $32.9 billion) in private capital investments in its tech sector, the most of any European country. The UK also saw the creation of 29 Tech Unicorns – start-ups that are valued at more than US $1 billion – in what turned out to be a record year of growth. The UK now boasts the third largest number of AI companies in the world, behind only the United States and China.

However, to garner the full economic benefits of all that investment, UK companies need another massive investment of human capital. Like many countries around the world, the UK tech sector is in the midst of a crisis-level shortage of skilled labor.

To help meet this critical need, in June the UK announced a wide-ranging and ambitious Digital Strategy aimed at sustaining continued economic growth and accompanying increases in the standards of living. Certainly, based on private capital investment alone, the UK does appear to be in the midst of a tech sector boom.

The UK Digital Strategy will make huge investments in scholarships to fund 1,000 PhDs in artificial intelligence and 1,000 master’s degrees in AI and data science. In addition, funding partnerships will help existing companies upskill current employees.

Several questions arise from the UK’s bold strategy. Does the tech industry still require government intervention to help bridge the digital skills gap? And where is the best place to provide skills-based education and training for next-generation jobs in the digital economy: in schools or in the workplace?

With the lowest unemployment rates and most pronounced skills gaps in the global labor market, the tech industry has been diligently searching for a more perfect solution to finding talent.

Some organizations are re-imagining the hiring process to de-emphasize formal post-secondary education in favor of an increased focus on inherent skills – both technical and soft – along with mindsets, behaviors and motivators. And that trend is spreading like wildfire through the global tech sector.

A spring 2022 survey by job posting site Indeed found that while 75 percent of respondent companies currently require post-secondary degrees for hiring, 59 percent said they expect to drop this requirement in the future. This trend was more pronounced in larger companies; two-thirds of respondent organizations with more than 1,000 employees said they were strongly considering doing away with a post-secondary requirement.

The move to de-emphasize formal education may seem radical, but it is driven by pragmatism. In a world where there simply aren’t enough university and college graduates with the right skills to fill jobs in the tech sector, employers are moving ahead to find people with inherent skills and qualities who can then be upskilled to fill specific jobs. This has evolved into a major push to create internal training academies and programs to cultivate talent with the specific skills required for specific jobs. Some of the world’s most iconic tech companies – Google, IBM, Apple and Tesla – have already changed their hiring practices to put greater emphasis on skills and less on educational credentials.

The biggest tech companies have the talent market insight and resources to find and build their own skilled talent. Is there still a role for government intervention? Yes, particularly if you consider the disconnect between current higher-level education and the skills requirements of the tech sector.

In a 2021 Gartner survey of business school students, more than 30 percent said they did not have the digital skills necessary to move into the job market, and 86 percent felt their degrees alone would not be enough to “land a job in their preferred industry.” And a 2021 PwC survey found that while 40 percent of respondents upgraded their digital skills during the pandemic, access to opportunities for upskilling are sometimes limited: the survey found digital upskilling is focused largely on workers who already have higher-level skills.

The appetite appears to be there, but the opportunities don’t always follow. That is why governments and private companies around the world are experimenting with a variety of solutions to make skills training more focused and sustainable. For example, individual learning accounts – government resources that can help someone transition into an entirely new career – are now commonplace in countries like Singapore, the United States, and France and soon to become more largely spread across the European Union following the latest Recommendation. The Council of the EU just adopted this Recommendation.

Not surprisingly, it seems the future of the digital industries will involve a partnership between government, companies and – most importantly – individual workers. The challenge is immense enough that no one player can crack the code on the digital skills shortage.