Given this increasing demand, there is a global war for talent and at the heart of it are three key issues:
- Changing demographic profiles. Emerging economies like India and China are increasingly becoming the new hubs for talent due to their large demographic dividend. Advanced economies like Japan, the U.S. and also several European countries on the other hand are facing challenges of an aging workforce. By 2050, it is estimated that the percentage of population above the age of 65 will be close to 67 percent in Japan, 53 percent in Germany and 39 percent in the US. India on the contrast will have only 19 percent above the age of 65. These disparities are causing a talent imbalance with surplus in a few countries and shortages in others.
- Technology development and a consequent productivity increase. Advances in technology, especially Information Technology, will disrupt societies faster in the coming years. Cloud, mobile technology, social network and collaboration technologies and big data will provide almost infinite computing, infinite storage and infinite bandwidth at very low cost in the hands of individuals. This will increase the amount of innovation in every sector and aspect of our lives. These developments are redefining jobs of the future and with it, the talent needed for the future.
- Skill gaps and Demand-Supply mismatches. It is ironic that at a time when close to 200 million people across the world (40 million of which are in the advanced economies alone) are unemployed, global businesses are still struggling with jobs that remain vacant. Moreover, 75 million of these unemployed are youth. The inability to fill jobs despite huge unemployment is not only due to geographic imbalances in demand and supply but also due to large skill gaps between the needs of the industry and the output of the education systems.
It is evident that the talent challenge of the 21st century is global and that each country has its regional peculiarities. It is also clear that the scope of the problem is so diverse and complex that no single stakeholder can address it. Therefore, there is an impending need for collaborative, multi-stakeholder and systemic interventions by governments, industry and academia across advanced and developing nations to overcome the talent challenge.
Long-term and sustainable solutions will require structural and systemic interventions. Governments have to make strategic investments in improving the basic educational infrastructure needed to produce high-skill talent on a large-scale and in a sustainable manner. Businesses have to work with the academia to ensure that the talent output is relevant to the needs of the industry and therefore more employable. However, while these are much needed, they require a substantial lead-time to produce the desired results.
This is where talent mobility plays a critical role in addressing the current talent challenges in the short to medium term.
To begin with, demographic profiles cannot be changed in the short term to cater to the needs of the industry. Secondly, addressing the academia-industry skill-gap challenge also requires long-term collaboration between the industry, academia, and governments. Therefore, mobility of talent between countries (of surplus and shortage of talent) as well as mobility of talent within countries provides a feasible alternative. Contrary to popular belief, research indicates that talent mobility benefits nations of surplus such as India as much as it benefits nations that receive this talent like Europe, the U.S., and other advanced economies.
Finally, the challenges of skill redundancy due to technology developments and productivity improvements impact advanced economies as much as, if not more than developing economies. Countries like India and China have been consistently producing large-scale, high-skilled talent in recent years. Advanced economies can and should tap into this pool in the short-term until they are able to scale their own educational infrastructure to cater to the changing needs of their industries in the long-term. Moreover, talent mobility also provides competitive advantages to both the countries of surplus and countries of shortage. Highly skilled immigrants contribute to the competitiveness and productivity of countries that they migrate to. When they return to their home countries, they leverage the business and technological skills that they have gained abroad.
However, effective talent mobility requires concerted efforts between governments and businesses across countries sending and receiving talent. Multilateral agreements are needed that foster labor market reforms and allow easy recognition of skills across countries. Pre-requisite to it all is the need for businesses and governments to assess current skill shortages and also to anticipate potential needs of the future. Businesses have to find means to attract, train, and retain the right talent themselves and foster talent mobility within. Finally, student mobility should be promoted as a stepping-stone to talent mobility.
Talent mobility is not the solution to some of the most pressing challenges in the need for large-scale, high-skill talent. It also brings with it a fair share of challenges, particularly in seamless implementation. However, talent mobility is an ideal and much-needed alternative in the interim until the long-term structural reforms in education and labor markets reap its dividends. This is critical not only to stimulate economic growth but also to foster long-term, sustainable growth and human capital strategies.
Kris Gopalakrishnan is Executive Co-Chairman and one of the co-founders of Infosys. Kris has been voted top CEO (IT Services category) in Institutional Investor’s inaugural ranking of Asia’s Top Executives; selected as a winner of the 2nd Asian Corporate Director Recognition Awards by Corporate Governance Asia; and was selected to Thinkers 50, an elite list of global business thinkers. In January 2011, the Government of India awarded Kris the Padma Bhushan, India’s third highest civilian honor.
This article was originally published in the special annual G20-B20 Summit 2012 edition. Published with permission.