In the wake of rapid digitalization, businesses across the globe have witnessed a large demand for digital skills. Given its direct impact on the performance and growth of a company, it's of little surprise that many are betting heavily on digital transformation to create new revenue models. This focus on digitalization, however, has meant a global surge in the demand for tech talent. From cloud computing to new-age business applications of artificial intelligence and automation, all require skilled professionals to meet business needs. Digital skills are now part of almost every role. Skills that companies are finding difficult to fill.
When it comes to India, the country faces similar challenges to addressing its demand for tech talent. For companies, the demand and supply gap of tech talent has an impact on their performance, with many facing the cost of not being able to fill positions on time.
Ramping up investments, but where are the people?
Keeping in line with growing business expectations, India has seen a major jump in the demand for tech services. Service providers have seen over 30% growth in digital deals, an 80% jump in cloud spending, and over a 15% rise in customer experience spending since the coronavirus outbreak. This according to the National Association of Software and Service Companies (NASSCOM) is fuelling the demand for tech talent in India. Assessing the growth of India’s tech sector, NASSCOM noted that the sector crossed the $200 billion revenue mark, earning $227 billion in revenue in FY 2022. The tech sector has witnessed a $30 bn incremental revenue in the year with an overall growth rate of 15.5%.
India’s IT sector today employs over 4.55 million people, adding another 140,000 to 200,000 workers each year. But the last few years have seen high levels of attrition and an accentuating digital and tech skills gap. According to NASSCOM forecasts, the sector could see a threefold rise in vacancies in the coming fiscal year. Skill gaps remain a major challenge, noted NASSCOM, with the sector facing over 30% to 60% shortage across skill sets. For niche skills in cybersecurity, data science, cryptocurrencies/blockchain and augmented/virtual reality, the gap could widen to as much as 70%.
With the rising need for digitalization and digital skills across functions, the skills gap is bound to impact other sectors as well. A recent Amazon Web Services, Inc. (AWS) study predicted that the country would need to ramp up tech talent pools in the coming years. While the study noted that digitally-skilled workers currently represent 12% of India’s workforce, it estimated that the number of workers in India requiring digital skills will need to increase nine times by 2025.
Not only is the demand for tech skills going to intensify but also more companies are bound to diversify their skill requirements. The average worker in India, the AWS report explained, will need to develop seven new digital skills by 2025 to keep pace with tech advancements and demand.
Addressing the skills gap
The persistent disconnect between the supply of capable graduates and the demand for the skills of an organization continues. The lack of investment in skill training has been the elephant in the room for years, and it is poised to become a bigger impediment.
“Despite many surveyed company leaders across different sectors stating that they faced challenges in filling positions requiring specific digital skills such as data analytics (with these vacancies costing billions of dollars annually), more than half of survey respondents felt that educational institutions did not reflect updated digital skill needs," the AWS report noted.
Skilling and upskilling need to, then, be a top priority. A similar sentiment was echoed by NASSCOM in a recent study on cloud computing where it said that to bridge the demand-supply gap, skilling at scale needs to be the topmost priority. “India is well placed to do this by tapping into the adjacent pool of installed base and also by targeting fresh talent from universities,” the report notes, adding that, “roles in traditional Software Engineering, IT & networking, cybersecurity, data engineering can be targeted for upskilling due to higher skill overlap and upskilling propensity. This will require concentrated efforts from industry, government and academia to nurture partnerships and develop effective talent development roadmaps.”