Already a major issue, skilled talent shortages will continue to impede growth and if not addressed, could have a significant impact on major Asia Pacific (APAC) economies by 2030, a study by US headquartered Korn Ferry (NYSE: KFY) revealed on May 7.
“Companies must work to mitigate this potential talent crisis now to protect their future,” said Michael Distefano, chief operating officer, Korn Ferry Asia Pacific. “Left to run its course, this shortage will severely impact the growth of markets across APAC, with an imminent talent deficit of more than 12.3 million workers by 2020, rising to a shortage of 47.0 million workers and $4.238 trillion in unrealised annual revenue across the region at 2030.”
Korn Ferry’s Global Talent Crunch study estimates the gap between future talent supply and demand in 20 major economies at three milestones: 2020, 2025 and 2030, and across three sectors: financial and business services; technology, media and telecommunications (TMT); and manufacturing.
According to the study, we can expect a talent deficit of 85.2 million workers across the economies analysed — greater than the current population of Germany. Left unchecked, the financial impact of this talent shortage amounts to $8.5 trillion in unrealised annual revenue globally over the next 12 years. Interestingly, the country that’s at the other end of the spectrum is India. The world’s sixth largest economy is the only place in the study which will have a talent surplus by 2030, with 245 million more workers in the next 12 years.
The talent deficit issue could threaten economies and sectors across APAC. Some key findings of the study:
- Asia Pacific faces an imminent labour shortage of 12.3 million workers by 2020, rising to 47.0 million by 2030 at an annual opportunity cost of $4.238 trillion.
- Technological advancement across all sectors of the Asia Pacific economy could be hindered by an acute talent shortage of 2.0 million TMT workers, at an annual opportunity cost of more than $151.60 billion by 2030.
- Financial and business services will be hardest hit across the region, with a deficit of 3.7 million workers by 2030, resulting in an annual opportunity cost of more than $439.62 billion if labour shortages are not addressed.
- India is the only economy among the 20 countries studied with a potential talent surplus, predicting an excess of 245.3 million workers by 2030.
- India, will see a Level A (highly skilled) TMT surplus of 1.3 million workers by 2030, offering yet more opportunities for the nation. India could challenge America’s position well before 2030 in TMT sector.
- China will feel the talent shortage most acutely and could lose out on $1.433 trillion in annual revenue not generated by 2030 - one third of the Asia Pacific region’s total opportunity cost.
Globally, the study reveals a potential crisis with a sizeable mismatch between supply of available workers and business demand:
- The United States, Japan, France, Germany and Australia face the largest threat in the near term, with a combined opportunity cost of $1.876 trillion by 2020.
- Labour shortages in global financial and business services are the most acute, with a potential deficit of 10.7 million workers globally by 2030.
- Technological advancement across all sectors of the global economy could be hindered by an acute global labour shortage of 4.3 million TMT workers by 2030.
- Manufacturing is facing a global talent deficit crisis of 7.9 million workers by 2030, despite being the only sector with a surplus of highly skilled workers in 2020.
Comments Bhavna Sud, client partner, Korn Ferry India, “The right talent is the greatest competitive advantage for an organisation - and that talent is getting scarcer every day. Our study reveals that there already isn’t enough skilled talent to go around, and by 2030, organisations and economies could find themselves in the grip of a talent crisis. Left unaddressed, the talent crunch will severely impact the growth of key markets and sectors across the region. India however, has the unique distinction of having a talent surplus right now and will continue to do so in 2030.”
Industries where the talent surplus will be the most visible in India include the financial services with a surplus of 1.1 million, technology, media, telecommunications (TMT) at 1.3 million and manufacturing at 2.44 million of extra manpower in 12 years.
“However, it’s no secret that while India has a surplus of talent, we must deal with the twin challenges of employability and job creation. The government as well as industry have made significant efforts to address both issues through programmes like ‘Skill India’, but we will have to do more to create a competitive advantage of the surplus manpower we have. If left unchecked, the talent surplus will add to our woes of jobless growth and unemployment. Companies across Asia Pacific, including India must act now to future-proof their business”.
“To manage this critical talent challenge facing our global economy, companies need to re-think their hiring and talent management processes. Hire for fit and culture rather than skills because skills come with a shelf life now. Hire people high on agility and make continuous learning a part of your life. Retain your best and show them a growth path. Tap into new and different sources of talent. Forecast and train for the ‘right’ skills. Make it easy for women to re-enter the workforce and literally double your talent supply,” added Sud.
The Korn Ferry Global Talent Crunch study is based on economic modelling designed by Korn Ferry, Man Bites Dog and Oxford Analytica and executed by Oxford Analytica.
Headquartered in Los Angeles, California (USA), Korn Ferry is a global organisational consulting firm.