Covid-19 spurred a step-change in business models and consumer behaviours, accelerating trends in digital and automation technology that will endure long after the pandemic.
Behind this technology is talent. The labour market has been significantly disrupted by these trends. Demand for skilled workers in the ‘digital’ economy is substantial. But this is at the expense of the more traditional labour markets.
E-commerce and the ‘delivery’ economy grew two-to-five times faster in 2020 than before the pandemic across major global economies1. This trend hastened the decline in employment in traditional bricks-and-mortar retail and service roles, while increasing digital jobs in user experience (UX) and user interface (UI) design, supply chain automation and last-mile delivery roles.
Hybrid remote work looks set to continue, despite offices in major cities opening back up. McKinsey estimates 25% of workers in advanced economies can work from home. That is four-to-five times the level before the pandemic2. This brings a growing dependence on the data and software underpinning the ‘remote’ economy and, therefore, expertise in cloud computing and network systems.
Companies have prioritised automation to cope with restrictions on physical proximity. This means replacing humans with robots in manufacturing plants and warehouses and adding self-service kiosks and service robots in customer interaction arenas.
Finally, there is an impetus on the existing labour market to up-skill and combine skill sets that did not formerly co-exist. An example of this is a marketing manager who increasingly needs to be comfortable with data analytics, or a software developer who needs to understand content and design, as well as programming.
Demand aside, there is a significant shortage in skilled labour to fill these roles. In Australia, Deloitte has estimated that there is a shortage of c.100,000 ICT-related workers3. Anecdotally, it seems a similar situation prevails in New Zealand and in other markets. It is likely that the required rate of growth in digital roles, and indeed the present shortage, will remain acute in the medium-term as traditional labour market jobs are displaced by automation.
Education and professional development are, therefore, paramount. The number of new ICT entrants graduating from universities and polytechnics is insufficient to even replace the natural attrition from retirement, let alone cater for the structural growth in the sector.
This is an opportunity for private providers of education. Another by-product of covid-19 is an increasing propensity to study online. This removes a significant fixed cost for a new entrant, being rent, and allows for wide distribution of learning content targeted at skills for the digital economy.
A Cloud Guru, an online training provider in cloud technologies, and Go1, an online marketplace for corporate training, have each raised significant amounts of capital at valuation metrics that imply substantial growth ahead.
Milford’s own private investee company, Academy Xi, is also experiencing strong growth, delivering online short-form and medium-form courses in UX/UI design, digital marketing, data analytics and software engineering.
These private education providers help to make roles in the digital economy more accessible, and ultimately contribute to a solution for the digital skills shortage.