The digital skills gap refers to the discrepancy between the digital skills an organization needs and the skills its current workforce possesses. This gap can have significant consequences for businesses, hindering their ability to innovate and compete, embrace digital transformation, and recruit and retain talent. A digital skills gap often manifests in an ineffective use of technology. Panorama Group evaluated ERP software usage and found that business typically use only 41% of their system’s features. A report from Okta found that while employees believe they use around 13 software tools, in reality large enterprises subscribe to 211 platforms.
A digital skills gap results from a number of factors including a rapidly changing technological environment that outpaces skills growth and a lack quality education and training. Employers are ultimately held responsible for the consequences of a digital skills gap, and without a forward thinking model for upskilling labor, the tax of a digital skills gap will only continue to worsen for organizations. Enterprises are losing about $1.14 million per week due to the digital skills gap, according to a recent study by WalkMe. This loss of efficiency translates to a waste of 44 working days per year – time wasted by employees struggling with technology-related challenges.
A study by Capgemini and LinkedIn found that the digital skills gap affects 54% of organizations globally, and results in productivity losses, lower employee engagement, and higher attrition rates. The study also revealed that 29% of employees believe that their current skill set is redundant or will be in the next one to two years, and 38% are worried about losing their jobs due to automation.
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The lack of sufficient digital skills in the workforce has large macroeconomic impacts. According to a report by Accenture, the lack of digital skills could cost the US economy up to $975 billion in annual GDP by 2028, as well as reduce the competitiveness and innovation potential of businesses across sectors. The report also estimates that closing the digital skills gap could create 5.1 million new jobs in the US by 2028, and increase the average income of workers by 17%.
The digital skills gap can affect both individuals and organizations, as it can reduce productivity, innovation, competitiveness, and employability. It can also widen existing inequalities and create new ones, as those who lack digital skills may face higher risks of unemployment, underemployment, or exclusion from the labor market. Meanwhile, organizations that fail to close the digital skills gap risk falling behind competition that effectively upskills and onboards talent.
The solution to closing the digital skills gap is not investing more in technology. The average spend on projects that didn’t produce ROI due to lack of end user utilization was $8.8M for Small Enterprises and $12.7M for Medium enterprises, according to WalkMe. A significant 38% of these digital transformation efforts failed to meet objectives due to a lack of adoption by end users.
Closing the digital skills gap requires a new model for upskilling, training, incentivizing, and selecting employees. In the first Update webinar of 2024, FPOV’s founding partner, Scott Klososky delivered a new perspective on building an organizational model to confront the digital skills gap – watch the recording here.
Future Point of View developed a program to guide organizations through a more effective approach to increasing the digital power of employees to leverage enterprise technology more efficiently. Read more about our Digital Skills Program at fpov.com/digital-skills.
About the Author
Trent’s proclivity for emerging technology makes him a great addition to FPOV’s Business Development team. As Business Expansion Manager, Trent leverages his passion for solving business problems and acuity in pitching new concepts to evangelize the FPOV offerings. Learn more about Trent Saunders.