Insights for Organisations

The Digital Skills Gap: What Opportunities Are Companies Missing?

John Smith

Digital skills are vital for business success. However, a shortage of internal skills is affecting many global organisations. The digital skills gap in the UK has worsened significantly due to the impact of the COVID-19 pandemic.

In addition, rapid technological advancements have increased the demand for essential digital skills. A major shift in how people work has also exposed the significance of the skills divide. With more than one in 20 households in the UK having no access to the internet, digital poverty is compounding the divide.

As a result, organisations are searching for candidates with digital expertise, and those candidates are looking for employers who are willing to train them. This leads us to ask the question: what opportunities are businesses missing exactly? And how can organisations drive digital inclusion to close the skills gap?

What’s in this article?

What does the digital skills gap landscape look like?

During this period of digital transformation, organisations are putting new and emerging technologies at the forefront of their future strategies. British businesses need digital technologies to keep up with unprecedented demands to support flexible and hybrid working. A survey by BT has found that AI is now present in 29% of large businesses and 38% of major corporate organisations. Adoption rates of technologies have increased among the public sector by 76%.

According to a recent report by the Learning & Work Institute, 92% of organisations state that digital skills are key to success, helping to drive growth, innovation and productivity. Most employers require employees to have basic digital skills. But an increasing number of organisations now also need more advanced skills. Of those surveyed, 23% of employers admit that their existing workforce lacks basic digital skills, while 37% are severely lacking advanced digital skills. The significance of this on organisations is evident: 76% of employers say that the lack of digital skills will affect the profitability of the business.

Although young candidates recognise that digital skills are crucial for a successful career, participation in digital training through further education or apprenticeships has declined. The disconnect between supply and demand means that such a wide skills gap can have a significant impact on businesses.

Helping young people acquire the digital skills they need is the next crucial step in fuelling the economy, as well as ensuring that young candidates can thrive in the labour market in the future.

What drives the digital skills gap?

Digital poverty has had a huge impact on young people and their future careers, preventing them from acquiring the digital skills they need to be successful. And yet, more than eight in ten young people realise these skills are essential for their careers in the future.

Young people from lower socioeconomic backgrounds are especially vulnerable to digital poverty due to the lack of access to devices and the internet. According to the Learning & Work Institute’s report, one in five households with children in the UK has no access to an appropriate digital device, while more than one in 20 households do not have any access to the internet. As a result, the intake of young people pursuing ICT courses both in schools and further education has declined dramatically in recent years.

Over half of young people are interested in pursuing a career that requires advanced digital skills. However, despite being a generation of ‘digital natives’, 62% of young people do not believe they have the basic digital skills employers need. Digital poverty has limited young people’s ability to learn, which has been amplified further by the pandemic, contributing to significant educational inequalities.

Ensuring future generations of young people have the digital skills that the economy requires is crucial for competitive economic growth.

How is the digital skills gap affecting businesses?

It’s widely accepted that technology plays a vital role in economic growth and recovery, particularly post-COVID. However, despite efforts from the UK government and industry leaders, there is no immediate solution to the problem.

The global pandemic has accelerated digital transformation by several years, with 80% of customer interactions now digital in nature, and many companies are feeling the pressure to deliver plans for growth faster than ever. In 2019, the Open University published a report on Bridging the Digital Divide, which revealed that 37% of job roles in the workplace are likely to change significantly in the next five years due to digital disruption. This means that as many as 12 million employees could be impacted in the near future.

The digital skills gap is a pressing issue for businesses around the world. For those trying to acquire the right people to help with their digitisation, the lack of technical talent available is hindering their growth. Companies and institutions must work together to solve the problem by taking a collaborative approach to creating a future workforce with the appropriate skills. Alternatively, they risk impacting the UK’s economic growth in the long term. 

How much is the digital skills gap costing UK businesses?

UK businesses are desperately preparing to future-proof themselves, but with technical skills in high demand, the skills shortage is a worrying prospect for the economy. A study conducted by the Confederation of British Industry (CBI) in 2019 found that 67% of British companies are struggling to fill digital roles. Furthermore, only 31% of UK businesses are confident that they will have access to the digital skills they need in the next 3-5 years.

The rapidly accelerating digital skills gap in the UK is contributing to a loss of over £63 billion per year in GDP. If left unresolved, this could have a devastating impact on the UK economy. The CBI also revealed that at least £130 billion would need to be invested in adult education services to bridge the gap in technical skills over the next decade.

What digital skills are businesses missing?

Digital skills could be anything from basic online searches and emailing, to data validation and specialist programming. Companies are experiencing a shortage of both essential and advanced digital skills, which are contributing to a global deficit of high-quality talent. But what are the most common technical skills that businesses are lacking?

7 essential digital skills for businesses

The following core skills help employees communicate, collaborate and problem solve, especially now that many organisations are adopting hybrid working models.

  1. Computer literacy – is essential to enhance the efficiency of workflows.
  2. Data entry – is vital for keeping accurate records, from contracts to invoices.
  3. Email and comms – facilitates efficient ways to communicate and share important data.
  4. Secure information processing – reduces the risk of internal and external data leaks.
  5. Social media – is essential for connecting and engaging with potential customers.
  6. Web-based research – uses advanced technology and tools to mine essential data.
  7. Word processing – is necessary for creating legal documents, company reports and internal memos following company brand guidelines.

7 advanced digital skills businesses require

Here are examples of the advanced digital skills that are in high demand, especially now that companies are ramping up their efforts to adopt digitalisation.

  1. Data science – efficiently understands valuable insights to make smarter data-driven decisions.
  2. Design and data visualisation – is necessary to interpret large amounts of data.
  3. Digital business analysis – helps stakeholders understand how data can contribute to smarter strategic decisions.
  4. Digital marketing and content creation – generates leads and increases conversions.
  5. Digital product management – focuses on the strategy behind the product vision and goals.
  6. Programming, web and app development – is essential for targeting and reaching potential and existing customers quickly.
  7. User experience design – facilitates the workflows of different user personas and maximises customer lifecycle value.

How has digitalisation impacted traditional hiring methods?

A lot of hiring methods weren’t born digital-ready, so it’s no wonder that businesses are working hard to digitalise their recruitment methods. Traditional recruitment methods have always been a long process, which resulted in delays, miscommunication and was ultimately very costly. Whereas, digital recruitment methods enable companies to widen their search for the perfect candidate, often for less money. It’s critical for any fast-paced business.

Digitalisation improves the connectivity, effectiveness, and the pace of the recruitment process for modern organisations. Advanced digital resources and recruitment tools can be used to help rank candidate profiles, while professional social networks and job boards provide recruiters with the accessibility they need to target the right candidates. Implementing a digital-first recruitment strategy can be a steep learning curve, however, it is a necessary move to acquire a higher tier of talent who are not only digitally savvy, but also have excellent soft skills.

Here are some of the advantages of digital recruitment over traditional recruitment:

What remedial action can businesses take?

Digital transformation is one of the biggest challenges organisations face today. So, it’s important for businesses to adapt to the ever-changing landscape. here’s no better way to prepare for the future than to harness the greatest assets of all – people. However, the sheer urgency and volume of reskilling is staggering, and with the rapid evolution of algorithms and machines, the role requirements for many digital jobs will be displaced over time. So, what remedial action should businesses take to address the digital skills gap?

Expand your network of expertise through partnerships

Many organisations are now working within collaborative ecosystems, which can be advantageous when finding candidates with the right skills. Tapping into existing partnerships and creating new ones can help businesses access digital natives through academic institutions and start-ups. It gives businesses access to a range of collaborative solutions and technologies that may not have previously available.  

Nurture existing talent through upskilling programmes

No employee is perfect – everyone is a work in progress – and it’s organisations that realise this that commit more time and effort to upskilling their existing workforce. Achieving the balance between building and managing talent is vital when working towards a common purpose – closing the skills gap.

Although it’s necessary for businesses to develop and hire talent, it’s also important to prioritise the development of existing employees. Hiring from a talent pool of bachelor’s and associate degree holders from both STEM and liberal arts backgrounds could help provide some of the digital skills your business requires.

However, harnessing the existing skills of in-house talent is preferable, as it’s a great way of combining new hard skills with existing soft skills, while encouraging continuous improvement in their day-to-day roles.

Adopt an agile and collaborative model

To encourage digital initiatives, organisations must move away from typical hierarchical structures, and instead, focus on developing a collaborative model that is more agile. Businesses should encourage an environment where all employees are decision makers, and not just key stakeholders. Building self-managing teams allows for more flexibility on projects and promotes greater collaboration across groups, which is often more successful.

What opportunities are businesses missing?

The future demand for advanced digital skills is a problem not only for businesses, but for the economy as well. Here are three ways businesses can navigate the current shortage of digital skills.

1. Offer apprenticeships in underrepresented communities

Apprenticeships are vital when it comes to diversifying teams, especially existing teams that may require reskilling or upskilling. Underrepresentation is one of the leading contributors to digital poverty and it has a detrimental effect on the young people in those communities. Hiring apprentices not only builds a diverse workforce, but also boosts productivity and cultivates talent.

However, the uptake in apprenticeships from underrepresented groups, particularly from black, Asian and minority ethnic (BAME) communities remains low. According to the Department of Education, only 13.3% of all apprenticeship starts were BAME in 2019/20, despite representing almost a third of the student population.

Younger people are even more likely to be affected. Official data by FE week found that the 16- to 18-year-old BAME group made up just 7.8% of new apprentices in 2018/19, which was down from 8.6% the previous year.

2. Utilise university recruitment programmes

Hiring graduates brings new knowledge and skills to a business: their fresh perspectives can contribute to innovative solutions to problems that the company may be facing. Out of the box thinking is what graduates are good at, so take advantage of the opportunity.

Graduates strive to learn from their mentors and typically see them as role models for their professional careers, which means they are more responsive to constructive feedback and new ideas.

Landing their first job is a critical moment for graduates. This is the perfect opportunity for businesses to onboard fresh talent who are engaged, committed and dedicated to the company. Employees are also more likely to be more loyal to their first employer if they feel appreciated and welcomed, which can lead to improved retention rates.

3. Introduce workforce development programmes

Overlooking existing employees within a business can have a profound impact on retention rates, as organisations risk losing talent that could develop and grow internally. Implementing a workforce development programme prioritises personal and professional development, which boosts employee morale and productivity.

Workforce development programmes ensure employees are equipped for the future demand in digital skills, while expanding the value they provide to the business. Encouraging multifaceted roles prevents positions from being phased out with the development of new technology. Millennials, in particular, prioritise career development and professional growth when job hunting. According to a study by Gallup, “59% of millennials say that opportunities to learn and grow are extremely important to them when applying for a job.”

Offering workforce development programmes within an organisation helps to attract talented and motivated people – people who want to grow and help the business grow in return.

Closing the digital skills gap with FDM

FDM Group aims to close the digital skills gap by addressing the social and digital inequalities that further widen it. With a pipeline of diverse tech talent that is business-ready, FDM consultants can help organisations strengthen their existing workforce and leverage untapped talent. All FDM consultants are equipped with the skills to deliver business solutions in technical environments, helping organisations to close the skills gap.

Is your company struggling to close the digital skills gap? Discover how FDM can help provide access to high-quality talent across business and technical roles.