Solving the digital skills gap

Solving the Digital Skills Gap
Successful Digital Transformation
Through Developing Existing Resources

Contents
3
5
11
4
14
8
13
15
Preparing for Digital
Transformation
What Industry Leaders Are
Saying
Factors Driving the Need for
Digitally Skilled Employees
The Challenges of Filling
the Digital Skills Gap
The Solution: Integrating Digital
Skills Development Programs
and Initiatives
Important Benefits of Digital
Skills Programs
What to Look For in a Digital
Skills Provider
About Digital Skills Global

skilled employees is also a concern. If re-staﬀing
Preparing for Digital Transformation
How can C-Suite leaders ensure their ability to rapidly take
advantage of emerging digital trends and opportunities
without spending large amounts of money?
Leaders in Telecom, tech, and finance
organizations understand the necessity of having
digitally skilled employees: the digital landscape
is the future of business. That is why filling the
digital skills gap between what they have and
what they need, is a concern of many company
leaders. The high cost of hiring new, digitally
an organization with digitally skilled workers
is the plan, leaders will be faced with a costly
initiative. In addition to the costs associated with
integrating new employees into the company are
the impacts on company culture, and the loss
of company knowledge where new hires replace
existing employees.
How can C-Suite leaders ensure their ability
to rapidly take advantage of emerging digital
trends and opportunities without spending
large amounts of money? Fortunately, solutions
exist that solve the challenge of acquiring
digitally skilled employees while simultaneously
reducing hiring costs and enhancing company
culture. Instead of buying a solution (hiring new
employees), leaders can build a sustainable
solution that uses their greatest asset: their
existing employees.
The debate at issue is whether leaders should
hire the digital capabilities they need, or build
on their existing foundation of employees. This
white paper will address the issue by exploring
the factors driving the need to fill the digital skills
gap, the challenges associated with preparing
the workforce for digital transformation, and
solutions that drive per-hire ROI. Solving The Digital Skills Gap | Page 3

aﬀected.”
Chief Executive Oﬀiecer of AT&T
“Whether you like it or not, the digital revolution is coming.
This is going to be bigger than the Industrial Revolution
or the Agricultural Revolution and every time there has
been a revolution of such a scale a lot of people have been
- Ashok Vaswani, CEO of Barclays UK, Former CEO of
Barclays Personal and Corporate Banking
“There is a need to retool yourself and you should not
expect to stop. [People who do not spend five to ten hours a
week in online learning] will obsolete
themselves with the technology.”
- Randall Stephenson, Chairman and
“I believe that if you’re going to be a successful retailer —
or business in general — digital must be enmeshed at the
highest level.”
- Julie Bornstein, COO of Stitch Fix, former CMO and
CDO at Sephora LVMH
“...breakthrough mobile and digital technologies are
together enabling us to extend our reach and deepen our
emotional connection to customers everywhere in ways
that were not imaginable even a few years ago.”
- Howard Schultz, Chairman and CEO of Starbucks
“There is a question over whether we should increase the
size of the franchise, or should we put focus on trans-
forming the business model for a digital future…I think
that digital should be our focus. … Today our compe-
tition is Allianz and Generali, but tomorrow it could be
Google and Facebook.”
- Thomas Buberl, CEO of AXA Group
What Industry Leaders Are Saying
Solving The Digital Skills Gap | Page 4

operational eﬀiciencies. However, this potential
the workplace, even though there was no oﬀicial
The transformational impact of digital technology
on the world of business is upon us. Industry
leaders understand the power in data gathering and
analytics, social media, and mobile technologies.
Increasingly, they also see the potential to harness
data for business growth, product innovation,
enhanced customer service experiences and
is being inhibited by a shortage of talent with
the required skills to unleash this power in the
organization. To cite the 2015 Global Human Trends
report by Deloitte University Press:
To start with, senior business leaders
increasingly see shortages of skills as
a major impediment to executing their
business strategies. “Only 28 percent of the
respondents to this year’s survey believe that
they are “ready” or “very ready” in the area
of workforce capability.” As the economy
improves and the market for high-skill talent
tightens even further, companies are realizing
they cannot simply recruit all the talent they
need, but must develop it internally. 1
The report goes on to say that CEOs are turning to
Learning and Development (L&D) teams and HR
departments to find internal methods for dealing
with this gap. For example, Randall Stephenson,
chairman and CEO of AT&T, has implemented an
extensive digital skills training program to address
the skills gap his company faces. Stephenson says
his employees need to be able to digitally innovate
their products or services or else: “If we can’t do it,
mark my words, in three years we’ll be managing
decline.”2
For AT&T and all companies that rely
on technology as their core product or service,
embracing digital transformation is a do-or-die
proposition.
CEOs are not the only members of a company who
see the need for digital innovation. Employees are
using new digital technologies in their personal
lives and they see tangible applications for those
technologies at work. Executive respondents
to the MIT Center for Digital Business survey
stated that many of their employees were finding
innovative ways to integrate new technologies into
company policy to do so.3
Even without leadership
support, employees are ready for new technology in
gnirbotsyawgnidnifylevitcaeradnaecalpkroweht
digital innovation into their roles.
Factors Driving the Need for Digitally
Skilled Employees
1. Eighteen, Jonathan, Josh Haims, et al., “Global Human Trends 2015: Learning and Development: Into the Spotlight,” Deloitte University Press (2015),
http://www2.deloitte.com/content/dam/Deloitte/at/Documents/human-capital/hc-trends-2015.pdf.
2. Hardy, Quentin, “Gearing Up for the Cloud, AT&T Tells Its Workers: Adapt, or Else. New York Times, (13 February 2016), http://www.nytimes.
com/2016/02/14/technology/gearing-up-for-the-cloud-att-tells-its-workers-adapt-or-else.html?_r=1.
3. Westerman, George, Claire Calmejane, et al., “Digital Transformation: A Roadmap for Billion-Dollar Organizations”, MIT Center for Digital Business and
Capgemini Consulting (2011), https://www.capgemini.com/resources/digital-transformation-a-road
map-for-billiondollar-organizations.

Only 28% of senior business
leaders surveyed believe
that they are “ready” or
“very ready” in the area of
workforce capability.

have immediate bottom-line consequences if left
4. Westerman, George, Claire Calmejane, et al., “Digital Transformation: A Roadmap for Billion-Dollar Organizations”, MIT Center for Digital Business
and Capgemini Consulting (2011), https://www.capgemini. com/resources/digital-transformation-a-roadmap-for-billiondollar-organizations.
External drivers are also influential forces in a
company’s path to digital transformation. Competition
is an ever-present factor of course, but customer
expectations are an evolving concern that can
unaddressed. Research shows that customers are
coming to expect more from vendors than the
simple delivery of products and services. They want
convenience, accessibility, and easy integration into
their lives.4
That means mobile apps, customer-
tailored to their buying history.
friendly websites and experiences, and relevant oﬀers
Out of these internal and external pressures, the
action item for company leaders is to empower their
existing employees to learn how to leverage customer
data and emerging digital technologies, and then
integrate them into the company’s business strategies.
Companies that lack this capability will struggle to
remain relevant or, as Randall Stephenson noted, end
up managing the decline of their company.
Even without
leadership support,
employees are ready
for new technology in
the workplace and are
actively finding ways
to digitally innovate in
their roles.

There are three key challenges that company
leaders face when it comes to preparing
their companies and workforce, for digital
transformation:
Per-Hire Costs
One might assume larger companies would simply
staff up on new hires who already have the desired
digital skills to fill their needs. However, the data
does not support this approach. According to Bob
Melk, president of Dice, an IT and engineering
talent career website, “Turnover costs companies
thousands of dollars in hiring, training, lost
productivity and lost knowledge. When talent walks
out the door, it impacts the workload of everyone
else who’s left behind, as well as overall morale.”5
A study done by the University of California-Berkeley
found that the average cost to hire a blue collar
employee is $2,000, $4,000 for a middle-level
employee, and $7,000 for managerial employees.6
Imagine for a moment that a Telecom company
with a workforce of 280,000 was in the early stages
of digital transformation, and planned to replace
one-third of its workforce. Assuming 40% were blue
collar employees, 40% were middle-level, and 20%
were managerial employees, the cost to re-hire that
group would be over $354 million. This number does
not include the costs of firing or laying employees
off, on-boarding, salaries, or costs associated with
lost productivity. Eric Koester of MyHighTechStart-
Up, argues that “estimates range from 1.5x to 3x
of salary for the ‘fully-baked’ cost of an employee–
the cost including things like benefits, taxes,
equipment, training, rent, etc.”7
Below, we will make
a conservative estimate quantifying how the costs of
on-boarding and lost productivity resulting from staff
turnover, adds to that full cost of hiring.
5. Florentine, Sharon, “Why high IT talent turnover is your fault,” CIO (14 December 2015), http://www.cio.com/article/3014526/careers-staffing/why-
high-it-talent-turnover-is-your-fault.html.
6. Dube, Arindrajit, Eric Freeman, et al., “Employee Replacement Costs,” University of California-Berkeley Institute for Research on Labor and Employ
ment, http://www.irle.berkeley.edu/workingpapers/201-10.pdf.
7. Mueller, Annie, “The Cost of Hiring a New Employee,” Investopedia (13 November 2015), http://www.investopedia.com/financial-edge/0711/the-
cost-of-hiring-a-new-employee.aspx.
The Challenges of Filling the Digital
Skills Gap

Across establishments, the
costs of replacing a worker
averages about $4,000
overall, $2,000 for blue collar
and manual labour workers
and as high as $7,000 for
professional and managerial
employees.6

Cost of On-boarding
Once a new employee is hired, company leaders
have high hopes for the new addition and look
forward to a speedy on-boarding. But what is the
actual cost of on-boarding new employees? This
number can be as elusive as the cost of hiring a new
employee, but Investopedia has broken it down
based on the percentage of the employee’s salary
that is or is not used productively within a certain
timeframe:
In addition to paying all the non-wage
administrative costs associated with hiring
new employees, company leaders also end
up subsidizing the on-the-job learning of the
new employees for the first six months of their
employment. For an employee with a salary
of $50,000, plus the $4,000 cost to hire them,
the employee ends up costing the company
approximately $15,300 in the first six months
before they are typically able to achieve 100%
productivity and give the company a return on its
investment. To put this in perspective, if we again
take the example of the Telecom company with a
workforce of 280,000 planning to replace one-third
of its workforce to achieve its digital transformation
objectives, the cost of replacing that group,
including hiring and lost productivity costs alone,
equals circa $1.43 billion. When a company looks
to do large rounds of hiring, this equation makes
leaders look to other, more affordable options.
Internal L&D Initiatives
Developing internal digital skills training initiatives
enables companies to invest in the training of their
existing workforce instead of incurring additional
costs with new employees. The barrier many leaders
run into when attempting to create these programs
in-house often stems from a lack of internal expertise
to deliver training. Again, the problem of having
employees with the right knowledge to implement
strategic solutions gets in the way of progress.
• First month: 25% productivity rate / costs
75% of salary
• 2-3 months: 50% productivity rate / costs
50% of salary
• 3-5 months: 75% productivity rate / costs
25% of salary
• 6 months: 100% productivity rate /
employee pays for themselves8
8. Mueller, Annie, “The Cost of Hiring a New Employee,” Investopedia (13 November 2015), http://www.investopedia.com/financial-edge /0711/the-
cost-of- hiring-a-new-employee.aspx

In a global marketplace that increasingly requires
digital skills and innovation, a digitally skilled
workforce is more than a competitive edge. It is a
necessity. According to a recent survey conducted
by TINYpulse, employees want to continue their
professional skills development and career
growth. They also stated that a lack of professional
development opportunities would contribute to
reasons why they would leave their employer.9
The
combined desires of company leaders to digitally
transform their organizations, and of employees to
learn new professional skills, is an ideal opportunity
to embrace the digital revolution in a cost-eﬀective
manner.
By implementing accelerated professional digital
skills programs for existing employees,
leaders are able to turn their workforce into the
digitally skilled experts they need to steer the
company safely, successfully, and profitably
through the process of digital transformation.
The costs of hiring new talent decrease because
the need for new talent decreases. Additionally,
leaders keep established employee dynamics
intact, instead of diluting them with new people
may negatively impact the organization’s culture.
Leaders are able to maintain, and even improve
upon, a positive, progressive and productive
company culture. This strategy is the diﬀerence
between building something from scratch or
improving upon a pre-existing foundation that
already works.
When company
leaders invest in
professional skills
development they
create a culture of
empowerment.
The Solution: Integrating Digital
Skills Development Programs
and Initiatives
9. Likavec, Cody and Laura Troyani, “The Era of Personal and Peer Accountability,” TINYpulse (2015) https://cdn2.hubspot.net/hubfs/443262/2015_Em
ployee_Engagement__Organizational_Culture_ Report.pdf.

According to a survey done by the MIT Center for
Digital Business, an integrated approach is the key
to success:
Large companies survive major transitions
not by radically replacing the old with the
new, but rather by transforming some of
their existing resources and competencies for
the new environment. While this sometimes
involves changing leadership or replacing
assets, it usually involves reassigning
or adapting assets and realigning or re-
motivating employees.10
When company leaders invest in the professional
skills development of their employees, they create
a culture of empowerment that leads to gains in
productivity, employee retention, and makes their
organizations better equipped to compete in the
new digital marketplace and win.11
and Capgemini Consulting (2011), https://www.capgemini.com/resources/digital-transformation-a-roadmap-for-billiondollar-organizations.
and Capgemini Consulting (2011), https://www.capgemini.com/resources/digital-transformation-a-roadmap-for-billiondollar-organizations.

• The digital skills gap is filled by existing
employees who embrace the opportunity
to learn new skills that enable them to take
their roles and careers to the next level.
• Digital Skills Programs allow employers to
build a strong foundation of digitally literate
employees, while simultaneously empowering
their workforce to achieve more.
• The high expenses of recruiting, hiring, and
on-boarding new employees are reduced
because existing employees are more likely
to stay with the company longer.12
• Valuable knowledge of the company is
maintained and expanded upon with the
addition and application of new digital
skills.
• Employees who are more satisfied with their
workplace will work harder and positively
contribute to company culture, which
results in increased company loyalty.13
• Instead of spending money to develop
an L&D program from scratch, leaders
will be able to leverage the expertise and
infrastructure of an existing degree provider.
• Employees who struggle with feeling
valued and recognized will be able to earn
a qualification that makes them feel respected,
and improves both their mobility within the
company and their morale.14
Valuable knowledge
of the company is
maintained and
expanded upon with
the addition and
application of new
digital skills.
Important Benefits of Digital
Skills Programs
high-it-talent-turnover-is-your-fault.html.
Florentine, Sharon, “Why high IT talent turnover is your fault”, CIO (14 December 2015), http://www.cio.com/article/3014526/careers-staﬀing/why-
13. Likavec, Cody and Laura Troyani, “The Era of Personal and Peer Accountability,” TINYpulse (2015) https://cdn2.hubspot.net/hubfs/443262/2015_Em
ployee_Engagement__Organizational_Culture_Report.pdf.
14. Lee, Christina, “Employee Job Satisfaction and Engagement,” Society for Human Resource Management (2015), https://www.shrm.org/Research/
SurveyFindings/Documents/2015-Job-Satisfaction-and-Engagement-Report.pdf.
When leaders implement digital skills programs,
they can look forward to the following benefits:

projects. Ideally, the provider would offer a
and offers flexible amounts of time to complete
When choosing a provider to help your employees
acquire relevant digital skills, many factors
should be considered, including:
Holds independent, high-quality
accreditation
Seek a provider that delivers programs accredited
or certificated by a reputable body. There are a
host of online course programs that can teach
learners how to build apps and learn data science
and even fewer which are independently accredited.15
Depending on the next round of venture capital
funding, some of these providers may not be
available in a few years, or may change their
business model, or disappear from the business
landscape entirely. Providers of programs
accredited or certified by established
institutions that will remain relevant over
time, represent a safe and smart investment.
component
Offers collaborative or social learning
The goal of the chosen program should be to
give employees the full experience of co-learning
and co-creating. The digital landscape is a social
landscape, and in order to truly gain the skills
that will enable their employer to be competitive,
employees will need to collaborate with their co-
learners to arrive at innovative solutions. Employers
who seek to have teamwork embraced and
embedded into their organization will enjoy this
benefit.
Applies the learning
By solving business challenges via digital innovation
projects, employees gain experience working in
international, virtual teams to tackle real challenges
and arrive at viable solutions.
Accommodates flexible learning schedules
As employee-learners will be full-time employees,
full-time immersive university programs are very
demanding for workers to complete. A better
solution is a program that is easy to access,
condensed, yet comprehensive, online accredited
program.
Focuses on bringing learners together to
dramatically improve performance
The focus of the program should be to engage
employee learners in growing their skills, expanding
beyond what they know, and working in concert
with peers to achieve desired results.
What to Look For in a Digital
Skills Training Provider
15. Hagel, John III, John Seely Brown, et al., “The Lifetime Learner: A Journey Through the Future of Postsecondary Education,” Deloitte University
Press (2014), http://dupress.com/articles/future-of-online-learning/.

Digital Skills Global partners with the world’s leading universities
to rapidly transform the digital competencies of corporate workforces.
We created Digital Skills for Professionals, building on the expertise
developed through international digital education pioneer, Digital
Skills Academy, which has supported online programs in digital skills
delivered to Working Professionals from 33 countries, across six
continents. Participants in these programs come from companies
like Accenture, Barclays, UBS, Credit Suisse, Prudential, EY,
Deloitte, Dell EMC, Google, SAP, Shell, and Oracle.
• d
About Digital Skills Global

International Contact Numbers
USA
New York City: +1 929 214 1068
San Francisco: +1 415 854 9431
UK
London: +44 203 588 2070
Edinburgh: +44 131 634 0200
South Africa
Johannesburg: +27 10 500 9309
Cape Town: +27 21 300 9257
Headquarters
Digital Skills Global
Crane Street, The Digital Hub
Dublin 8, Ireland
Tel: +353 1 690 8090
Digital Skills Global
2nd Floor, North Block,
The Business Exchange,
90 Rivonia Road,
Sandton 2196,
Johannesburg: +27 10 500 9309
Website Address
www.DigitalSkillsGlobal.com

Solving the digital skills gap

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