Tackling Asia’s talent challenge: How to adapt to a digital future

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Asia’s steady trot toward a digital-first future has raced into a gallop. With the COVID-19 pandemic catalyzing forces already at play in Asia, 78 million workers across China, India, and Japan will have to adapt to the proliferation of automation technologies and other forms of innovation, according to research by the McKinsey Global Institute.

How should business leaders, policy makers, and employees in Southeast Asia prepare for this great transition? That was the topic of discussion in a virtual roundtable led by Oliver Tonby, chairman of McKinsey Asia, with Li-Kai Chen, managing partner of the Malaysia office, and Anu Madgavkar, a partner with the McKinsey Global Institute, this May.

The increased pace of automation has made reskilling an urgent priority, an endeavor that requires a coordinated effort from multiple levels. The following outlines the key themes surfaced during the conversation.

Impact of COVID-19: Remote work is only the start

Remote work was only the first in a number of profound changes accelerated by the COVID-19 crisis. During the pandemic, mobility constraints compelled businesses to find digital ways to replace in-person interaction—from virtual meetings and e-commerce to digital supply chains and digital sales and marketing—and many companies are now thinking about how to apply the lessons learned to a hybrid scenario. “Employees actually like the flexibility, and employers are willing to look at remote work as a new way of securing talent and improving their talent value proposition,” says Madgavkar.

Madgavkar projects that the use of automation technology to minimize physical movement and interaction will likely pick up steam in the next 18 to 24 months. However, Asia’s diverse demographic and economic mix means that changes will not be uniform everywhere. In Asia, around 20 to 25 percent of workers will be able to work away from physical offices, although the figure for Southeast Asia will likely range between 5 to 10 percent. That said, even for a country like Malaysia, where automation is not expected to be as prevalent, Chen estimates that “about 60 percent of jobs will likely have 30 percent of activities that can be automated.”

Supporting and reskilling workers for new opportunities

Widespread automation will inevitably displace jobs even as it creates new ones. Repetitive, manual tasks and functions requiring only basic cognitive skills such as data input and processing are most at risk of becoming obsolete. According to a McKinsey Global Institute study of eight countries, more than 100 million workers will be affected, including 18 million in India and around 50 million in China. “It can probably be quite traumatic for the person whose job is being displaced,” observes Tonby.

It’s imperative, therefore, for reskilling to be an integral part when planning for the future. The skills that will be most important going forward are those that are not easily replaced. “These include technology skills, basic computer and digital skills, advanced cognitive skills, quantitative and statistical skills, and problem-solving skills,” says Chen. Other traits that will rise in importance include interpersonal skills to foster relationships across various stakeholders.

Reskilling a workforce of millions is no easy feat, but similar shifts in history have led to positive outcomes. “Every time there’s an occupation transition, it potentially enables workers to do higher value work, be more productive, earn more and do less drudgery,” says Madgavkar. For instance, as self-service kiosks become more commonplace in banks, a bank teller’s role may evolve to helping customers troubleshoot problems, doing some cross-selling, or cultivating client relationships.

Embarking on the transition: How should governments, companies, and employees think about this?

The transition presents many opportunities, and Asia is well-poised to lead the rest of the world in terms of digital transformation, as three quarters of all STEM graduates hail from the region.

Governments could think beyond offsetting job losses and look at the transition as a way to generate new jobs. The two main areas to pay attention to are communications infrastructure and inclusive and accessible education. “We can’t have half the population left out because they don’t have access to low-cost and high-speed internet, or if they don’t have access to skills to navigate the digital environment,” says Madgavkar. According to Chen, around three to four million workers in Malaysia will benefit from new roles, thanks to initiatives such as MyDigital blueprint. The scheme consists of a slew of national development policies aimed at catalyzing the nation’s digital economy. Singapore, meanwhile, has a SkillsFuture effort that is aimed at helping workers in the country learn new skills.

Companies could explore avenues to empower their staff to be more agile and productive, focusing on especially vulnerable segments such as women, new joiners, and those with fewer formal qualifications. Women, for instance, have been disproportionately disadvantaged by the pandemic, even though they have the potential to be a great driver of value. Tonby points out that a disproportionate number of women are spearheading the micro-, small- and medium-enterprise segment in Indonesia’s tech landscape.

Companies also have to play an increasingly proactive role in upskilling their employees so that they can adapt to new changes in technology instead of relying too much on external hires. “We should not be trapped into defining suitability for work based on traditional degrees, or time- and cost-intensive ways of educating people,” explains Madgavkar. Instead, employers should adopt a more agile approach and define the specific skill types required. Then they can leverage digital technology to offer workers specific programs to equip them with the necessary skill set. Extra thought should also be given to the lower-skilled workforce, such as delivery jobs. As e-commerce grows in prominence, companies could investigate ways to equip this segment with the professional qualifications needed to perform these jobs well, and making sure that credentials are recognized as workers move from job to job.

Finally, employees and workers have to recognize that they’re due for a mindset shift when it comes to their careers. Chen cites research showing that millennials change jobs more than four times in the first decade of their careers—more than double the rate of their parents’ generation. Another seismic change is on the horizon: employees will have to fundamentally overhaul their skill set several times for each job they hold to keep pace with changing skill requirements. “The speed of reskilling is going to be quite vital for a new joiner to today’s workforce. Lifelong learning is here to stay,” says Chen. “How do you learn to learn?”

Ultimately, while the journey of talent transition is not without its challenges, the roundtable participants agree that it’s especially important that senior executives, leaders, and policy makers do not lose sight of the prize: greater agility, productivity, and empowerment of the workforce. As Chen aptly sums up: “This is both an opportunity and an obligation to reimagine a future of work.”