Asia-Pacific and Africa offer best source of talent for enterprises taking a long-term view; Everest Group advises companies to invest now for highest future payoff.
A shrinking labor pool in North America, Europe and China is at the heart of the talent scarcity, forcing companies in these countries to look elsewhere to find the talent needed to run their business. New research from Everest Group advises companies to double down in Asia-Pacific (especially India) and consider Africa for the best long-term solutions.
Everest Group’s Top-Line Recommendations:
- Immediately: Pay your employees more, improve employee experience, reduce talent demand via automation and technology.
- Next 3-5 years: Double down in India. India represents the biggest growing educated pool of talent in the world today. Tier 2/3 cities are particularly poised for the next round of growth.
- Long term: Look to Africa and boldly go where no one has gone before. In addition, discover new pools of candidates from millions of previously excluded people. Innovative approaches to socially responsible recruiting include reevaluating education requirements and targeting previously excluded groups (such as women, people with disabilities, LGBTQ+, and veterans and military spouses) and under-resourced or marginalized groups (such as rural or urban poor, refugees, incarcerated groups, and indigenous communities).
Everest Group experts will share their recommendations in a live video presentation on LinkedIn on Thursday, January 27, at 9am EST. “Now is the Time to Refresh Your Global Talent Strategy: Could Africa be the Next Great Talent Pool?” will be presented by Parul Jain, practice director, and Michel Janssen, chief research officer of Everest Group. Jain and Janssen will discuss how organizations can address the talent challenge by focusing on untapped populations and the top emerging hotspots for talent.
“Enterprises in North America and Europe are facing a stark reality: their onshore and nearshore labor pool has 2.4 million fewer employees than they’ve had access to before,” said Michel Janssen, chief research officer for Everest Group. “This is a huge wake-up call, forcing employers to think outside the box and deploy strategies they’ve never considered before to find the talent they need. Our research points to not only where organizations can find immediate solutions to their workforce challenges today, but also what strategies they need to enact today to prepare for 5 and 10 years down the road.”
Evaluating Location Readiness and Future Potential
Everest Group maintains that locations should be evaluated both from their current readiness and future potential. Although the talent in onshore geographies such as the U.S. and Western Europe are considered high on a “readiness” scale, the workforce populations in these regions are shrinking. The same is true for Nearshore Europe (e.g., Poland, Romania, Czech Republic and Lithuania). North America and Europe, in particular, have unhealthy “labor pyramids,” with 2.4 million less new workers coming into the workplace than just 5-10 years ago.
In contrast, populations in Africa and Asia-Pacific are continuing to expand. India and the Philippines are particularly attractive short- and long-term talent locations, boasting high talent readiness, relatively mature markets that will continue to grow, and multiple tier-2/3 locations that offer untapped potential. Africa is a viable long-term solution with an attractive population pyramid: Africa has almost six times more people entering the workforce than North America will have this year. However, the talent readiness in Africa is comparatively low, and significant investment will be required to shape the talent market and enable a strong talent delivery ecosystem.
Latin America and the Caribbean, although supported by a stable population pyramid and featuring strong pockets of expertise in contact center and IT services, is hampered by dicey geopolitical and macroeconomic situations.
It’s Not a Talent War, It’s a New Reality
Everest Group’s Key Issues study revealed that enterprises are bullish about growth in 2022; however, they’re facing a nearly “immovable issue”—fewer new workers entering the workforce. On one hand, enterprises anticipate 7.4% headcount growth in 2022, a much more positive growth sentiment than expressed in 2020 (5.2%) and 2021 (2.7%). On the other hand, enterprises report their No. 1 constraint heading into 2022 is “finding enough talent to run the business.”
According to Everest Group, enterprises need both short-term and longer-term solutions, with each requiring businesses to reach beyond their comfort zones.
- In the short-term, the winners in the talent war will be companies that become radically better at hiring and are willing to bust their budgets by paying higher salaries. Executives responding to Everest Group’s Key Issues study anticipate average salaries to increase 6% in sourcing positions, 8.1% in Global Business Services, 6.7% in IT, and 4.5% in engineering.
- In the longer term, the winners will be those businesses that reduce demand through process reengineering, automation, and the application of technology and also branch out to new geographies and talent pools (e.g., GIG workers and disadvantaged communities) to build their workforce.
***Additional Resources Available from Everest Group***
- It’s Not a Talent War, It’s a New Reality | On-demand Webinar
- CXO Agenda Item: Build a Talent Strategy for Today and Tomorrow | On-demand Webinar
- HR Outsourcing’s Role in Winning the Talent War | On-demand Webinar
About Everest Group
Everest Group is a research firm focused on strategic IT, business services, engineering services, and sourcing. Our research also covers the technologies that power those processes and functions and the related talent trends and strategies. Our clients include leading global companies, service and technology providers, and investors. Clients use our services to guide their journeys to maximize operational and financial performance, transform experiences, and realize high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.