According to ‘The World at Work’, a workplace trends report from the McKinsey Global Institute, the global workforce will encounter a talent shortage of between 38 and 40 million college-educated workers by 2020. In addition, the same report predicts that a full 60% of the future growth in the global workforce will come from India, other South Asian countries and Africa, leaving countries with minimal (or no) domestic workforce growth, such as the UK, particularly exposed to future talent shortages.
Compounding that trend, data from the Office of National Statistics suggests the UK faces an increasingly aging workforce, with a 13% increase in the number of people over the age of 60 expected by 2020. Similarly, the ‘Working Futures: 2012 – 2022’ report from the UK Commission for Employment and Skills predicts the UK will experience a significant decline in labour market participation rates by 2022 because of Britain’s aging population.
With an aging workforce at home, and much of the growth in the global talent pool occurring in Asia and Africa, the UK needs to increase its access to talent in other countries if it’s to remain competitive and productive. Immigration is one obvious solution to this dilemma, and immigration will continue to play an exceptionally important role in helping Britain tackle its looming talent shortage…but is also likely to be supported by a newer, more technologically-enabled option that could increasingly help countries in the war for talent: the virtual workforce.
The first step on the path to this virtual workforce has been the diminishing importance of location.
The internet, and in particular the growing ubiquity of ultrafast data connections, has played a central role in helping to make location largely irrelevant when it comes to teamwork. Video conferencing empowers teams to hold ‘virtual meetings’ no matter where the team members are based, and this trend will become even more dramatic when virtual reality enters the workplace, with VR likely to make location and proximity truly passé by enabling team members to interact as if they’re in the same room, even from opposite ends of the globe.
Beyond meetings, cloud computing technologies mean files can now be accessed from anywhere and everywhere as well, enabling teams to share and collaborate on documents, reports and presentations instantly, no matter where they are or what device they have to hand.
A similar trend can be seen when it comes to disparate time zones – team members spread out across the world are increasingly adjusting their working hours in order to create layers of ‘temporal overlap’ with colleagues in other countries, while collaboration platforms such as Slack, Basecamp and Yammer, in consort with cloud computing technologies, are ensuring that genuinely collaborative teamwork no longer has to happen ‘in real time’ anyway.
In fact, research from Gallup indicates that 37% of the US workforce now works remotely at least part of the time, and almost half of those ‘telecommuters’ don’t keep the same work hours as their far-flung teammates.
Taking the USA as a leading example again, 34% of the US workforce are now freelancers (on either a full-time or part-time basis), and forecasts suggest this figure will surpass 50% by 2020. In the UK the proportion is noticeably smaller – according to data from the Association of Independent Professionals and the Self Employed around 1.91 million people in the UK freelance on a full time or part time basis, which represents just 6 per cent of the active workforce.
However, the same IPSE data indicates that freelancing is growing at a rapid rate in the UK, with a 36% rise in the number of freelancers between 2008 and 2015.
The trend towards freelancing has been partly due to the Great Recession, of course, when permanent job vacancies declined sharply. But there are also other factors at play, including the end of the ‘social contract’.
The social contract (an unspoken compact where employers offered employees job security and incremental increases in salary and responsibility in exchange for long-term loyalty) has largely disappeared, with “job-hopping” becoming the new normal even for permanent, salaried staff. This has encouraged a shift towards ‘contingent workers’, such as freelancers, contractors, consultants and temps, who work for a company on a project basis rather than being held ‘on retainer’ as permanent staff members.
Other than helping employers address the talent shortage, the move towards a contingent workforce has another important benefit for small businesses and large corporations alike: it allows companies to access talent only when they need it, freeing them from the administrative and financial burden of a larger, more permanent workforce. The net result is a move towards “talent on demand”.
In the technology sector the on-demand economy has taken Britain by storm, with Uber’s UK turnover increasing by 1,000% in 2015, Just Eat growing sales by 57% last year and Deliveroo averaging 25% month-on-month growth.
As we’ve already discussed, the UK is some way behind the USA’s move towards an ‘on demand’ workforce (34% freelancers, 37% telcommuters in the US), but given Britain’s position as a global leader in the digital economy, and the exponential growth of the on-demand economy in the UK, it’s likely only a matter of time before this consumer technology trend spills over into the general workplace.
Perhaps unsurprisingly, the move towards a virtual, globalised, project-based workforce got its start in the technology sector, giving rise to a trend that Deloitte describes as the “Open Talent Economy”. In line with the tech sector’s embrace of open source technologies and agile development models, Deloitte’s concept of an Open Talent Economy recognises the full range of talent that businesses can now employ, from permanent employees, to project-based freelancers, consultants, virtual assistants and contractors, as well ‘open source talent’ (e.g. open source developers writing code for a project, open source ‘evangelists’ teaching others how to use a company’s technology through forums and meetups, etc.).
While the UK is some way behind the US (and in particular Silicon Valley) when it comes to the scale and success of its technology sector, as a technologically-advanced economy, with a firm commitment to high-speed internet infrastructure, a business-friendly policy environment and a high degree of digital literacy, Britain is well placed to plug the looming gaps in its domestic talent pool through virtual access to the global workforce. Watch this (virtual) space.