How Skills Intelligence Can Avert a $8.5 Trillion Crisis by 2030

“Checking the skills gap of ~80 million job roles by 2030 at a global level requires workforce transformation efficiency to also improve at a global level across companies. With the adoption of skills intelligence and SFT 2.0, companies now look forward collectively to making a significant dent to forecasted lost annual revenues of US$8.5 trillion by 2030.”

The current workforce has borne witness to the highest number of layoffs seen in decades in just the last 4 years. Over 3.2 million layoffs were recorded in 2020 due to the COVID 19 Pandemic, and it was premature to think those days were behind us. 2023 witnessed another 167 thousand layoffs in the tech industry alone, and while number reduces in 2024, the crisis is far from mitigated. Our previous report on ‘Tech Skills Transformation’ published in 2023 revealed that a staggering 81% of organisations were facing a shortage of skilled tech workers and the skill gap will continue to widen. 

“We underestimated the extent to which the growth driven by the pandemic would persist after people resumed their offline activities. We are currently adjusting the size of our workforce to align with the current market conditions” - Director, Talent Development of a European, Technology firm - (headcount ~10,000)         

The Band-Aid solution of layoffs is only going to be contributing to the impending doom, because the full costs of layoffs for companies far exceed any immediate cost savings. The realistic costs of hiring per role include hidden costs, such as additional training, employee turn-over and re-hiring costs since typical accuracy is between 70% and 80%! Even with 80% accuracy, the realistic unit cost per role is almost three times the visible costs when the impact of the role is 1.5x of the CTC, going up to ~6.5x when impact is five times of the CTC. Don’t just take our word for it, the data itself is telling.  

These hiring, training, and attrition cycles in today’s market have resulted in low employee engagement across companies. According to market analysts, global employee engagement stands at 23%, while employee engagement in advanced organizations reaches 70%.

The scale of workforce transformations is expected to remain high, given the present pace of AI adoption and the magnitude of the skills shortage. A forecasted shortage of skilled employees in over 80 million job roles globally by 2030 could lead to a predicted impact of US$8.5 trillion in unrealized annual revenues if left unchecked. A significant portion of the US$8.5 trillion in unrealized annual revenues will be incurred as opportunity costs during cycles of re-hiring, re-training, and employee attrition.

So, what can be done to mitigate this? The answer lies in workforce transformation.

Regardless of the context of the business transformation, workforce transformation is always at its center affecting the levers of hiring, training, and employee attrition.

Our study indicates that organizations with high employee retention rates outperform their competitors in revenue growth by an average of 2.5 times and the cost of replacing an employee can range from 16% to 213% of their annual salary.

And where there’s workforce transformation, Skills Intelligence establishes itself as a natural solution as it can potentially enable organizations to significantly reduce these costs by improving effectiveness and efficiency across the key levers of workforce transformations — hiring, training, and employee attrition.

Now, the question arises, “exactly how much impact can it have at an organizational level?”

We surveyed HR leaders (CHROs, Global HR heads, Regional HR heads and Country HR heads) and employees across multiple industries and geographics and here’s what we discovered:   

1. Accuracy Boost: Skills intelligence can improve your hiring and training accuracy by 10-20%. 
2. Hidden Costs, Revealed: Workforce transitions seemingly cost more than they should. right? The real costs can be 3-5 times higher than we usually estimate.
3. Transformation Efficiency: A skills-first approach can make your workforce transformations 1.5 to 5 times more efficient. Now we're talking!
4. Employee Engagement: Companies using skills intelligence see employee engagement soar to 70%, compared to the global average of 23%. 

 Ready to be part of the solution? Here's what you can do.

1. Dive deeper: Download our full EY-iMocha report. Get your copy here.
2. Take a hard look at your current workforce strategies. Where could skills intelligence make the biggest impact?
3. Get in touch with us! We’re always here to help.

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