The previously noted 2012 Oxford Economics study stated the following: “In 1990, the total of the world’s exports and imports accounted for only 30% of the world’s GDP—today , they make up more than half… These structural shifts are reshaping both the supply and demand for talent across the globe.” In a 2014 SAP/Oxford Economics survey of 2,700 executives in small to large businesses world-wide, “Globalization of the labor supply” was cited as the most important “labor market shift having an impact on workforce strategy.”
Two major drivers of this shift have already been evident:
- The mere fact of an increasingly globalized economy necessitates that businesses, large and small, engage workforce capacity in different parts of the world. As investment, production, operations, and services follow fast expanding, “developing” and “emerging” materials sources and markets (supplies of basic resources or demand for goods and services), workforce must be engaged in those locations to ensure that the needed work gets done and to ensure that it is done (and a business is represented) in an appropriately “localized” way to the markets, regulators, etc.. This is fundamental and has been increasingly happening for a century or more.
- Another very visible development of the last quarter of the 20th century was that of outsourcing/off-shoring, whereby businesses (mainly manufacturing and some service industry segments in developed economies) shifted work from costly, domestic “employed workforces” to lower cost workforces in developing and emerging countries (along with investments in capital assets of plants and other facilities). This set of practices involved shifting work to relatively large, homogenously skilled populations of workers (especially factory workers, call center workers, IT workers) employed in other countries. This “lift and shift” outsourcing/off-shoring wave seems to have crested in the past 10 or so years, certainly since the radical global economic realignment brought about by the Global Financial Crisis (GFC).
But now, 15 years into the 21st century, other conditions are driving why and how workforce is engaged in different countries across the globe:
- First of all, the global economy now operates faster, more competitively, and in some ways more openly (is “flatter”) than ever before; and businesses must be able to respond with unprecedented speed and agility to supply and demand opportunities and competitive threats on a global scale.
These situations are different from the long-term, long-lead-time, “epic” commitments of “lift and shift” outsourcing/off-shoring. They may involve making market-testing probes or defensive moves or establishing limited market beachheads, et al. Businesses must accomplish such actions abroad quickly, cost-effectively, and with agility. The right workforce or talent (which could be experienced managers, business developers, engineers, attorneys others specialists, etc.) must be engaged in an adequately “localized” way with smooth, fast execution processes in days, weeks, or a month or two.
Just as important, such actions abroad may need to be taken tentatively or at least in an agile manner which will be open to further change that may also happen quickly (leading to a shift in the original strategy or mission, a cancelling or withdrawal from the initiative, a rapid escalation of the program that was started on a small scale).
In effect, new ways of utilizing and engaging talent across the world are becoming prominent, and there seems little reason to expect this trend to reverse itself. Businesses need to be able to engage relatively small numbers of diverse workers in different country locations, and they need to be able to do this with agility (speed and flexibility), not a lot of overhead, in a manner that is sufficiently “localized” to the cultural and economic practices of the country in question.
- Second, as suggested above, the nature and purpose of the global workforce engagement is shifting. Now and going forward, global workforce engagement becomes less and less about a “labor arbitrage” world, structured around access to reservoirs of low-cost, homogenously-skilled (and largely low-skilled) labor. The new world of global workforce engagement is structured around and motivated by business’ needs to utilize specific talent and skills.
The basis for this shift is two-fold:
- As noted above, more and more businesses are executing responsive or expansionary business initiatives in different countries around the globe, and these initiatives require that specifically skilled talent (often consisting of individuals or teams on a relatively modest scale) is engaged for specific, location and time-dependent, purposes.
- Of rapidly increasing criticality, global workforce engagement is also being driven by (a) “talent/skill shortages” that are severely challenging businesses in their domestic labor markets in developed economies and (b) the growing talent pools of diversely and highly skilled workers in developing and emerging economies,
This particular phenomenon is also well documented by Oxford Economics:
…structural shifts are reshaping both the supply and demand for talent across the globe. To cope with a changing business environment, employers are demanding new skills from their employees, yet often and they are in short supply. …executives and managers tasked with hiring new workers often say they are unable to find the right people with the proper skills to fill their vacancies.
Meanwhile, the sources from which talent might be recruited are also realigning…. More talent is being “home grown” in the developing world, and as a result, our forecast shows that over the next decade, new and sometimes unlikely regions of the world will generate a surplus of talent…
The impact of the global distribution of talent will be dramatic. Already, over half of the world’s college graduates (54%) come from the top emerging markets (the E7: Brazil, China, India, Indonesia, Mexico, Russia and Turkey), compared with 46% from the industrialized world (the G7: Canada, France, Germany, Italy, Japan, UK and US). Over the next decade, the percentage of college graduates will rise to 60% in the E7—some 217 million workers, as opposed to 143 million in the developed world. Perhaps most tellingly, China will overtake the US as the country with the largest single pool of educated talent.5
With this increasing “production” of skilled talent in developing and emerging economies, it becomes clear that global workforce engagement will not only be driven and shaped by businesses that are “following” opportunities to source new supplies of materials or to access new markets for expanding distribution of products and services. As with “lift and shift” outsourcing/offshoring, they will also be following labor/human resource supply opportunities; however the driving motivation will be to access talent and skills that they cannot access domestically.
It is clear that 21st century businesses are and will be operating in a global economic landscape that will increasingly drive them to engage a global workforce for various reasons and in a variety of different ways than they did in the past. The most-notable features of this new world-wide workforce engagement are: (1) agile, moderately-scaled engagement of specific talent and skills in national economies where business opportunities are present, and (2) global engagement of talent and skills as a way countering talent and skill shortages in domestic economy labor markets.
This is an excerpt from the recently launched CXC Global Whitepaper “Engaging “The Worldwide Workforce” In The 21st Century. You can download this, and other industry related whitepapers on –http://cxcglobal.com/white-papers/
With over 60 compliant country solutions around the world, CXC Global™ is a leading supplier of compliant contingent workforce solutions, Contractor Management Workforce Services with an unmatched suite of managed services for employers, contractors and recruiters, CXC Global helps thousands of organizations, recruitment agencies, and individual contractors decrease costs and increase profits by providing innovative contractor management, compliance, payroll and remuneration solutions, risk mitigation and salary packaging solutions.