We’re currently in the middle of a pivotal moment in human history. The Fourth Industrial Revolution and emerging technologies like artificial intelligence are having a major impact on the global economy and how it functions.
One of the biggest impact areas of this within economies is production. Or, to use the colloquial term, work. Current estimates by McKinsey say that by 2030, between 3% to 14% of the workforce—which represents between 75 and 375 million workers—will need to switch occupations and learn new skills. Digital transformation is driving this.
What is digital transformation?
Digital transformation is a term used to refer to the development and adoption of digital technologies in all aspects of organizations and societies, which fundamentally change and disrupt how they operate.
Going beyond mere technological adoption, it encompasses a shift in mindset, culture, and processes to leverage the full potential of digital tools and data-driven insight to streamline operations, make data-driven decisions, and create new business models or services.
One area where digital transformation is having a profound and irreversible impact is the world of work. In just a few years, it has noticeably changed the workforce in some areas by reshaping roles, skill requirements, and work dynamics. It’s also changing demands across industries and occupations, meaning that many occupations and skills are at risk of becoming irrelevant or obsolete. At the same time, new ones are emerging.
A global digital divide
While digital transformation is accelerating digital capabilities for many in the developed world, it’s doing the opposite in the developing world; emerging technologies accentuate divides as poorer countries fall further behind. This is reflected in the statistics.
Roughly 2.6 billion people, one-third of the global population, remained offline in 2023. At the same time, more than 90% of people in high-income countries used the Internet in 2022 compared to 25% in low-income countries. This is a significant gap and represents an even more significant issue: Developing countries are at risk of being left behind in digital transformation as the rest of the world moves on, compounding negative effects in terms of economic, political, and social inclusion and equality.
This divide isn’t solely geographical. Disparities in Internet connectivity, for example, include gaps based on gender, age, and rural vs. urban populations. Recent estimates say that there are 264 million fewer women accessing the Internet compared to men. Women are also 7% less likely to own a cell phone and 16% are less likely to use mobile Internet than men. Meanwhile, younger populations are more likely to be online with 75% of those ages 15-24 connected to the Internet compared with 65% of the rest of the population.
Access to the Internet is not the only barrier. Basic digital literacy training, for example, is critical for populations to be able to effectively use the Internet when they have access to it. Workforces in developing countries will struggle to do this without the prerequisite knowledge and skills.
Despite this digital divide, developing countries arguably have the most to gain and the most to lose as digital transformation moves along. This is particularly true when applied to workforce development in these economies, an area where digital transformation will have a widespread impact on systems, processes, and technology adoption.
As digital transformation continues, employers in developing economies will begin to realize that their old approaches to workforce development are becoming redundant and ineffective. This will necessitate the further adoption of technology to overcome workforce challenges—with the failure to do so potentially being detrimental to economic growth.
The question is then, how can developing nations and their workforces manage and make use of digital transformation?
Addressing skills gaps in developing countries
The answer is by addressing skills gaps. These are widening across the world due to the rapid pace of digital transformation and advances in technologies like artificial intelligence.
Although workers in all countries risk becoming unemployable because they don’t possess the right skills, the problem is more profound in developing economies. This is because skills gaps can constrain economic and social development, which limits not only the ability of individuals to access jobs and improve their standards of living, but also the ability for an economy to grow.
It should therefore be a global imperative for nations to ensure that no worker is left behind due to digital transformation. This can be achieved by shoring up organizational skills inventories by first identifying any skills gaps that exist on an individual and organizational level and then taking steps to upskill and reskill employees to bridge them.
However, understanding the current state of the labor market can be difficult. Traditional methods of labor market analysis are constrained by analyzing materials based on historical data which are unable to provide the real-time insights needed to support operations in the digital age. Data quickly becomes obsolete as supply and demand movements are changing daily.
To overcome this challenge, organizations are turning to artificial intelligence to capture labor market movements in real time. Quantum labor analysis is an emerging methodology that uses artificial intelligence to analyze labor markets in real-time at their most granular level—skills. Using it, organizations can see real-time data on skill gaps within labor markets by looking at the supply and demand of skills. This makes it easier to forecast future and emerging skills and place workers on sustainable career paths that meet the needs of digital transformation.
Both the public and private sectors have skin in the game here and play an equally important role in bridging gaps by equipping workers with the skills needed to thrive during digital transformation. By identifying future skills, we put workers on career paths that are aligned with future needs. This forward-thinking mindset is key to proactively addressing changing workforces so that digital transformation can be a global success—not just a Western one.
Making digital transformation a global success
Close the digital divide
Even though governments in some developing nations have made significant investments in digitizing their public services—61% of African nations now offer an average of 12 public services online—citizens don’t always have the means to access them. According to the International Telecommunications Union (ITU), “vast swaths” of people are currently excluded from the Internet.
“While the number of Internet users surged from just a few million in the early 1990s to almost 5 billion today, 2.9 billion people remain totally offline,” says the ITU’s 2022 Global Connectivity Report.
According to the report, hundreds of millions of people worldwide contend with expensive, poor-quality Internet access that does little to improve their lives. At the same time, the increasing speed of public service digitization runs the risk of exacerbating existing inequalities, which goes against the UN’s Sustainable Development Goal (SDG) of reducing inequality within and among countries.
Given that research has shown that when countries have access to high-speed Internet, employment and incomes increase, governments will need to work to close this digital divide by investing in robust Internet infrastructure and digitizing public services. But this is just one piece of the puzzle-- skilled public and civil servants will also be needed to run these services
In developing markets, where Internet access and digital fluency are in short supply, any strategy to digitize public services and begin widening Internet access will need to be based on a foundation of skills. Among core digital capabilities, government departments will need in-depth knowledge about things like artificial intelligence, machine learning, cloud computing, and data technology.
Bridge skills gaps
Underemployment and unemployment are some of the biggest risks for developing nations. The coronavirus pandemic had a huge impact in Africa, and unemployment rates have continued to rise in the years since.
The problem is especially prevalent among Africa’s youth. 13 million young people in Africa are unemployed, and more than 72 million are not in education, training, or employment. Between 2012 and 2024, 11.2% of those aged 15 to 24 in Africa were unemployed. Tackling this will be essential if countries within Africa are to be in a position to make the most of digital transformation.
With that said, one of the most effective ways to boost economic development is through job creation. Cybersecurity, artificial intelligence, and cloud-based solutions are just a few examples of jobs with increasing demand. By investing in emerging industries and equipping workers with the skills needed for digital transformation, we can help improve underemployment and unemployment rates in developing regions.
At the workforce level, quantum labor analysis can help employers capture labor market movements, better understand the current state of the market, and forecast future skills. For example, we have seen double-digit growth in digital literacy skills but a double-digit decline in traditional skills.
Policymakers can use these insights to build reskilling infrastructure to help workers take advantage of the opportunities the digital transformation provides. At an individual level, reskilling technologies can help workers identify hidden and adjacent skills and create targeted career and learning pathways.
Educate and re-skill the workforce
Digital transformation and innovation are radically changing the nature of work. New jobs are emerging, others are evolving, and some are ceasing to exist altogether. While innovation is reshaping the nature of work globally, developing countries are witnessing the emergence of new job roles that require digital skills and expertise that, as we’ve discussed, simply don’t exist.
Developing countries must prioritize investments in education systems that emphasize STEM (Science, Technology, Engineering, and Mathematics) subjects, digital literacy programs, vocational training, and continuous learning opportunities to upskill the general population. In doing so, can bridge the digital skills gap and empower their workforce to leverage digital tools and technologies effectively.
Additionally, building strong partnerships between governments, educational institutions, and private sector stakeholders can facilitate the development of tailored training programs and certifications aligned with industry needs. Education resources are more readily available and accessible than ever. With the help of reskilling platforms, workers can easily be connected to resources by aggregating relevant training and resources that match their career goals. By using future skills prediction, we can target skill gaps and learn for maximum efficiency.
Reskilling and upskilling are not one-time quick fixes, though. It’s important to understand that it’s an ongoing effort that needs to be constantly adapted to labor market shifts as they occur in response to digital transformation. Training and development programs must be able to adapt as demands change. At a commercial level, agile organizations must shift their mindset to that of lifelong learning to ensure their workforces adapt to ever-changing labor market conditions.
Promote the reallocation of labor
Some researchers have argued that digital labor platforms can help mitigate inequality and poverty in developing countries due to the income-generating opportunities they create. It’s important to note, however, that a wide range of tasks such as taxi, domestic, and delivery services have been performed within conventional labor markets and continue to be conducted there.
This implies that there is no sectoral reallocation of labor because workers largely remain within the same sectors. While some may transition from rural to urban areas as seasonal workers to provide, for example, taxi driving or delivery services via digital platforms, this is typically a seasonal shift rather than a substantial sectoral change. This isn’t unique to the digital era; agricultural workers have historically migrated to urban areas to engage in low-skilled service sectors.
With the emergence of the digital economy, however, we’ve seen a growth in the range of microtask services focused on things like image and data annotation, labeling, categorization, and data processing. These are repetitive and well—defined tasks that can be completed quickly by human workers. As a result, they’re often outsourced through online microtask platforms. This creates new employment opportunities.
According to a survey conducted by the ILO, approximately 57% of microtask workers in developing countries possess a university degree in a STEM subject area. Many of these workers have migrated to urban areas in pursuit of education and employment but are instead engaged in working through microtask platforms and in call centers due to limited employment opportunities.
This indicates that instead of transitioning to high-end jobs, well-educated workers in developing economies seem to work in low-end services, such as microtask work overwhelmingly. This contradicts trends seen in the developed world whereby educated workers typically have better employment prospects.
Developing nations therefore need to take steps to ensure that those who pursue higher education and training have a pathway to employment in areas complementary to their skills. This will ensure that any efforts to educate, train, and re-skill or upskill the workforce won’t be wasted.
A substantial opportunity for developing countries
Digital transformation represents a substantial opportunity for developing countries that are willing to foster agility among their respective workforces. At the same time, there’s an overarching risk of widening existing skills gaps, unemployment, and inequality through slow or poor adoption of digital technologies.
The time is now for these countries to put measures in place to ensure their workforces are ready for the future of work. Digital adoption and usage, alongside education and upskilling, will need to increase for workers in these economies to take advantage of opportunities presented by digital transformation.
By proactively addressing these risks with emerging methodologies like quantum labor market analysis and reskilling and upskilling technologies, developing economies can empower their communities and improve livelihoods while also creating workforces that are competitive in the global environment.
.png)
