Avert skill set crunch by applying better analytics: SAP
By Edwin Yapp September 20, 2013
- With hyper-growth rates in emerging markets, Asia set to experience skill set deficit in the next decade
- Organisations should prepare for this by applying analytics to gain better insights on their talent database
THE hyper-growth rates experienced by emerging economies in Asia offer great opportunities for commerce but the shortage of relevant skill sets in the region may stifle success, according to German software giant SAP.
Speaking at the SAP Insider regional conference in Singapore recently, Raj Sundarason (pic), vice president of human capital management solutions at SAP Asia Pacific Japan, noted that countries such as China, India and Indonesia continue to experience vibrant economic growth, and that this phenomenon is expected to create a “new consuming class” in the region.
A consuming class is defined as comprising individuals with an annual net income of above US$3,600, using the year 2005 as a baseline for purchasing power parity.
Citing a study from a variety of sources including the University of Gronigen, McKinsey and The Brookings Institution, Raj noted that by 2025, the consuming class would swell to 4.2 billion people and that consumption in emerging markets would account for US$30 trillion, nearly half the global total.
The SAP executive said Indonesia is a good case in point, noting that the consuming class in this archipelago economy could reach a population of 90 million by 2030.
“If Indonesia continues to grow at 7% of its GDP (gross domestic product) as it has these past few years, the consuming class will become a very real potential for companies operating in this region,” Raj said in his keynote presentation.
“Organisations that can embrace this challenge can set themselves up for success tomorrow.”
Despite this huge potential, Raj pointed out that there are several ‘speed bumps’ that could retard the progress of commerce in this region, chief of which is the lack of relevant skill sets.
To achieve a 7% annual growth target, Indonesia would require labour productivity to grow 60% faster than in the 2000-2010 period, he argued.
“If the labour pool of skills remains the same today and Indonesia wants to hit a growth rate of 7%, the first thing it will need to do is to improve its productivity,” he explained. “But becoming more efficient in productivity is only going to get you so far.
“Ultimately you’re going to need more people, more trained skilled individuals who can take productivity, drive efficiencies and become more effective in the market. The speed bump to this is trying to find the people in Indonesia today,” he said.
While Indonesia was cited to highlight this acute shortage of talent in Asia region, Raj noted that the situation isn’t unique as all Asian countries are expected to undergo this challenge.
He said that a number of companies, notably multinational corporations (MNCs), are trying to prepare for this skill set crunch by being creative about recruitment and retaining talent.
A key piece to this strategy is for companies to go beyond merely collecting raw data within the organisation and instead gain insights from that data, turning it into useful information, Raj said.
“We had one of our customers who wanted to 'right-size' its workforce from 10,000 people down to 8,000 people, and we were able to achieve this," he claimed.
“By using our analytics solutions, we were able to go beyond just that what we were tasked to do."
"Besides right-sizing our client’s workforce, we were able to provide other insights. This included what grade of employee was experiencing the highest turnaround; which country was experiencing this turnaround; where in the company it was losing more people than others; who else was at risk of leaving; and the reasons they were leaving.”
Raj said that with this extra information, SAP was able to craft suggested responses and help its client address its talent challenges.
“Data without analytics or insights is like the blind leading the blind. We are not just talking about data but how you use that data by putting some ‘smarts’ around it, have people understand the issues, and try to figure out how we can use these insights to solve real business problems,” he said.