Insourcing Tribes Is Good for Your Business

One of the most often repeated complaints about Australian business is that it faces a significant shortage of digital talent.

There is a raft of reports and opinions on this subject, which all largely support the same view that the training, attraction, and retention of digital talent is one of the critical industries facing Australian business and is holding back growth and competitiveness.

A recent report for industry group ACS, for example, commissioned from Deloitte Access Economics, forecast a shortfall of 100,000 digital workers by 2024.

"For Australia to be a competitive player in the world economy, our policymakers, businesses, workers, and communities need to work better together to address the challenges of technology-related skills, investment, and collaboration," said ACS president Yohan Ramasundara.

Another study, the Australian Digital Success Report from ntegrity, comes to similar conclusions. It divides Australian companies into three main categories: digital sideliners, digital climbers, and digital achievers.

Unsurprisingly, the digital achievers were the ones achieving the highest growth, but it wasn’t so much that they didn’t have the technology – they didn’t have the people.

Across the board, 76% of companies reported that finding digital talent was a challenge, with 42% saying it is their greatest challenge.

Investing in Staff Reaps Dividends

The report also discovered that 48% of the Australian businesses surveyed were increasing their spend on the training and development of existing staff.

It also found that the companies which were investing most heavily in digital staff were not the laggards, but the leaders.

"The research reveals that Australian companies growing in revenue are investing in digital training for their staff, bucking the national trends," said Richenda Vermeulen, founder, and chief executive officer of ntegrity.

So, given the shortage and the importance of digital talent to successful growth, attracting and retaining such talent is – in the current environment – a critical marker of success.

U.S. research also showed that companies that have a more substantial proportion of their digital talent in-house perform better than those with more contractors.

This was part of a study by Kristine Dery, a research scientist at the MIT Sloan School of Management, who looked at these ratios at around 300 large U.S. companies.

Dery found that, on average, 60% of digital employees were sourced externally, and were either engaged on contracts or on a casual basis.

While this delivered flexibility and kept down costs, it was not necessarily good for business growth.

Why Outsourcing is Not Business Good

The majority of companies will typically employ a mixture of full-time and contractual digital staff. An MIT study led by Dery of approximately 300 large companies found that in the IT departments, on average, 60% of digital employees were sourced externally either to enhance or extend the workforce.

The problem with this approach is that though it allows for flexibility, it’s not necessarily good for business.

The research also found that those companies with an in-house digital talent pool of 50% or lower reported lower profit margins, were less agile and innovative and were slower to introduce new products and services to market.

The equation then is clear for companies that want to succeed. Investing in an in-house digital "tribe" and keeping the group happy and together is a common factor for success, and according to Kristine Dery, it all comes down to the concept of employers delivering a better employee experience.

“The way we define employee experience,” said Dery, “is how easy is it for me to do great work today and reimagine my future work?

“It means you need to install integrated systems and provide great tools and provide people with relevant spaces to work in. It means you create environments where teams have opportunities to work on interesting projects that stretch them, and where value is measured on outputs.”

Frictionless Workplace

Other analysts talk about the “frictionless” workplace, which is built around the talent, which makes employees feel supported, motivated and engaged. The idea of workplace engagement is giving way to the concept of workplace experience.

Where engagement is more transactional and based around conditions and remuneration, workplace experience is more about interactions with colleagues, leaders, and employers. It is more focused on what happens in the buzz of the workplace rather than what people take away from their jobs.

There is a generational aspect to this as well. The talented digital workers are likely to be younger, and it is well documented that younger people are looking for different things from their jobs if they are going to be satisfied enough to stay.

Richenda Vermeulen from ntegrity puts it this way: “We need to stop thinking about staff perks, like a Christmas party or beer fridge, as investments that drive a culture of performance, and instead, think about the professional development of our workforce.”

That would be a win for both employer and employee, but right now – in Australia as in many countries – it is the right talent which is in demand and calling the shots as companies understand how important they are to the growth.

Stand by for the 2020s to be the decade of the workplace experience and wait for the innovation that will produce as the workplace continues its own transformation.