Balancing the ‘Digital Divide’

Companies for years have heavily outsourced production and sourcing to China and other Asia-Pacific (APAC) countries, drawn by such factors as low wages and low costs. As advanced technologies have become prevalent, workers there have become much more skilled and proficient. And while China has become more expensive, it and some APAC countries are still less expensive than producing in the U.S. or Europe.

When — and in some cases, before — the coronavirus pandemic hit, organizations realized a need to diversify to other locations and closing to home and customers. But moving away from a skilled workforce, a mature manufacturing and logistics infrastructure, and well-developed supply base is difficult. What is often lacking in those alternate locations is experienced talent.

 The APAC region, which comprises 45 countries, is “at the forefront of the world’s digital revolution” and a major source of digital talent, a recent study by supply chain intelligence solutions provider Zero100 states. The Digital Divide notes that China is “investing heavily in automation, robotics, and other technologies to boost efficiency and productivity across its manufacturing base…” India is a hot spot for software engineers and data scientists, and Singapore “leads the world in AI spending as a proportion of (gross domestic product) GDP.”

“A lot of innovation is going on,” says Geraint John, vice president of research at Zero100. “Chinese companies are getting bigger, entering the U.S. market through companies like Shein or Temu, for example, in the e-commerce space. But it’s also our companies that are gradually upskilling people working for them in those countries within Asia. That’s why we call it the digital divide because we see that activity being ramped up slightly disproportionately.”

Strong Foundations

For supply management organizations, AI’s use can go well beyond tasks, John says. It also spurs innovation, the creative use of technology, and crucially, the ability to do things quickly and at some scale, he says. “This is true for domestic Asia-Pacific based companies, whether in China, India or elsewhere, as well as the Western multinationals that have extensive operations there,” he says.

What makes APAC talent stand out? The report’s executive summary offers these four reasons:

• The educational system provides students with a strong foundation in such subjects as engineering and computer science
• Hard work and ambition
• The APAC region offers such advantages as lower costs, higher capabilities and the ability for companies to operate around the clock, due to the time differences
• Students and existing employees are given extensive digital skills training.

Balanced Workforce

When moderating a recent seminar, John asked attendees about the importance of training workers in North America or Europe if APAC workers have such strong skills: “Why is this an issue if you’re used to outsourcing and offshoring production? If we have a digital divide, which most of the leaders attending agree exists, why does it matter? You’re already working in the East.”

The response from one attendee, he says, was that there is a big need for talent reshoring and skills reshoring because organizations cannot solely rely on development work being done by workers on the other side of the world. “She said, ‘We need people on our own teams in the U.S. and Europe and elsewhere to know how to use this technology, to be very skilled at and quick and adept at using it and to have the knowledge and skills.’” This applies to all levels, he added.

Distance and time also are factors. Issues can often be addressed in a more timely matter if skilled workers are closer to customers.

Global companies must have a balanced talent footprint, he adds. “You don’t want to put all your eggs in one basket or in one country or in one talent pool,” he says. “It’s not a question of suddenly reshoring all of this from East to West. It’s about being very conscious and deliberate about where you choose to invest — and making sure it doesn’t feel like an unbalanced situation.”

He adds that while doing the report, Zero100 heard a lot about the differences between university education and practical training programs in the East and West. India and China are among the countries that ensure talent is upskilled in data analytics and computer science, he says.

“Not only do we need to make sure (North American) universities and graduate schools are catering for the latest technology trends and the latest technical skills, but companies in the West must also invest in practical programs to ensure their staff at all levels embraces this and understands the skills and knowledge they need to be successful going forward.”

(Image credit: Getty Images/Blackred)