Understanding and Addressing the Skills Gap in Hiring

Introduction

A remarkable and complex transformation is taking place in India's dynamic talent landscape, especially in large enterprises and SME’s. Workforce dynamics are rapidly evolving to meet the demands of an ever-expanding digital environment. A significant concern that resonates across industries is the existing skills gap - a mismatch between the skills employers are looking for and the skills potential candidates bring to the table. This skills gap has significant implications and requires immediate attention to ensure competitiveness in the rapidly changing Indian job market.

Essentially, the skills gap in India is the result of several factors. Rapid advances in technology and the subsequent emergence of new business models have created a demand for significantly different skills across the professional landscape. At the same time, traditional education structures are struggling to keep pace with these rapid changes. As a result, the knowledge and skills provided to graduates often do not match the actual needs of the labour market, leading to what is commonly known as a skills gap.

According to a recent study, around 40% of IT professionals in India will need to upskill in the next few years, while around 48% of Indian employers report challenges with skills gaps and filling vacancies due to talent shortages. On a broader scale, this gap extends beyond just hard skills and encompasses the evolving needs of the workforce.

Understanding the skills gap in India

The skills gap in India can be characterised as the gap between the skills desired by employers and those possessed by the available workforce. Recognised as a major hurdle in hiring and recruitment across the country, the skills gap has a significant impact on business expansion and overall economic progress.

Sector-specific skills shortages

Various industries in India are currently facing critical skills shortages that are limiting their ability to thrive and compete globally. In 2022, around 83% of industries in India reported a shortage of talent. The construction industry had the highest shortage of skilled labour at around 85 per cent in that year. According to another report by Deccan Herald, India has a doctor-patient ratio of 1:1,456, which is far below the World Health Organization's recommended ratio of 1:1,000.  In addition, the financial and retail sectors are experiencing a growing demand for employees with digital skills. These shortages present tangible business challenges, ranging from stifled innovation to customer dissatisfaction and missed opportunities.

In-demand skills in India

India is also facing a shortage of in-demand skills. In particular, there is a significant demand for technological expertise, which includes skills in artificial intelligence (AI), machine learning, data science and cybersecurity. Leadership, negotiation, emotional intelligence, problem solving and project management are also in high demand. 

Impact of technological advances

Rapid technological advancements are also contributing to the skills gap in India. This requires employees to constantly adapt and upskill in order to remain relevant. For example, emerging technologies such as AI and machine learning require specific skill-sets that did not exist a decade ago. In addition, the widespread adoption of remote working, spurred by the pandemic, has created a need for new digital skills. According to the Chairman of NASSCOM, the shelf life of skills in India is only 2-3 years, highlighting the need for continuous upskilling. Organisations need to invest in continuous training and development to address the growing skills gap and remain competitive.

2.1 Educational disparities:

While education plays a critical role in bridging the skills gap, there are significant disparities in India's educational landscape. The introduction of the National Education Policy, 2020 has brought a new lease of life to India's education system. The aim is to create an education system that is more in sync with today's dynamic and changing world. The NEP aims to shift the focus from rote learning to a system where children 'learn how to learn'. The need for multidisciplinary, experiential, flexible, result-oriented and integrated learning has also been emphasised.

Take the information technology sector, for example. Despite its growing demand, there are gaps between what students learn and the practical skills required in the labour market. Many graduates may be well versed in theoretical concepts, but lack the practical programming, data analysis and project management skills that are critical to the sector. According to the Equinix 2022 Global Tech Trends Survey, 74% of IT decision makers in India view the lack of IT skills as one of the top threats to their business. Companies are looking to expand the talent pool by attracting more diverse candidates through various recruitment methods.

2.2 Demographic shifts:

India is experiencing significant demographic shifts with implications for the skills gap. The youth bulge in the population means that a significant number of workers are entering the labour market, but there are challenges in matching skills with industry needs. 

3.1 Recruitment challenges

The skills gap poses significant challenges for recruiters in finding qualified candidates. The available talent may have the necessary qualifications, but often lack the specific skills required for the job. As a result, their productivity is compromised, leading to performance degradation and ultimately impacting the overall efficiency of the organisation.

3.2 Retention concerns

In addition to recruitment challenges, the skills gap also leads to retention issues. Inadequate skills to adapt to changing job requirements can make employees feel overwhelmed, contributing to burnout and higher turnover rates. According to a report by LinkedIn Talent Solutions, a lack of career growth or advancement opportunities is cited as one of the top reasons why employees leave their jobs, with the skills gap identified as a significant contributor.

4.1. Talent attraction and employer branding strategies

Addressing the skills gap begins with the ability to effectively attract qualified candidates. A strong employer brand differentiates organisations and positions them as the best place to work in their sector. Research suggests that 94% of jobseekers are more likely to choose a company with a strong employer brand and 91% of them find a poorly managed digital presence detrimental to the employer brand.

Key components include fostering a vibrant culture, promoting a compelling work-life balance, offering opportunities for career advancement and providing competitive compensation. By influencing these factors, HR managers can shape their employer brand to create an attractive workplace for skilled workers.

4.2 Innovative recruitment methods:

Exploring alternative recruitment channels can change the approach to tackling the skills gap. Organisations can use platforms such as LinkedIn to discover untapped talent pools. Virtual career fairs, social media recruiting and AI-powered candidate screening tools can expose organisations to candidates who might otherwise go unnoticed.

Gamification and mobile recruiting also offer interesting alternatives to traditional recruitment methods, providing convenience for both recruiters and the modern, mobile workforce.

4.3 Diversify recruitment criteria:

Just focussing on academic qualifications and specific experience can limit the pool of potential candidates. Shifting the focus from pedigree to potential and recognising transferable skills can unlock a diverse talent base. This approach values agility, problem-solving skills, creativity and growth potential over traditional credentials, fostering a more dynamic and inclusive workplace.

4.4 Working with recruitment agencies:

Working with specialist recruitment agencies can accelerate access to niche talent networks. These agencies have connections and expertise in their respective sectors and offer invaluable insight into the recruitment process.

They provide access to a database of qualified candidates, speeding up the recruitment process and delivering candidates who may be more competent and suitable for specific roles.

4.5 Internship and Apprenticeship Programmes:

Internship and apprenticeship programmes help organisations build a pipeline of talent. By training young talent in-house, companies can shape the skills they need, bridge the talent gap and potentially secure the future leaders of their organisation. This long-term strategy ensures a steady flow of competent candidates who are aligned with the organisation's culture and goals.

4.6 Global talent acquisition:

Global talent acquisition can be an effective solution to domestic skills gaps. While working across time zones and with different cultures presents challenges, the benefits often outweigh the drawbacks. The ability to recruit from a global talent pool brings fresh insights, perspectives and unique skills to the organisation.

4.7 Upskilling and reskilling programmes:

Investing in the current workforce through upskilling and reskilling programmes is a proactive strategy for closing the skills gap. By focusing on developing in-demand skills, organisations not only improve the productivity and performance of their existing workforce, but also cultivate a learning culture that attracts skilled workers. Consider partnering with education providers and online courses to implement such programmes. According to the latest LinkedIn WLR, 89% of of L&D pros agree that proactively building employee skills for today and tomorrow will help navigate the evolving future of work.

5.1 Data-driven hiring decisions

Data analytics has become an integral part of how companies approach recruitment in India. It is not just a supplementary tool, but a critical factor in HR's strategic decision-making process. Defining 'what is a skills gap' now involves in-depth analysis of workforce data, assessing skills and identifying areas of talent shortage. With tools like LinkedIn Talent Insights, hiring teams can access real-time reports on talent pools, skills availability and market trends.

For example, a company in Bengaluru can use these tools to identify if there's a shortage of certain technical skills on their team, and adjust job descriptions accordingly to ensure informed hiring decisions.

5.2 A culture of continuous learning

Dynamic business environment demands that employees continuously upgrade their skills. Given the rapid changes in market demands, it is critical for organisations to foster a culture of continuous learning.

Giving access to LinkedIn Learning which enables employees to pursue additional certifications and provides incentives for skills development, highlight the importance of providing space for employees to learn and grow, ultimately mitigating skills gaps over time.

These evolving trends - remote working, data-driven hiring and a focus on continuous learning - are fundamental to addressing the 'skill gap' in talent acquisition in India and building a resilient workforce for the future.