Spotlight: Skill Gap and the Impact of Macroeconomic Conditions on Growth

Suparna Goswami: Hello and welcome to Spotlight where we highlight all things tech with a stellar panel of editors. Once a month, editors at CIO.inc will get together to discuss the big tech news of the month and their views on it. What's in the mind of CIOs, and what are their priorities? We will dive deep into some of these topics. For the first episode, we will discuss the impact of macroeconomic slowdown on technology purchase and projects, the perennial issue of skill gaps, what new can be done, and much more. So let us immerse ourselves in the joy of technology. The editors for this month's discussion are Shipra Malhotra who is managing editor with ISMG, CIO.inc; Smruti Gandhi who is executive editor with ISMG, CIO.inc; and Brian Pereira who is director, global news desk with ISMG. So excited to have you all to record our first episode of Spotlight. Thank you so much for joining.

Smruti Gandhi: Pleasure is all ours.

Shipra Malhotra: Thanks, Suparna, looking forward to it.

Brian Pereira: Glad to be here, Suparna.

Goswami: Thank you. So Smruti, let me start with you. We have been speaking about the macroeconomic slowdown for a while now and how it will impact the spend on technology and cybersecurity. So you recently had an interview with Girish Ramachandran, president from TCS, on this very topic. What did he say?

Gandhi: To start with, Suparna, sustainable technology is not an isolated concept. We have been speaking to a lot of CIOs and CEOs on environment, sustainability and governance and that is very high on the CEO's agenda. That's the whole reason that I spoke to Girish Ramachandran on sustainability. He spoke about how CIOs can blend digitization, sustainability and innovation to beat the impact of recession and ensure growth. He also added that the essential role that digital will play to deliver sustainability outcomes will help transform businesses. And that will enable the success of sustainability goals and targets. If I had to sum it up in one line, this is what he said, if all CIOs can bring every element of ESG together in one framework, it will result into a stronger and a resilient enterprise, which will survive longer. He also referred to a study by Gartner that predicts that 50% of the CIOs will have defined KPIs related to sustainability of the organization by 2025. Apart from that, we also discussed about the new Digital Sustainability Index that TCS has developed for the APAC region, where the report evaluates current sustainability efforts and how ready the company and the government are with achieving their ESG goals. It also tracks how enterprises adopt and leverage their digital technologies for sustainability outcomes. Economic headwinds and the importance of digital transformation are also covered. I just wanted to add one very important part of what I liked about the interview, which reflected the value, philosophy and culture of the Tata Group. Girish has been with the Tata Group for more than 15 years. He just mentioned the sentence wherein he said that Jamset Tata had once told him, or the group, that in a free enterprise community, digital is just not another stakeholder, but, in fact, it's the very purpose of our existence.

Goswami: Excellent! I think, Jamset Tata, anyway, has been a pioneer when it comes to adopting technology. So Smruti, you spoke about sustainability, how much do you think it will be relevant going forward, and what are your reasons for that?

Gandhi: Achieving all the objectives of sustainability can help build very inclusive and a diverse organization that basically does business the right way. Every business is a technology business is what we discussed. If I could add a sustainability lens to digital transformation, it can help us reimagine different outcomes, revitalize our planet, create transformation ecosystem, address inequality, and basically help the organization in a journey to a more sustainable and resilient future. Also, when sustainability is at the heart of your digital transformation, it basically has a multiplier effect on the impact achieved, and it is a part of the broader framework for digital solutions that help achieve ESG objectives. For example, large push toward cloud, AI, data-driven insights, 5G, all other goals of technology, and the goals of technology and sustainability need to be united - where sustainability needs to be a core belief that is held by the organization leading the conversation on inclusive growth.

Goswami: Excellent. So Shipra continuing with the theme of macroeconomic condition, you posted a fantastic panel with two CIOs asking them on the macroeconomic condition and its impact on the CIO community. So what can you tell us about your discussion here? What are their plans ahead?

Malhotra: I had this discussion with Miao Song, who is the global CIO of GLP in Singapore, and with Ruwanthi Fernando, who is the chief information and process officer for Hela Apparel Holdings in Sri Lanka. And both of them were of the opinion that the year 2023 is going to be tougher for CIOs. While every year we say that the next year is going to be challenging, but this year is going to be challenging, but the challenges for 2023 are going to be different from what they were, let's say over the last two to three years. In 2020, when the pandemic struck, the challenge for the CIOs at that time was to ensure that the business continues as usual. And whether to pivot to work from home or enable new digital revenue models that was the challenge. But it was easier for them to get the budgets and the investments because the management was ready to give them whatever they asked for to ensure that the business continues. However, in 2023, it's going to be the opposite. The budgets are going to be under the scanner; it's going to be much more difficult for them to rather get the IT budgets from the management. Now, this will not put the digital transformation projects on hold; that is not going to happen because digital transformation is at the core and it has to continue. What this means is that the organizations or rather the CIOs will need to be more intentional and more strategic with their IT investments. Therefore, their role becomes very critical in ensuring that they prioritize it right; the top two or three items in their priorities are what help the business not only save costs but also build new business models and get new revenue for the organization. So what will happen ultimately is that the investments that were going into the low priority items will perhaps get redirected to the high priority items. So, while the overall IT budgets may not see a sharp decline, what will happen is the budgets for low priority items will see decline and the high priorities will get the money that was going into the other items. That is what essentially came out of this discussion.

Goswami: So Shipra, they both spoke about making strategic investments. What technology investments are they planning given that, as you said, budgets will be an issue this year and low priority items will not see a big investment?

Malhotra: What came across from my conversation with both Miao and Ruwanthi was that conversations around every single project will shift from cost to value. And that means that technologies and projects that contribute to business growth and enable new business models are going to be prioritized. This includes technologies like artificial intelligence and analytics, IoT, and technologies that help in enabling better customer experience. Now artificial intelligence, in particular, is going to be of big interest for organizations because of all the data that they're collecting today and every organization today is a data organization. So making sense of that data and taking the right decisions or rather taking decisions that help them give competitive edge will be key. So therefore artificial intelligence will see a lot of investments going. Overall, the expectation from the CIO office will be to help cushion the business against recession and drive growth amid uncertainty. So, customer experience will be key because in a market where there is recession, having a competitive edge will definitely give organizations a business edge. So these are the areas. And overarching all this will be cybersecurity because organizations and the CIOs have realized that - and especially in 2022, with the attacks growing not only in volumes but also complexity, especially the ransomware attacks - they have to keep cybersecurity at the core of all their technology decisions and investments.

Goswami: It's great to see how security is in the top priority list among CIOs as well. So shifting the topic a bit to skill gaps. Brian, like most industries, the technology industry too is struggling with skill gaps, and we have been talking about it and somehow we have not been able to find a solution in the industry as a whole. Please share some highlights from your conversation with Sangeeta Gupta from NASSCOM.

Pereira: Thank you, Suparna. So just to continue the conversation where Shipra left off, and Shipra was talking about macroeconomic conditions. There is a lot of volatility and uncertainty today in the market. You see a lot of layoffs, not only with the tech companies but also elsewhere in the industry. Now, if you go back two years when the pandemic started, we saw the emergence of work-from-home models and hybrid models. Today, employees are asking for flexible work hours - not asking rather demanding. And to retain those employees, you have to change your hiring strategies. Sangeeta Gupta, the NASSCOM, senior vice president and chief strategy officer, shares that they did a survey in November. It was called "The Future of Workforce: Decoding the Gig Workforce 2.0." So within the tech industry, there is a lot of uncertainty in terms of the types of projects they will get 12 to 18 months from now, because as Shipra mentioned, budgets are declining and people are not willing to make fresh investments. Therefore for a tech organization, they do not want to hire full-time employees and then keep them on the bench. So now the tech industry has resorted to hiring gig workers. Gig workers are going to be more prominent in the future workforce, not only in the tech industry but also in the other industries. So Sangeeta says this calls for a change in hiring strategies and a new way of thinking because the gig workforce is going to be more prominent within the industry. Just to give you a few statistics from the report. As per the NASSCOM study, 70% of organizations surveyed employed gig workers in 2022. In large organizations with more than 2,000 employees, the proportion of gig workers was less than 5%. However, for smaller organizations with less than 2,000 employees, the proportion of gig workers was more than 5%, and 25% are hiring gig workers for more than 12 months - for projects that extend to more than 12 months. None of these organizations have declined hiring in gig workers. Earlier in 2021, the gig workers were hired for projects for as long as just nine months. So what does that mean today? It means the new hiring strategies have to focus on a mix of things. We have to focus on a combination of finding the right skills, managing volatility, and how you think about the gig workforce. So Sangeeta tells me that the HR policies are got to change to make the gig workforce feel more inclusive within the organization. You cannot have a separate HR policy for gig workforce and for full-time employees. Secondly, there are other challenges. How do you make your bigger gig workers feel inclusive and part of the organization? How do you verify the credentials of this gig workforce? And then when you're dealing with intellectual property, there are security issues to be addressed. So yes, while gig workforce coming into the organization are becoming more prominent, it brings all these challenges, and HR officers have to think about new hiring strategies.

Goswami: Fantastic. So a question to all of you. We all know that an editor's job is not easy. And all of you interact with CIOs on a regular basis, and look for interesting stories that would catch the attention of the community. So what's keeping you busy? What are the stories that you're working on, and what we can look forward in February? So Shipra, you want to start here.

Malhotra: Smruti spoke about sustainability. So taking further on that theme, I'm planning to work on a story on the carbon footprint of AI. Like I mentioned, AI is on the top of the agenda for most organizations. However, the carbon footprint that it creates is having not only a cost impact for organizations but also big impact on the ecosystem on the environment. So how does it impact the environment, and how does it impact the cost for the organizations? So there was a study that indicates that training one machine learning model creates an immense amount of carbon footprint. I want to go deeper into what kind of carbon footprint it creates and what organizations can do to bring that down because the investments in AI are not going to go anywhere.

Goswami: But I never thought that machine learning also creates carbon footprints. Interesting. Look forward to reading that story. Brian, what are you working on?

Pereira: So not too far off from where Shipra is working on, mine is on research on ChatGPT. And I've been speaking to a couple of AI researchers last week and I continue to speak to them to try to find out how realistic is ChatGPT and AI generative models. Everyone's talking about them. ChatGPT has been around for the last two months. Everyone's experimenting about them writing about them. There's a lot of hype. But what about business use cases? How is it going to improve cybersecurity? Those are some of the issues that I'm exploring, right now, Suparna, and a couple of stories will come out of that.

Goswami: Fantastic, Brian, look forward to reading it as well. There's so much that we are all reading about ChatGPT each day; it's fantastic what all it can do. Smruti?

Gandhi: Shipra and Brian are talking about artificial intelligence, and we all are entering the world that is assisted by artificial intelligence. We have to be more aligned on machine making decisions for with us and for us. With this in mind, I am working on a story on understanding the ethics of technology or as we call it, Technoethics. Basically, how it's an interdisciplinary approach to determine the appropriate viewpoint of technology to real-life situations and where can application of technology go wrong. And I'm looking at different sectors, especially the pharma sector, to talk about Technoethics.

Goswami: Fantastic, lovely stories that you're working on. Thank you so much. This is all for this month. We'll meet again next month and cover new topics on technology and topics that matter to the CIOs. Till then goodbye. Thank you so much. It was a pleasure.

Malhotra: Thank you. Goodbye.

Pereira: Thank you.