Digital talent refers to the wizards that we would expect to find in companies such as Google or Alibaba—digital native companies created solely to function online. Roles range from interface designers to data scientists, and they work as what is known as “agile” professionals in self-organizing and cross-functional teams for more nimble strategy implementation and execution. These professionals aim to bring together data-driven insights with digital capabilities and technology to enhance customer experience, such as in the creation of cab-hailing apps, or online shopping.
Research shows that when comparing the Middle East’s progress with countries in Asia-Pacific, North America and Western Europe, the region comes third in terms of digital jobs as a percentage of total full-time employees. It ranks above Asia, but behind the U.S. and Europe. Only 1.7% of the Middle East workforce is digital talent. The U.S. and Europe have more than twice as many digital jobs, at 3.8% and 3.7% respectively.
While consumers in the Middle East are among the most digitally savvy in the world and governments are moving fast with digital and artificial intelligence initiatives, the private sector is lagging behind. Despite world-leading levels of digital consumption, key digital sectors in the Middle East are still nascent.
E-commerce has significant potential for further growth. Only 8% of small and medium enterprises have an online presence (ten times less than in the U.S.). A mere 1.5% of retail sales are online (five times less than in the U.S.). Companies continue to operate legacy IT systems and infrastructure—where the role of the IT team is focused on maintenance and incremental customization and doesn’t require digital talent—and are yet to begin a holistic digital transformation that will modernize their business for future growth.
Evolving To Become Technology Companies
To stay competitive, businesses need to evolve from simply having industry expertise to becoming technology companies that leverage industry expertise. Of the eight most valuable companies in the world today, seven are technology companies.
Competing on products alone is no longer enough; companies need to differentiate themselves through technology, data and rapid innovation. The implication is that outsourcing or relying entirely on vendors to run digital programs without the goal of building digital capability in-house is not a winning strategy.
Building digital capability, in turn, is predicated on hiring the highest quality and best performing digital talent. Leading digital talent is significantly more productive than average digital talent—some research suggests more than 10 times more so—yet it is only two to three times as expensive, so the potential return on investment is obvious. In our experience, the difference in value that is created is even higher. Leading digital experts will not only be smarter in the way they write programs or use modules; they will have a more intimate understanding of what will drive value for the business and the consumer, allowing them to move from executing requirements specified to the business to adding value directly.
Rethinking Talent Strategy
Our research highlights five areas for consideration by businesses and organizations as they rethink their digital talent-acquisition strategy.
- Create a compelling vision. Remuneration is important, of course. But as long as the pay is competitive, an inspiring mission and value proposition is what motivates the best talent. This includes the mandate and level of empowerment teams are given in shaping their agile way of working and delivering digital products and services.
- Make targeted anchor hires. Like attracts like, and that’s true of top talent. Investing in anchor hires who are leaders in a particular discipline or industry helps attract other exceptional talent to the organization, either through their personal networks and industry reputation or by signaling to the market how important that talent is and how it is used.
- Reimagine recruiting. This includes reskilling Human Resource departments. Hiring new types of IT talent is complex and requires a fundamentally different approach to talent sourcing. Suitable profiles may not have a traditional résumé or search for jobs on traditional careers sites. Technologists—scientists, engineers, technicians—can be found on community discussion websites such as Github and Stackoverflow, while top software programmers can be identified by good recruiters who can look through source-code repositories that programmers share for anyone to review and use.
- Develop a presence on large digital career platforms. Digital experts access information about companies through online platforms, where employees share job satisfaction, company culture and lifestyle information. Businesses must be visible on such sites advertising their digital job opportunities.
- Cultivate an ecosystem of vendors. Given the difficulty in hiring digital talent easily from the start, companies can engage an ecosystem of vendors that provide leading digital talent and teams. These vendors, by working with a company’s teams, can help inject a digital mindset among existing employees.
Developing Homegrown Digital Talent
For the long-term, to safeguard its competitiveness, the Middle East needs to develop and cultivate homegrown digital talent.
The first way it can do this is through large campaigns that send a signal about the importance of digital talent. One recent example is the “One Million Arab Coders” program, an ambitious initiative launched by the Dubai government that seeks to empower young Arabs with the skills needed to contribute to the development of the digital economy.
The second way is through education, such as institutions and programs dedicated to technology or data science. Universities can also work with the private sector to create internships and collaborations, which are big drivers for priming digital talent.
A third way is through initiatives established by the private sector. A small number of companies already embarking on their digital reinvention journey are also supporting the wider development of digital talent by designing their own talent accelerator programs. Collaborations between global and highly-motivated local talent can help build the next generation of well apprenticed, local, digital professionals.
In summary, as government initiatives take some time to reach scale, the private sector in the Middle East can also show leadership and actively invest in creating an environment to attract, develop and cultivate digital talent. The private sector is also the best positioned to do so, given the diversity of digital talent it requires.
Companies that focus on building and sustaining a digital capability, so that technology becomes the core rather than the products they offer, will accelerate their digital transformations. This requires a commitment to changing existing recruiting and HR processes and a willingness to invest in top talent. Once these key levers and elements come together, the region will be on the right path towards becoming a digital and AI talent factory.
Christian Kunz is an Associate Partner at McKinsey & Company. Jigar Patel is a Partner and Head of Digital McKinsey, Middle East.