Businesses today have entered a phase of rapid transformations in the way they create and transfer services, goods, and information among their customers. The global nature of this shift has made experts take note of it, often referring to this phase of rapid deployment of digital technologies across different sectors under the moniker of the Fourth Industrial Revolution or Industry 4.0, 

Today technologies like artificial intelligence and machine learning, the internet of things (IoT), and advanced data systems that allow for real-time and predictive analytics are all reshaping business processes. As an ever-growing number of companies across Southeast Asia enter the fray of leveraging these technologies to transform their businesses, their skill requirements also evolve. The promises of Industry 4.0 can only materialise when businesses across Southeast Asia have access to the right talent. 

Skill shortages across Southeast Asia 

A recent report by PwC stated that the biggest challenge of leaders isn’t the use of technology but rather having the right people. Success in the era of Industry 4.0, the report stated, depends on the organisation’s capability to lead and transform businesses. Both senior leaders and employees require the right digital qualifications to ensure digital processes and services are a success. 

While many in the ASEAN region remain optimistic about the opportunities of Industry 4.0, experts highlight how the skills shortage and the lack of a robust talent pipeline remains an important challenge to tackle. 

The skills development study released by the Asian Development Bank on Industry 4.0 mentions how countries like Indonesia, Vietnam, and the Philippines require to focus on how to address skills shortages and lack of preparation for the workplace. The requirement of skills like creativity, complex problem-solving, digital and ICT literacy, etc all make finding skilled talent difficult for companies.   

Even when people are trained, there exist gaps in such training levels and industry expectations. This further accentuates finding skilled talent in the region.  “Despite close engagement with industry,” the ADB report notes, “significant mismatches in perceptions on skills preparation separate employers and training institutions.” In Indonesia for example, the report stated that while 96% of training institutions in the country believed that their graduates were well prepared for work, industries had a fairly low agreement on the matter. According to the ADB report, only 33% of employers in F&B manufacturing and 30% of employers in automotive manufacturing agreed. 

Creating a robust  skills pipeline

While skills shortages remain a challenge for companies across Southeast Asia, many today are finding better ways to address the problems. Governments within the region have made upskilling a priority. Policy decisions on creating training institutes and imparting digital skills have taken a completely new direction in the past couple of years. From integration and sharing talent pools to looking at collaborative efforts to address the digital skills gap, Southeast Asian countries are finding impactful ways to leverage the opportunities of Industry 4.0. 

But while these external steps prove crucial, companies need to up their skilling programs to ensure a steady talent pipeline. While the traditional model of buy-or-build talent has proved effective for companies to create a steady skills pipeline, the changing nature of work brought on by Industry 4.0 means companies have to focus on building talent. While buying or acquiring talent externally might enable companies to address short-term skill requirements, a focus on developing people’s skills is a must for future needs. 

The ADB report notes that for many countries in Southeast Asia, educational and training institutes have already had dedicated programs for Industry 4.0 skills. Others reported that they plan to develop or expand programs for Industry 4.0 by 2025. While this is promising for companies, there remain doubts over its effectiveness. Parameters such as quality of training sessions,  its relevance, and alignment with employer needs. 

The scope of growth due to Industry 4.0 remains difficult to predict. And so does its impact on how jobs are going to be structured across Southeast Asia as its influence spreads. Companies cannot predict the direction or scope of the transformation and skills demand ahead. But they can ensure their skill demands are met by utilising upskilling platforms and programs that ensure talent has access to learning opportunities. By focusing on building talent, companies will be better placed to respond to skills gaps as they emerge. To learn more about these learning opportunities, click here.