Data science skills shortage – outsourcing as a solution?

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There is an immense shortage of skilled workers in the ICT sector in Germany. According to a study by Handelsblatt.com, the skills gap increased threefold from 2014 to 2019 to 60,000 experts. In addition, the inpatient nature of the workforce exacerbates the gap. For example, an IT employee in Bonn would rather have a job in Bonn or in neighboring areas than in Bavaria. Around 81% of medium-sized companies consider staff shortages to be one of the problem areas for their company. This problem is more acute for medium-sized companies based outside cities or villages, as the younger generation prefers to move to the cities and work for larger and well-known companies with better professional development opportunities.

The immense shortage of skilled workers becomes even more accentuated when it comes to skills in connection with the new, digitized technologies. In areas such as data analysis, the Internet of Things, robot-assisted process automation, and API-based integrations, the availability of skills in medium-sized companies is much more pronounced than in DAX companies. The availability of skills is one of the reasons why German SMEs are falling short of expectations, as several reports and studies show. One of these studies comes from the Bertelsmann Foundation,, which indicates that the lack of digitization possibilities not only damages the profile of a company, but also represents a potential and massive threat to the entire company.

An effective way to meet this challenge is to harness global talent. Although the immigration of trained foreigners can work towards a change in the qualification situation in Germany, this is a slow process. A faster, but definitely more complex way to fill the skills gap is to get the work to the trained professionals abroad, that is, through offshoring or nearshoring. Offshoring or nearshoring, if done properly, can actually generate rich dividends. Think of the USA. More than 80% of companies in the US outsource their IT services to nearshore / offshore IT providers or have their own teams in low-wage countries. India, for example, is the recipient of more than 65% of all outsourced IT jobs. According toNasscom reports , India has at least 450,000 full-time employees with experience in digital technologies. According to their own estimates, this number will reach 2 million FTEs in 2025. India remains number one for outsourcing IT and BPO, followed by China, the Philippines, etc. Some of the Eastern  European countries such as Poland, Ukraine and Hungary could also prove to be attractive destinations for IT outsourcing.

In most of these countries, the vast majority of ICT services are provided to customers abroad. As a result, the companies there are very adept at working with overseas companies of various sizes, sectors and complexity. This can become a “value enabler” for our companies in Germany, as the companies can bring this know-how to our local companies. Another core benefit is that we can benefit from the agility and scalability of the workforce through offshoring. Within a few days, a new FTE could be added within a few days to cope with a new surge in demand. Similarly, a FTE can easily be phased out, without having to worry about layoffs or other legal issues. This helps companies to quickly turn ideas into reality and to check for themselves whether the idea is worth investigating further. 

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