When discussing emerging technologies such as Web3, metaverse, blockchain or crypto-assets, the main challenge facing companies around the world is somewhat unexpected (or not!). Talent shortage: here is what threatens the growth of the digital transformation of the 2020s. Hopefully, there are solutions, some of which brought by fintech companies and consulting firms.
This talent shortage situation is a paradox considering the demand of the market. As highlighted by the recent KPMG global tech report 2022: 67% of businesses are set to embrace emerging areas of technology such as those cited by 2024, 46% are making plans for future investment and implementation of these emerging technologies, 73% indicate that "technology debt" (the long-term maintenance costs attached to new systems) has little-to-no impact on their IT ambitions, etc.
In echo, a recent survey issued jointly by Linkedin and OKX showed that the total number of people working in the blockchain industry among LinkedIn’s worldwide members grew by 76% year-over-year as of June 2022. With India (+122%), Canada (+106%) and Singapour (+92%) leading the pack. And on its side, the blockchain Academy reported last year in its Global Blockchain Employment Report that the global demand for blockchain specialists should continue to grow at an annual rate of 300–500%. And as the technology matures, the demand will go up and up. All lights are green.
Talent Shortage
All? Not exactly. Unfortunately, at the same time, the companies recognize that the number one challenge complicating new digital technology adoption is the talent shortage. According to the KPMG survey, of the top eight challenges to adopting these new digital technologies (see KPMG chart below), the top three are related in some way to employee skills!
This is likely why, also, 37% of respondents admit they are looking to partner with technology companies to leverage the metaverse and Web3 rather than develop capabilities in-house. There is simply not enough talent ready to be hired.
How can we explain this situation?
Firstly, generally speaking, the fact is digital technologies are now embedded, interlaced with every activity run by all kinds of businesses. It is no longer the preserve of the IT department or something that some companies can do without. No wonder why the survey published by Linkedin and OKX highlighted that the top five talents in demand in the global blockchain field were: engineering and information technology, immediately followed by product management, marketing and human resources employees. As a sign of a deep transformation, this transversality is good news, but it comes with challenges regarding the employee’s skills. From now on, most professions require a blend of business-domain competences and digital capabilities in order to create or implement sophisticated relationships between the two. But these requirements are less common throughout the workforce than expected.
Secondly, even though it is related to the previous point, digital capabilities are too often understood as just a knowledge of some specific system or platform or app or, worse, knowledge of some functions of these systems or platforms or apps. But in a domain as highly dynamic as digital technologies, knowledge has to come with understanding because this combination is the only way to learn, evolve, improve on the fly, hence adapt to new digital technologies. Thinking digital, in other words, understanding the singular way the digital works, evolves, mutates, is by the way the best shield against the fifth obstacle listed in the KPMG survey: risk-averse corporate culture that is slow to embrace change and disruption. Sadly, despite (or because) the actual absolute domination of digital easy-to-use technology, finding these inherently digital adventurous employees is particularly difficult.
Thirdly, to talk only about technical skills, we have to keep in mind that the blockchain technology and its applications are currently shifting from a highly financial to a highly technical nature. This is illustrated in the Linkedin/OKX survey quoted above: employees in engineering and information technology are the most sought after. Furthermore, among the talents in demand, the top three in terms of growth rates are: Quality Assurance Analyst (+713%), Cryptologic Technician (+350%) and Compliance Specialist (+253%). This is in stark contrast to the actual top 10 occupations in the global blockchain industry, all of which are in the financial sector (trading, anti-money laundering specialist, financial analyst, and so on). Given the actual stage of blockchain technology’s development, this technical mutation of the job market makes sense: beyond the profound technical nature of this industry, we are at a moment where a large amount of infrastructure needs to be built to enable the next step for businesses and clients. The problem is this high and sudden need makes consequently the talent shortage even more critical for the industry: how to respond to this increase in demand when your pool of talents remains low due to the emerging and fast-paced nature of these new technologies?
In this context, consulting firms can be naturally useful by providing presentations, formations and deep accompaniment throughout the businesses. This is one of the ways to bridge the employees’ digital gap we talked about, generate curiosity, knowledge and implication about this transformation which is already happening and to get everyone on board, from IT to marketing teams, with these new technologies.
Difficulties in retaining staff
But the problem doesn’t stop there. As if this talents’ shortage was not enough, it is accompanied by a difficulty in retaining them. What we are seeing today - to use a metaphor - is an appetite for these new technologies undermined not only by a lack of waiters on the market, but also by the wage requirements of those who are already employed!
This is again what stands out from the report released by Linkedin and OKX. It says notably that the average tenure of blockchain talent globally is 1.2 years! With too many opportunities for too few talents, keeping an employee is immensely difficult and the companies have to put incentives in place and work on their corporate culture to attract, grab and retain the best ones. Easier said than done…
This situation is especially worrying for highly critical institutions like finance regulators, on whose shoulders rest the legislative framework of crypto-assets and blockchain technologies usages. The European Banking Authority (EBA) Chair José Manuel Campa thus evoked the problem in this interesting interview conducted by the Financial Times. He explains that the retention of talent is a “major concern, particularly in the areas of technology, anything related to crypto, digitisation [or artificial intelligence]. This is in high demand across society.” His biggest concern is that the EBA’s salaries are aligned - and will stay aligned - with those of the European Commission, but are far from the “lavish packages” that banks, fintech and consultancies are able to offer to their experts.
This lack of flexibility to adapt to the evolution of the workforce is like a continuity of the difficulty encountered by the European regulators to grasp the very dynamic nature of the crypto sector. As Campa said, the regulation “naturally tends to go behind the curve”, trying to regulate something that in three years may have “moved and transformed into other uses that I cannot anticipate”. The threat, in his mind, would be to improperly manage the risks identified by the EBA in the crypto market. “If we don’t do as well as we should have, we’ll have to live with the consequences”, he said. And hiring, then keeping talents is a necessity to avoid these kinds of mistakes…
But in the case of the EBA and other regulators, making these efforts wouldn’t be sufficient. In echo with what we said previously about the need for a blend of business-domain competences and digital capabilities, regulators require on top of their employees' technical skills some legal expertises on very specific local jurisdiction, a set of talents you can find only inside the European Union (not without difficulties) and which can necessitate years of training. Years these employees are not ready to wait, as we saw. Moreover, as the EU’s Markets in Crypto Assets (MiCA) legislation should be implemented only in three years - an eternity in the crypto world - the framework we know now won’t probably be the same. So, without the right staff to follow the wave of innovation, the regulators increase their risk to stay far behind the curve.
That is why Fintech companies and Digital Assets Consulting firms have to work hand-in-hand with states all over the world in order to help them on their journey and avoid future obstacles. They are probably the ideal partners to alleviate these difficulties in recruiting experienced staff by providing the necessary expertises and advice to navigate in this new world and make the right decisions.
Don't count on a slow down
The retention is not as difficult in the rest of the industry, but challenges remain. The competition is harsh to attract and keep the rare talents on the market. Businesses have to be more seductive and offer big incentives if they want to stay in the game. “Even at a company like Siemens, it has become hard to find new recruits with the appropriate skillsets,” affirms in the KPMG report Andrew Whytock, Head of Digitalization, Pharmaceutical Division at Siemens, explaining that Siemens is focusing on making itself an even more desirable employer in order to retain people and attract new staff. “It must be very hard for small and medium-sized companies to attract young talent.” How to play the ball when the biggest competitors propose to developers $500,000 to $700,000 in salary?
These huge emoluments were offered a few months ago, during the frenzy of the bull market. Since the crypto crash and the beginning of the bear market, things have cooled down a bit, but not enough to reverse the trend: the job market is still in high demand and competition for talents continues. It appears the more the technology matures, the less the talent acquisition cycle is correlated to the market’s volatility. There had been spectacular layoffs (for instance, Coinbase cut 1,100 staff, or 18% of its workforce, in June), but with the increasing penetration of blockchain technologies and digital assets throughout the industry, the employees discovered their skills were still in high demand elsewhere and got back quickly on their feet. As of today, the demand for talent continues to exceed the supply by far.
Take Canada for example. We saw that the total number of people working in the blockchain industry among LinkedIn’s worldwide members grew by 106% in this country. But at the same time, in the very same country, the blockchain job postings grew by 560% (see hart below)! Obviously, the pace is too high to be followed. At least for now… The Canadian Government demonstrated in the past that it knows how to respond to the emergence of new technologies. You just have to remember the speed at which the country developed an industrial cluster in the field of AI and Deep Learning. By allocating to universities dozens of millions of governmental dollars in order to stimulate the sector and educate the future workforce, Canada emerged as a worldwide leader in an highly technological domain (a fascinating article about this story here). No reason to not repeat this success with the blockchain technologies. The fact that the regulation framework is progressing quickly, bringing clarity to investors, is a good sign which puts us in a better position than the US, but we are still lagging by far behind the bold statement and growth plans of the UK and UAE (the situation is clearly exposed in the October Canadian Blockchain Consortium Letter). In other words, this gap between talent demand and talent supply we see is not a fatality anywhere on the planet, as long as the problem is properly addressed with targeted investments.
In the waiting, the Blockchain industry has a complementary role to play in order to solve the problems of staff and retention. Clayton Pullum, co-founder and director of Satoshi Solutions, mentioned this disturbing number to Cointelegraph: “If you look at traditional finance, banking, insurance, you’re looking at an average rate of 44% of entrance grade positions available at any one time. So that’s internships, that’s entry-level positions. In crypto, you’re looking at 4%.” Just 4%. By lowering the barrier at the entry, by investing on entry-level employees rather than looking for the rare stars that everybody wants to reach, businesses could grow and nurture their workforce from the bottom and generate fidelity among these employees in return. The fast paced nature of the blockchain industry and technologies must not be an excuse to have a quick return-on-investment human resources policy: build, block by block, the finance of tomorrow, will take time and stamina.
The bear market is actually an opportunity for some companies to become more strategic in terms of hiring in these new technologies. Bull market was a time of experimentation and big investments; the bear market is a time of consolidation and thoughtfulness. “Bear market purges all the short-term opportunistic companies, and leaves space for well-funded, serious businesses to keep hiring and building”, explains to Cointelegraph Raman Shalupau, founder of Crypto Jobs List — a platform for Web3, blockchain and cryptocurrency job listings. This is a moment for careful recruitment, but also partnership with digital assets consulting firms. Paradoxically, this bear market offers them the perfect timing to bring highly relevant support and expertise to companies who have moved beyond the hype and are really dedicated to move forward with these new technologies.