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Workforce Trends to Watch in 2024

Wage inflation, generative AI, global talent sourcing and a skills-based hiring approach are the building blocks for the workforce trends expected to shape the industry in 2024. Allegis Global Solutions’ Market Analytics Manager Alex Springate joins the Subject to Talent podcast to share data-informed insights on what organizations can expect in the new year and how they can remain competitive as they navigate the global marketplace.

Transcript:

Bruce Morton: Allegis Global Solutions (AGS) presents the Subject to Talent Podcast, a hub for global workforce leaders to unleash the power of human enterprise. Thank you for listening in as we explore the most innovative and transformational topics impacting business today.

Hi, I’m Bruce Morton, host of Subject to Talent Podcast. Today I'm joined by Alex Springate. Alex is a market analytics manager here at AGS. Alex has worked with virtually all of our global managed service provider (MSP) clients, providing insights and rate management, and sourcing conditions to help drive strategic decisions. A prolific writer, Alex has lent his experience and expertise to numerous reports over the years to share in-depth market analysis for workforce leaders around the world. We are very excited to welcome you to our podcast, Alex, thank you for joining us today.

Alex Springate: Hey Bruce, thanks for having me on.

Bruce Morton: Good stuff. So those who are regular listeners will know, here on the Subject to Talent Podcast, we always ask our guests the same first question, and that is how did you get into the workforce solution industry? What has your journey been to get you where you are today?

Alex Springate: Yeah, so I think to start now, I have to go back to university. So I studied economics at Coventry University in the UK and as part of that course I took a year out to work for the government economic service and specifically in the labor market team for the Department for Work and Pensions. So, once I'd graduated, I was looking around for work and the labor market analyst job at AGS came up and luckily enough Ron Hedrick hired me and then here I am eight years later.

Bruce Morton: Good stuff. And you're based in London, right?

Alex Springate: Yeah, that's right.

Bruce Morton: Okay, great. So here we are, early 2024. And as we begin this new year we often find trends, some of those that continue from the year before, obviously. So, looking at the past year with a global lens, can you share what trends we should expect to still see that we were seeing in 2023? What were the big surprises and predicted changes that did or didn't happen last year?

Alex Springate: Yeah, sure. I might start with the last part of that first. So in terms of what was predicted and didn't happen, I think to be honest, that's the global recession. There's a lot of talk at the end of 2022 and at the beginning of this year, or sorry, 2023, about which economies would be going into recession, at which points, a bit of a pessimistic view. And to be honest, I think everyone was a bit surprised by how resilient markets were when we didn't go into a recession, not in the US or in the UK either.

In terms of what's going to happen over the year, the markets have stayed fairly tight, unemployment's still been incredibly low. We know that even despite layoffs amongst companies, everyone's still struggling to find the right talent that they need. And that's not just across professional services, but also all sectors, be it manufacturing or hospitality as well. And I think that's something that we're going to continue to see going into the next year as well.

Bruce Morton: Right. So as you mentioned, you're in the UK, but I know that your work touches the global market. So what are some of those themes that you've been finding yourself discussing recently with clients and perhaps they might vary by region. Can you share some of that?

Alex Springate: Yeah, sure. So in the UK, we're definitely on a bit of a downward trend now for the economy. So we are starting to predict that we'll be going into a recession in the next year or so. The growth figures from just this last month are suggesting we might be going that way. I think for somewhere like the US, the picture's looking a little bit rosier, growth is definitely going to slow, but it's far from stopping. We're still seeing continued job increases, and that's happening across most markets, which just lends to the view that even as things slow down. We're not expecting talent to become readily available. There's not going to be mass unemployment like we've seen in past recessions. I think we're very much looking at what you might class as a jobs-full recession in various markets.

Bruce Morton: I was going to ask you what term we should think of a term for what we call a recession when there's low unemployment. There we go.

Alex Springate: Yeah, I think it's certainly going to be a bit of a unique one and definitely I think in the next year we'll see from a global growth perspective, that a lot of that is going to come from the economies in Asia.

Bruce Morton: Right. So, as we’re thinking about this landscape that, as you said, is very tight in 2023; not seeing it really loosening up and still going to remain tight this year in 2024. What are organizations doing to respond to that and what advice are we giving them? Is this a case of trying to get the work to the talent and finding new or expanded locations to get the work done?

Alex Springate: Yeah, definitely. As we said, the unemployment's going to stay relatively low, even if it has ticked up a little bit in certain markets. I think companies are going to need to start looking elsewhere for talent. One of the big things which we haven't touched on yet that happened this year was really the wage inflation. So a lot of those markets have seen a huge increase in contingent worker rates, in average salaries. Certain markets have seen almost double figure percentage increases over the year. So with those increasing costs, companies are going to have to really look to other lower cost markets to see if they can get work done.

Bruce Morton: Right. And thinking about that, some of the locations coming up in conversation more than others, can you share just what does that landscape look like now globally in terms of as organizations start to investigate where they might expand their horizons?

Alex Springate: Yeah, absolutely. So we've actually just released a new workforce trends report, something that our team is doing on a quarterly basis now, and the Q4, 2023 one focuses on emerging markets. However, when we say emerging markets, we use the term a little bit differently. We mean in talent. So it doesn't quite fit the traditional definition. And we've looked at these all across the globe because there are pockets of those in each kind of major region, whether you're looking at EMEA, thinking about Europe, Middle Eastern Africa;  (Asia Pacific) APAC, or even America, so looking towards Latin America.

If I was to focus on Europe, which again is my specialty, so I'd like to start there. We had a look at three different markets, which were Poland, Romania, and Slovakia. So Poland being historically a popular market for offshoring, that's one that we've seen rapidly grow over the last five years to expand from being a market for lower level, IT help desk support talent, to now employing all kinds of IT talent and has really seen some huge growth over that five year period and also seen a lot of wage inflation. So now we're starting to look towards those other markets within Europe, so Romania and Slovakia, where we expect them to almost become the next Poland.

Bruce Morton: Right, interesting. And what about elsewhere? You mentioned Middle Eastern countries. What's happening there?

Alex Springate: Yeah, so if we're looking at the Middle East, so trying to look towards, say Egypt and United Arab Emirates. We're seeing those as two potential markets. It’s a little bit more complex in terms of the landscape from moving into those as an organization. So United Arab Emirates is definitely more likely to be difficult. There are a lot more regulations you'd need to abide by, they certainly want to protect local organizations. But I think we are looking at that potentially being a big hub in the future as they try and move away from being dominated by the oil and gas industry and look into other ones.

Bruce Morton: And in APAC, obviously India has been a magnet for work for many, many years. But beyond there, which other countries will be emerging as to use your term?

Alex Springate: Yeah, sure. So, India's definitely been by far the most popular, but if we were to look elsewhere, the Philippines, it's definitely one, called the call center capital of the world. It's a great market for offshoring call center type talent, help desk support. Then again, they're going to be rapidly growing I think in terms of other IT skill sets. Also in terms of manufacturing, Vietnam, so once more looking towards manufacturing low value type products. So textiles things are simpler to make. They’re now expanding into electronics, more complex products as well.

Bruce Morton: Okay. And what about my favorite soapbox, Africa?

Alex Springate: Africa, yeah, I knew you were going to go there. So we’re paying very close attention to that. I think we’re still a little ways off from seeing a lot of companies start to offshore talent there. Where we’re looking in Africa, Nigeria, we’re looking at Botswana. I think we’re going to see a huge amount of population growth there in the next kind of 30 years or even 20 years. And I think Nigeria specifically, they’re going to need to create about 30 million jobs to actually satisfy the number of working age individuals that they’re going to have. So a huge opportunity for organizations to start looking there for talent, particularly as they really ramp up in terms of the education that they can provide their people.

Bruce Morton: Right. Yeah, I think it’s really interesting. You touched on how organizations used to think about back office (positions), and I think IT, 20 years ago, it was more of a back-office function really, right? IT kept the business running. You might be running your accounts and it was very much seen as a back office, but now most organizations feel their technology business has become their value prop, in a way. So, I think that's affecting how organizations are. I think they used to be okay with just outsourcing it and getting it off their books, but now I think they still want some form of control, whilst at the same time, sending that work somewhere the talent is. I think it's no longer just by labor arbitrage, it's where the talent is. So I think it's really fascinating where those skills, the IT skills in particular, used to be fairly generic and I guess you could say high volume jobs, but now the specialist goals are being sent overseas as well. Would you agree with that?

Alex Springate: Yeah, absolutely. I mean, technology's evolving at such a rapid rate and companies are desperately seeking talent wherever they can find it. And so we're starting to see these other hubs pop up. To go back to Romania, they're outputting a lot of talent in terms of their graduate pipelines. So a lot of individuals are studying IT degrees, business degrees, and they've actually now got, I think, a higher density of software developers per capita than even China and the US.

Bruce Morton: Right. Yeah, I know here in North America and we're only producing, I think the latest figure, I saw somewhere about 85,000 computer science students a year. In India, it's just under a million. So, I think you can do the simple math and it's pretty obvious organizations have to think broader than domestic markets going forward with the talent. And I think that's a trend that we saw, obviously, although there was a slowdown in 2023, as you pointed out, it was still tough to find the people, right?

Alex Springate: Yeah, absolutely. A lot of our clients companies out there are really struggling to find the right type of talent and hold onto them, particularly with the rampant wage inflation, people were seeing the opportunity to move companies and really earn huge increases in terms of pay. So we've definitely been advising organizations to look at ways of retaining their talent. How do you keep individuals? What do you offer them in terms of training and advancement? Because it's going to be far less costly to keep them than it is to replace them.

Bruce Morton: Right, yeah. So as we are thinking about that, for those listeners that have a responsibility to lead the work and think about, how are they going to get those big projects done this year and so on. In the conversation they're having with you, what is information are they looking for from you? What is the data that they can start thinking about and really understanding how to form some of those decisions?

Alex Springate: So we are definitely encouraging organizations to think about skills-based hiring. Really don't just assume that because you've had an attrition in one area that you need to replace that role with a like for like person and more to think about what work you need to get done? What skills are you going to need to do that, and where best can you find them? Once you actually start to break it down into what skills you need, you can really start to look at the global market and think, where are these people more say available but more readily available than other places? And when you start to do that, you can also consider what skills do you have within your organization, that you can repurpose as opposed to potentially having to go out to the market.

Bruce Morton: So it sounds like that all of that, one of the challenges that of course is where does that data sit? Where does that information sit? I always sort of joke that most organizations have to go out to LinkedIn to see what skills they have inside their business. But putting that aside, what are we using here at AGS in terms of helping our clients with that? What are the data sources? How do you make sense of that, to be able to, I guess, simplify what all of that data is actually telling us?

Alex Springate: Yeah, sure. So we're lucky, we've got some great data partnerships, particularly with Brightfield TDX and Lightcast. So, in reference to the skills, Lightcast is a global labor market intelligence platform. So they collate a lot of that data from various sources around the globe so that we don't have to, and they're able to break down, where the skills are sitting in terms of which markets, which industries and which organizations. So we can start to use that to really inform those decisions that our clients are making, as to where can they go to find that talent. And then when it comes to how much they need to pay, that's certainly where Brightfield TDX comes in as well. They're an independent provider of contingent great data with millions of data points. And so we are able to use them, as well as our own data that we house within Acumen®, our intelligence workforce platform, to really start to guide our clients on not just where to find talent, but also what they should be paying for it.

Bruce Morton: Right. And I know you've done a lot of work on this, so it's sort of a setup question here, but how are we making that easier to consume and get that data to the point of sale, so to speak, so how people make decisions in the moment?

Alex Springate: Great question. So something new that we've done this year is really try and get that data into the hands of our client delivery individuals. So those that are working directly with our clients, so data democratization as you'd call it, spreading that out. So they now have self-service access to tools that we have created. So they are now actually armed with the information to be able to bring it straight to the hiring managers and their stakeholders. So it's really making sure that every conversation they're having is informative and based around data.

Bruce Morton: And what advice are we giving clients or individuals in our client base in terms of making sure that they have an expert analysis around that and not just looking at the data? What are some of the pitfalls of too much data and not truly understand what it's saying?

Alex Springate: Yeah, well, data paralysis is definitely a thing. So here at AGS, we're providing a lot of training to our individuals. So my team specifically this year has done an awful lot of work with our client delivery teams to ensure that they have not just access to that data, but also that they understand it, that they're able to wield it.

Bruce Morton: Yeah, and I think it's, as you say, it's data paralysis. And also I think sometimes it can be dangerous if you just take a data point that doesn't have the context around it. I think there's danger of people believing that data and making some pretty big decisions based on what they should be paying and so on. So I think the points well-made that it's not the data itself, it's how you are actually interpreting that, that's the key.

Alex Springate: Yeah, absolutely. And that's what our team is all about. We don't just provide reports full of data points. Our aim is to be a strategic partner, to be consultative, so that we're always thinking of the outcome, the ‘what if’, basically.

Bruce Morton: Right. So it sounds like 2024 is going to be about moving to a skill-based organization, probably more and more data, but understanding it and getting your arms around it. So exciting time for you because I know you love this stuff and geek out on it, so I know you're going to have a great year. But if we look a bit further than 2024, the classic crystal ball question, how do you see market analytics playing a bigger part in your world if you like changing over the next few years?

Alex Springate: Yeah, absolutely. So looking at not just continued staffing, but also services as well, recognizing where companies are using those different routes and trying to guide them more on which route to take when they're looking to get work done. That's something that our team is going to be actively involved in over the coming years.

We're also going to have to pay attention to the newest trend, which is generative AI. I think we're really seeing a breakthrough moment in terms of how work is going to shift. Right now, for instance, we're seeing far more roles cropping up that require the use of or experience with generative AI, being able to use ChatGPT, and I think we'll see far more jobs created to work with that before we start to see them being replaced by it.

If I was to pick one other kind of topic, flexibility and upskilling, as I said, labor market tightness is not going away anytime soon, particularly for the highly skilled roles. So I think companies are going to need to look at, again, repurposing their own talent, finding skills in their organization where they exist or helping to train them in their organization, then also thinking about flexibility.

Since Covid, since the pandemic, there's been a big shift to try and get people back into the office. And I think a good thing for collaboration, for people learning. There's also going to need to be an emphasis on flexibility, because that's not going to go away either, that's here to stay. And if companies want to attract the right individuals, they're going to need to really offer that flexibility because we can't keep going through this cycle of wage growth and wage inflation. So there's going to have to be other policies that help get the right talent to your organization.

Bruce Morton: Right. I thought we were going to get away with doing a podcast and not mentioning AI, but you mentioned this, there we go. That's my prediction in 2024, I'll never have a podcast where AI isn't mentioned. But anyway, obviously having a massive impact, and again, everything you just said, all of that relies on companies making data-based decisions. So I think your expertise and your skill is certainly one, I think that's going to get harder and harder in the market, as organizations navigate the crazy new world that we're in. So Alex, you mentioned earlier the Workforce Trends Report, which obviously, it's going to add a lot of value for organizations, but that and beyond just keeping in touch with yourself and reaching out for any advice, what's the best way for people to find you?

Alex Springate: Yeah, so people can always reach out to me on LinkedIn. I'm always more than happy to speak to them about what we're doing here at AGS, specifically in the market analytics team and make sure that they can get ahold of a copy of the Workforce Trends Report or any of our other reports that we're putting out there.

Bruce Morton: That's fantastic. Thanks, Alex. We really, really appreciate your time today, and here's to a great 2024.

Alex Springate: Thanks, Bruce.

Bruce Morton: If you enjoyed this episode, please rate and review us on Apple PodcastsSpotify, or wherever you get your podcasts. And if you have questions, send them to SubjectToTalent@AllegisGlobalSolutions.com. Follow us on LinkedIn with #SubjectToTalent and learn more about AGS at AllegisGlobalSolutions.com where you can subscribe to receive additional workforce insights. Until next time, cheers.