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Today's workforce is undergoing major change. For one thing, it's not getting any younger. In the U.S., the proportion of the population over 60 grew from 13% in 1960 to 17% in 2005. Estimates put that figure at nearly 25% by 2025. This is a result of the aging baby-boom generation -- the large number of people born in the years after World War II -- and represents a trend that holds true for much of the developed world.
Increasing longevity, better health, declining birth rates, and the large number of baby boomers have created an unprecedented age-distribution shift in the population of the world's developed countries. Within the next seven years, more than 33 million people in Japan -- 26% of the population -- will be more than 65 years old. And, over the next two decades, the number of people in EU countries overall aged 50 to 64 will increase by 25%.
ENGINEERING SHORTFALL. With aging comes retirement -- a large portion of the workforce will start to retire en masse over the next 10 to 20 years. One example of the expected impact in the workplace: Half of the current U.S. government workforce will be retiring in the next five to seven years.
These trends will have profound personal, societal, and business ramifications. Among them will be a major effect on the supply and demand of skills worldwide. In the information technology industry, this trend threatens to exacerbate some already troubling declines in certain skills.
As experienced IT workers retire, post-industrial nations are not graduating enough engineers to replace them. The best and brightest students are pursuing other disciplines, partly because of declining social prestige associated with the field.
LOCALIZED TO GLOBALIZED. The reverse is true in many developing nations, such as India, China, and Russia. They are graduating increasing numbers of engineers -- perhaps 3 million to 4 million a year in India, for example, compared with less than 100,000 a year in the U.S. Unlike the U.S., the field in these places attracts their best and brightest candidates, since engineering jobs have high social prestige there.
The answer seems obvious. Developed countries have the workload but a growing shortage of workers. Developing countries have an abundance of workers, but a shortage of workload. So, either the developing world's skills need to move to developed nations to fill the gap, or the developed world's workload must be shipped to where the skills are -- or both. That's exactly what has been happening, stirring controversy and prompting calls in the U.S. for limits on H1B immigration visas and penalties for outsourcing.
But in an increasingly knowledge-based economy, movement of people or operations may not be necessary. Advancing technologies are allowing these linkages between needs and skills to be made remotely, helping businesses transform a collection of stand-alone, localized activities into more globalized operations.
"FOLLOW THE SUN." For instance, effective interaction between dispersed project team members can be achieved, without the need to move people or whole operations, through the use of collaborative tools for software development and services-oriented architectures (SOA). These provide standard interfaces to more readily integrate applications inside a company as well as externally with customers, partners, and suppliers. What's more, working in this way can actually accelerate projects by permitting work to "follow the sun," with one regional team handing it off to the next as its day ends.
We're developing approaches like this in response to the IT industry's shift toward a services base. In services, the ability to build and effectively manage a global, collaborative workforce is emerging as a key competitive advantage. If this sounds very much like a supply-chain issue, it's because it is -- a supply chain of skills and knowledge, not parts.
As with physical assets, while skills and knowledge can be supplied electronically without having to physically move people or operations, we must still maintain an adequate inventory. Here's where the aging-workforce issue introduces a major wrinkle.
HUMAN FACTOR. While developing countries are churning out more IT skills, there's still no substitute for experience. Until very recently, developing countries' economic environments have not provided opportunities for applying advanced IT skills to real-world business processes and issues. So our current pool of knowledge and experience will need to be preserved and shared as much as possible.
This will require new techniques to keep older, experienced workers engaged. Technologically, it might mean the development of still-new tools for broader collaboration outside the physical organization as a growing number of baby boomers prefer to work part-time or remotely as a transition to retirement. Since many of them might be older workers, assistive technologies may also play an increasing role to accommodate their unique needs.
ACT NOW. But technology alone is not the answer. We're learning how a more loosely organized "extended family" of contributors can work together effectively. We'll also need to create programs and opportunities beneficial for both the experienced worker and the organization, so that people will want to stay engaged in some capacity beyond their formal working years.
While it may sound simple, this represents a profound shift in how corporations view retirement and the relationship between older skilled workers and the company. But as with other precious resources, if we don't recognize their value and find ways to nurture and preserve it, we'll quickly lose it.