Points of View

Balance short-term survival during COVID-19 with a long-term talent strategy: Capgemini gives its employees a financial vote of confidence

Apr 28, 2020 Sam Duncan

Technology and enterprise demands are advancing at such a rate that even the most established service providers are struggling to source the necessary talent. This is likely to worsen thanks to COVID-19, as many providers are thinking short-term (see Exhibit 1) and viewing headcount as a target for reducing spending. Meanwhile, enterprise clients are increasing their spending on technologies, forming a perfect storm with the existing lack of talent and newly self-enforced lack of capacity on the provider side. Going against the trend, Capgemini recently made several investments to enhance the trust between the company and its employees, proving it is looking beyond short-term turbulence and focusing on a long-term talent strategy to ensure competitiveness after the pandemic. Service providers should follow Capgemini’s lead and nurture relationships with their employees rather than look for quick, cheap wins if they hope to retain the talent needed to compete on the other side of COVID-19.

 

Exhibit 1: While many enterprises are thinking short-term with their COVID-19 strategy, most expect that the pandemic will outlast their response plans

 

 

 

Source: HFS Research, 2020
Sample = 631

 

 

The talent crisis raged long before COVID-19; 20% of enterprise leaders ranked it as the number one inhibitor for their digital transformation objectives, and the gap is only going to deepen

 

Pre-COVID-19, HFS found that 32% of executives viewed the talent shortage as a top-three inhibitor for their digital transformation efforts, and 20% ranked it as the top inhibitor, as Exhibit 2 shows. This talent challenge is likely to worsen due to the ongoing pandemic as businesses are forced to balance their own survival with the wellbeing of their employees. Every firm is responding differently: some have drastically reduced their headcount, while others have sent employees to work remotely; a few have even left employees working in crowded offices.

 

However, as technology evolves to make remote-working easier, employees have more opportunities than ever before, meaning providers focused solely on short-term success at the expense of their employees could experience both reduced success in the labor market and the company’s existing talent jumping ship—and doing it very quickly.

 

Exhibit 2: Talent was a leading inhibitor for enterprise digital transformation before COVID-19

 

 

 

Source: HFS Research, 2020

Sample = 368

 

 

Eventually, many enterprise clients will move their gaze from surviving COVID-19 to enhancing efficiency through digital transformation

 

Exhibit 3 shows a small portion of the data collected in HFS’ recent COVID-19 response survey, outlining the impact enterprise clients expect the pandemic to have on their spending on services and technologies. Understandably, as huge numbers of employees leave offices to work remotely, cybersecurity has become increasingly important; enterprise clients predict that their spending will increase by 5.3%. However, the increased spending doesn’t end at cybersecurity, enterprise clients predict a rise, albeit often minor, in spending across the board on change-agent technologies. While often small, the fact that increases exist at all is significant—in these uncertain times, any financial commitment represents serious intent, and service providers must not underestimate this.

 

While this is likely music to the ears of many service providers, they must remember that these services are far from simple, and an unskilled workforce can’t deliver them. If they continue with tunnel vision, focusing only on the short-term problems presented by COVID-19, they could find themselves without the capacity to compete with those who blended short-term survival with long-term success.

 

 

Exhibit 3: Enterprise clients predict an increase in spending in several areas due to COVID-19

 

 

 

Source: HFS Research, 2020
Sample = 631

 

 

Capgemini’s investments in its workforce throughout COVID-19 are likely to pay off as employee loyalty and motivation will help attract and retain talent

 

Quickly glancing at news headlines, you can see countless stories of enterprises laying off staff, furloughing employees, or asking them to take voluntary—even compulsory—pay cuts. However, one outlier was Capgemini, which recently made the news for the opposite reason. It announced several investments in its staff, specifically in India. These investments include pay increases for 70% of its workforce, financial support for employees stranded due to the pandemic, and retaining and paying benched staff. While these investments will have positive implications for employees, they also bring a host of benefits to Capgemini. They make it easier for the firm to retain its existing workforce, which could be more productive due to increased job satisfaction, and the firm appears more attractive in the labor market, appealing to more talented individuals. Ultimately, all of this expands Capgemini’s capacity to deliver high-quality services on sensible timelines, ensuring both its long-term success and short-term survival.

 

Service providers should note Capgemini’s investments and develop their own long-term talent strategy if they hope to remain competitive in the transformation market following this pandemic.

 

The Bottom Line: Don’t lose sight of a long-term strategy throughout COVID-19. Talent is crucial, and if you hope to meet increasing demand from enterprise clients, you must nurture it while you still can.

 

The unpredictability of the economy due to the COVID-19 outbreak means it will be difficult for businesses to look beyond the short-term, with enterprise clients and service providers focusing mainly on survival. However, the complex nature of the industry in which service providers operate means they cannot afford for their talent to jump ship and look toward more supportive competitors. They must ensure they have a long-term talent strategy that involves nurturing existing employees. If any provider fails to do so and instead focuses on simply short-term survival, they might just find themselves unable to compete with their peers.