Why Is Digital Transformation Expensive?

Apple, Microsoft, Amazon, Alphabet, Facebook and Alibaba - what do these companies have in common? For starters, they happen to be among the top 7 companies in the world in terms of Market Value, with a combined market value of more than 4.6 Trillion Dollars. That makes it about 3 times the GDP of Sub-Saharan Africa - picture that! 

But what else do these companies have in common? They all have Digital Technologies at the core of their businesses. 

It takes no rocket scientist to visualise the value and impact that Digital can have on any business, something that not just startups but incumbent business giants too have realised. Take General Electric’s efforts to place internet-enabled sensors across the streets in the US, for example. Or take Nestle’s Digital Transformation success focussed on social media and e-commerce. The future is Digital.

Not only is this transformation imminent, it also happens to be fairly expensive and signs are that it will become more and more expensive in the near future. Why is Digital Transformation expensive? Why will it continue to cost more to build Digital Products?

Reason 1: Limited Tech Resources

India happens to be a country of more than 1.3 Billion, plush with human capital. How then, can there be a dearth of capable tech resources? Well, it turns out that 80% of Indian Engineers are not fit for jobs in the first place, and less than a fourth of these remaining 20% have the ability to write code. Drill deeper for specialised industry requirements like “Artificial Intelligence”, and the numbers are absolutely dismal. Only 2.5% of these engineers are skilled in the domain.

For an economy that is looking to rely on this tech workforce for its Digital requirements, these are not very promising numbers at all.

To overcome this talent deficit, Indian Startups are already looking to hire from overseas, with their hunting list focused on artificial intelligence, machine learning, robotics and big data. There seems to be no other alternative.

Reason 2: Expensive Product Managers

Before we get into the details, it is important to first understand how Product Managers are different from the rest of the engineering workforce. For most digital products, Product Managers are essentially the binding force between business requirements, programmers and customer experience. 

It is well understood that Digital “products” are at the heart of any Digital Transformation project - be it a startup or a large company. Product Managers happen to be at the helm of most of such product development. 

Which brings us to the key question - why are they so expensive afterall? 

With a combined workforce that has a strength of a meagre 20,000 Product Managers, India is witnessing a huge shortfall of skilled product leaders. Simply compare that with the US’ army of product managers, estimated at 1.8 Million and you will begin to fathom the extent of this scarcity. 

Limited supply and an ever-increasing demand is unfortunately only solved by one seismic shift - that in price. As per latest estimates, these product leaders are already about 3 times as expensive as generic project managers, with no signs of becoming cheaper.

This Digital Talent Gap is a critical challenge for an economy with an estimated contribution of $170 Billion from its core digital sectors. 

The power of building great Digital Products happens to rest in the hands of a very limited few. While we hope that the Indian tech workforce is able to find ways to upskill at speed, we hope to make our own little contribution at FavcyX, by democratising technology and bringing it to the hands of many to effectively change this narrative. 

Got an idea?