The nature of work is going through a significant shift: businesses are embracing technology, notably the potential of AI, to develop more asset-lite business models, improve the accuracy of different disciplines, and change traditional, brick and mortar operations to be less hands-on. There is also a growing demand for new skills, changing employee expectations, shifting labor demographics, new workforce models, and a changing regulatory environment, according to Deloitte.[1] Failure to reskill or upskill existing workers risks large swathes of the population being left behind and potentially marginalized from the work force. (Upskilling is the process of learning new skills, while reskilling is existing employees undergoing training or learning how to do a new set of skills.[2]) According to a McKinsey study, the industries most acutely facing skill disruption are financial services, followed by high tech and telecom, while the least impacted are healthcare services and pharmaceutical and medical products.[3]
Ironically, the biggest change agent for the future of work is also one of the solutions to reskilling/upskilling the population at scale: technology, specifically education technology. Once mainly targeted towards improving educational outcomes for at the K-12 or college level, education technology is effectively being applied to reskilling/upskilling workers in all parts of the workforce. Skills training includes both new technical know-how and general business training required for today’s jobs, but also training in “soft skills” that can be delivered online to enhance an employee’s EQ abilities and management potential. Further, employees are demanding increased access to these types of trainings, with 66% of respondents to a recent Cengage Group study saying that access to employer-paid training and upskilling opportunities were important factors in accepting their new job, and 56% saying that their former employer did not offer these opportunities.[4] A McKinsey study found a need for reskilling and upskilling to address a wide range of skill areas, with the top three being data analytics, IT management, and executive management.[5]
Investors are taking note of these developments. Venture and private equity firms that previously focused largely on the K-12 or university education segment in education technology have, in some instances, broadened their focuses to include lifelong learning meant to help reskill or upskill workers. A broader range of investors, including financial investors, internet and IT-based companies, and other education companies that could be strategic acquirers have also been attracted to the sector. The education technology sector overall saw funding rise 2.5x higher from pre-pandemic levels in 2022 (although this was down significantly from 2021 spending).[6]
Where are some of the most significant investment opportunities in reskilling and upskilling? One is in companies that partner with higher educational institutions to facilitate certificate programs or even online associate’s or bachelor’s degrees in areas such as data analytics and IT management. Another involves companies that deliver specific professional training directly to employees, working with the companies and relevant industry experts to develop customized content applicable to the specific employees’ professional needs. Finally, there are companies offering massive open online courses (MOOCs), such as Coursera, to provide access to thousands of courses to upskill the workforce. Companies not only have to invest in the right technology, but they also need to invest in their employees as part of the upskilling and reskilling process.
Overall, the opportunity to leverage technology to solve the reskilling and upskilling needs of the current workforce remains significant. The coming years could bring innovative product delivery developments, improved training opportunities, and a larger investor pool to the lifelong learning segment within the education technology discipline. The future is bright.
[1] Superlearning: Reskilling the Workforce | Deloitte Insights
[2] Digital Upskilling: A Top Trend for 2023 (worldwideerc.org)
[3] How companies are reskilling to address skill gaps | McKinsey
[4] Digital Upskilling: A Top Trend for 2023 (worldwideerc.org)
[5] How companies are reskilling to address skill gaps | McKinsey
[6] Investments in Ed-Tech Companies Tumble. How This Could Affect Schools (edweek.org)
Jennifer Leonard, Managing Director, Investments
Why Upskilling And Reskilling Are Essential In 2023 (forbes.com)
How companies are reskilling to address skill gaps | McKinsey
Learning In The Digital Age: Reskilling And The Evolution Of Education (forbes.com)
Superlearning: Reskilling the Workforce | Deloitte Insights
How can an organization best promote a successful approach to upskilling its employees? There are three key steps, according to a Harvard Business Review article: How to Build a Successful Upskilling Program (hbr.org)
Want to leverage AI in your organization’s reskilling/upskilling process? IBM has some ideas: Reskilling your workforce in the time of AI — IBM Blog
Looking to reskill but not sure where to start? The US Office of Personnel Management has put together a guide: Reskilling Toolkit (opm.gov)
This newsletter is intended solely for informational purposes, and should not be construed as investment/trading advice and are not meant to be a solicitation or recommendation to buy, sell, or hold any securities mentioned. Any reproduction or distribution of this document, in whole or in part, or the disclosure of its contents, without the prior written consent of Flat World Partners is prohibited
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