3. Raise firms' awareness of the importance of digital and complementary skills
Adoption of digital tools remains below potential among private firms and could be due to an insufficient level of digital and complementary skills. Assessing firms’ digital literacy and raising their awareness of available support to upskill could better guide their investments in the digital transformation.
Beyond basic digital tool use, firms seem unaware of the path forward to integrate digital technologies
The ongoing digital transformation of Uzbek firms has been spearheaded by the banking and financial services sector (USAID, 2022[1]), yet firms in this area remain primarily state-owned, while private firms’ adoption of digital tools has been increasing but is still low. World Bank data found for instance, that only a quarter of the latter have their own websites (World Bank, 2022[2]). When firms do use digital tools, it is far from clear that these tools are exploited to their full potential. OECD interviews found that internet users tend to use their smartphones or create a hotspot for their laptops, which limits digital tool performance, as the internet connection is less stable than with a subscription for a landline connection. In absence of available data on the private sector use of digital tools in Uzbekistan, anecdotal evidence shows that a significant share of Uzbek SMEs rely on social media such as Telegram, Instagram or Facebook to find and communicate with suppliers, customers and employees, promote products, and take and place orders, among others. Private firms’ digital transition can start with the adoption of basic functions such as administration or marketing, where the digital gap between small and large firms is smaller (OECD, 2021[3]). OECD fact-finding interviews also found that private firms have only recently been investing in digitalisation, starting with enterprise resource planning (ERP) and digitalising distribution and procurement, before moving to more advanced functions, such as upgrading to customer relationship management (CRM) tools.
Adoption seems impeded by a lack of knowledge. An EBRD study of women-led MSMEs in Uzbekistan found that basic digital tools, such as office software, web presence and social media were used, but study respondents were eager to learn more about how to use these tools to their full potential. When these firms wished to find the resources required to grow digitally, they reported having limited options for advice and indicated turning to YouTube and Google as sources to address their digitalisation questions (EBRD, 2021[4]). OECD interviews also found that companies increasingly rely on international software tools such as Google Workspace, Microsoft 365 or SAP, or Russian ones such as 1c.ru, but tend to underestimate the added value of digital tools and favour cost effectiveness and little or no commitment when acquiring such tools. On the other hand, OECD interviews revealed that when businesses do take the leap and decide to invest in digitalisation, they often see such investments as a silver bullet and acquire costly digital tools without planning the integration of these tools into business models and processes, which often results in mixed results and lower-than-expected returns on investment.
Skillnet Ireland is the single business support agency of the Government of Ireland dedicated to workforce development. Its mission is to facilitate increased participation in enterprise training and workforce learning in Ireland, through the provision of nationwide, subsidised training to Irish businesses. It also provides career development advice, funding, and access to business networks. It trains over 21,000 businesses and 81,000 workers through its 73 business networks each year. The agency’s recent focus has been on providing digital skills to the Irish private sector.
Technology Ireland Digital Skillnet, a business network part of Skillnet, offers hundreds of programmes to the technology sector on digital transformation. The TechLEARN programme in particular offers access to e-learning platforms for firms willing to enable their staff to learn new tech skills while on the job, keeping pace with recent technological developments. Technology Ireland Digital Skillnet funds up to 70% of the training costs. Platform advisors are available to demonstrate the programme’s latest features and provide expertise. Some of the courses currently available include data engineering, system administration, hardware, and programming.
The platform operates under a cost-sharing model of state grants and membership revenue from business contributions. A key success factor of the agency has been its co-operation with the private sector to design its programmes and the support it has gained from national employer and employee bodies for the relevance of its offering for the industry. This approach enables cohesive enterprise networking and the ability to respond to ever-changing skills needs. The agency has also been active in fostering industry – academia collaboration for the development of new programmes in higher education to address skills gaps.
Source: (Skillnet Ireland, 2022[5])
Systematic digital skills assessments are needed to inform investment in skills development
As the level of digital maturity can significantly vary across firms, even those operating in the same industry, businesses need to assess their own digital maturity to identify the most suitable digital solutions for their situation and formulate informed investment decisions (Interreg Europe, 2021[6]). Digital self-assessment tools can help (European Commission, 2021[7]). The self-assessment should provide a targeted digital plan outlining the steps required to advance from one level of digital maturity to the next (Box 3.2). It can help managers adapt the firm’s strategy and understand which processes can be improved, which digital tools to adopt and which skills should be developed among the workforce. A website hosting the self-assessment can be the most convenient and accessible option for firms. The tool should investigate the different areas of operations and business functions common across sectors (e.g., production, marketing, human resources, accounting, CRM, and logistics), as well as those that are sector-specific. Based on the outcome of the self-assessment, contact points and first recommendations for specific digital solutions and training can be provided. The latter can be a subset of generic steps included in relevant sector-specific digital plans. Uzbek policy makers may consider providing such a tool that would be accessible on the responsible entity’s website, such as the Chamber of Commerce and Industry or a revamped SME agency responsible for digital upskilling as outlined above.
Established in 2017 by the Infocomm Media Development Authority (IMDA), the SMEs Go Digital initiative aims to help SMEs use digital technologies and build a stronger digital culture. Among the digital solutions the initiative offers, the Chief Technology Officer (CTO)-as-a-service tool enables firms to assess their digital readiness, explore digital solutions and request digital advisory and project management services. Firms which do not know where to start can check their digital readiness by taking a 5-minute test. The test results adapt recommendations based on the firm’s sector, its number of years in operation, staff size and annual sales turnover. The firm respondent has to answer the following questions:
Upon completion of the test, the platform suggests common solutions adopted by other companies in the same industry. The respondent can watch video testimonials of firms operating in the same industry which obtained a high digital readiness score and explain how digitalisation transformed their business.
Firms which have a better understanding of their digital needs can look for solutions tailored to their business and sector on the website, which provides vendors’ contact details, indicative prices and the option to browse and compare similar solutions.
Source: (IMDA, 2022[8])
Undertake awareness-raising campaigns with private sector support to inform the latter about opportunities available to upskill
Extensive consultations with private sector representatives, including the IT sector, can serve as a basis for the development of awareness campaigns concerning the importance of digital skills acquisition for the private sector. The authorities could promote the development of a shared vision that describes the different options of digital skills learning and its benefits to employees and managers. Such a vision should be designed by all ministries involved in private-sector development, digitalisation, education and adult learning. It could also raise awareness of digital skills learning opportunities among firms through campaigns and events. Campaigns should be targeted to sector-specific events, specific groups (such as small firms or women), or both. Expert webinars and success stories featuring business owners could also be presented to encourage the development of a digital culture and illustrate the practical implications of digital solutions (OECD, 2021[9]). The campaigns could take place through traditional media, open days, exhibitions, and presentations of educational programmes. Television and radio broadcasts, as well as active support of mahallas, will be necessary to raise awareness among non-digital SMEs. Each channel should include specified objectives and associated targets in terms of reach, activities, participation, etc. Initiatives could be launched immediately, though ideally they would also build upon the baseline assessment and market needs forecasting and anticipation to help prepare Uzbekistan for the future. Raising awareness about education opportunities for women and girls in particular is important and must be integrated in this approach (OECD, 2018[10]).
Supporting the public sector’s digital upskilling will also ensure that the incentives developed can meet the private sector’s needs
Support to the private sector will be more effective if government employees themselves grasp the breadth and depth of the digital transformation needed by firms. In 2020, the President acknowledged that most departments were still far from the introduction of digital technologies, and that many managers were equally far removed from digital technologies and thus failed to properly engage their employees in the digital transformation of the firm (gazeta.uz, 2020[11]). The government should therefore address deficiencies in digital literacy in the public sector and pursue efforts to train civil servants in the sphere of ICT, as Uzbekistan currently lacks qualified government employees with ICT skills (ADB, 2021[12]). The resolution of the Cabinet of Ministers on ‘’additional measures for further training and skills of employees of state and economic management’’ foresees the assessment of government employees’ ICT skills and qualifications and support in certification activities. However, civil servants have been unable to acquire digital skills due to a lack of training programmes and resources (USAID, 2022[1]) (Shin, Ho and Pak, 2020[13]). Civil servants in close interaction with the private sector (Chamber of Commerce, SME agency, etc.) could be given priority to receive such training.
Investment in overall skills development also appears critical, as the benefits of digitalisation are lessened by skills shortages in managerial or digital-related technical skills. This is especially the case for less productive firms, which often lack resources and attractiveness to hire skilled workers (Sorbe et al., 2019[14]). The diffusion of ICT in the workplace not only raises the demand for ICT specialist and generic skills, but also that of ICT-complementary skills. These skills are not necessarily linked to the ability to use ICTs but have become needed to operate in environments shaped by ICTs. For instance, the greater amount of information delivered thanks to technologies requires better capability to plan in advance and adjust skills. Flatter work organisations enabled by ICTs, characterised by more team work and less top-down management, require more co-operation and stronger leadership (OECD, 2016[15]).
In Uzbekistan, the level of general skills remains inadequate to cater for private sector growth and the transition to a market economy (World Bank, 2022[16]). Private sector firms report difficulties in finding high-skilled workers, and nearly three out of four firms report inadequate skills as a significant hurdle to business development (World Bank, 2022[2]). MSMEs, in particular, are the most affected by the lack of appropriate skills. An ADB survey of employers showed that 20% of firms interviewed were unable to invest, and another 23% experienced reduced business turnover because of a shortage of skills, (ADB, 2022[17]). The skills mismatch needs addressing, especially in a context of SOE privatisation, where SOE workers will need to acquire new skills and qualifications to adapt to different skills requirements on the labour market (Box 3.1) (World Bank, 2022[2]).
Digital skills alone are not sufficient to navigate the transition to the digital world of work and thrive in it. The development of a wider set of strong cognitive and analytical skills is required to make the best use of latest innovations. In addition, supporting efforts to reskill and upskill can simultaneously augment both technology innovation and workers’ ability to use that technology (Harvard Business Review, 2020[18]). The government could therefore consider promoting investments in a broader, complementary set of skills, such as inter-personal as well as managerial and organisational skills through the provision of targeted training programmes (OECD, n.d.[19]). Inter-personal skills include information processing, problem solving, and communication methods. Efforts should focus on training and upskilling company founders and high-level managers, as change is more likely to take place if decision-makers are convinced of the benefits of digital adoption (Harvard Business Review, 2020[18]). In realising this, managers will prioritise training their existing employees and recruiting new ones with the relevant knowledge and skills.
References
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[1] USAID (2022), Digital Ecosystem Assessment - Uzbekistan, https://www.usaid.gov/sites/default/files/documents/USAID_UzbekistanDECA.pdf.
[16] World Bank (2022), Boosting private sector development in Uzbekistan, https://blogs.worldbank.org/europeandcentralasia/boosting-private-sector-development-uzbekistan (accessed on 6 July 2022).
[2] World Bank (2022), Uzbekistan - The Second Systematic Country Diagnostic, https://documents1.worldbank.org/curated/en/933471650320792872/pdf/Toward-a-Prosperous-and-Inclusive-Future-The-Second-Systematic-Country-Diagnostic-for-Uzbekistan.pdf.