The automotive sector needs to consider a role for talent development when it comes to realising its digital transformation agenda, writes Sam Schofield, chief revenue officer at Udacity, a software consultancy. 

At Volkswagen’s annual press conference in 2019, company CEO Herbert Deiss predicted that “software will account for 90% of future innovations in the car”. Flash forward to 2022 and more than a quarter of a million electric vehicles now travel on UK roads. According to Accenture, battery electric vehicles will represent almost 50% of all European new-car sales by 2030. 

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Sam Schofield

Looking to the future, the role of Software-as-a-Service (SaaS) in the sector will only continue to expand. The prospect of self-driving vehicles creates a huge opportunity gap, and development in the sector is well underway.

Tesla has famously had self-driving vehicles in beta development since 2019, but it is not the only company seriously investing in the space. In 2016, Ford announced that it would mass-produce a fully autonomous self-driving car without a steering wheel by 2021. In the same year, Uber made headlines for its $680m acquisition of Otto, a self-driving truck company, and, just a few months ago, General Motors announced its $2.1bn acquisition of SoftBank’s Vision Fund majority stake in the Cruise autonomous vehicle unit. The advent of SaaS technology in the 21st century is propelling the automotive industry into massive scaling and innovation.

Software engineers and coders are king

As the automotive industry shifts towards digital projects like EVs and autonomous vehicles, software has become the new hardware. The need for digital transformation means that engineers can no longer get by with hardware knowledge alone. As software skills become increasingly mandatory in the field, mechanical and electrical engineers must now also serve as software engineers.

The industry needs experts in several digital fields including AI, machine learning, architecting and developing and, most crucially, coding. Where there is software, there must also be coding and, in an industry increasingly being overtaken by SaaS, code is king. The SaaSification of the automotive industry opens up a new field for coders to look into, full of scope for innovation and on the cusp of massive change.

However, as organisations are embarking on developing their SaaS offerings, it has quickly become clear that the biggest roadblock to innovation is the lack of digital talent to innovate and execute the development process.

Some of this gap can be explained by a lack of effective future planning. According to a survey by McKinsey’s Center for Future Mobility, while 30% of total vehicle costs are expected to be driven by software and electronics by 2030, only 9% of respondents said that they’re prioritising recruiting software-architect, developer and system-integrator roles.

However, there is also a genuine digital skills gap in the sector that has become particularly alarming in recent years. New analysis from the IMI has found that automotive vacancies are at their highest level in 20 years, and KPMG has reported a lack of digital skills as one of the biggest challenges faced by the automotive sector today. Automotive companies are increasingly looking to hire computer science graduates in addition to classical engineering, mechanics and electronics, but there simply isn’t enough digital talent to fill the gap.

Addressing the skills gap

So what can be done to tackle the skills gap, and how can automotive businesses stay ahead of the curve as the sector shifts from a hardware to a software industry?

One of the most effective methods of addressing the skills gap is simply to change the hiring process by looking inwards and transforming the skillsets of existing staff. This serves as a way around the hiring problem and builds out the capabilities of existing employees into a workforce that is more flexible and more resilient; an invaluable asset for an industry facing vast and rapid change.

Investing in the skills development of existing employees should be viewed as part of the digital transformation journey. Consumer demands are ever-changing, and automotive organisations need to constantly adapt and invest to remain on top.

Therefore, investing in staff talent transformation should be a life-long project. Rather than hiring continuously as the sector evolves, developing the talent of current employees allows you to preserve their expertise gained through years at the company and in the industry.

In July of this year, Mercedes-Benz announced that they’d be doing just this with the rollout of their ‘lifelong learning’ digital training programme. They are investing more than €1.3bn into the programme in Germany alone with a view to rolling the programme out globally.

By enrolling current staff in talent transformation programmes in subjects like coding, architecting and developing, artificial intelligence, machine learning or cybersecurity courses, automotive organisations can build a sustainable workforce in a time of intense flux.

The skills shortage is not going anywhere any time soon, and so digital talent transformation is the key to longevity for automotive businesses. Navigating the SaaSification of the automotive sector requires creativity, not just in product development, but in building out a flexible workforce with future-ready skills. Talent transformation provides automotive organisations with access to a pool of readily available talent who have pre-existing industry knowledge that will allow them to build the transport of the future.

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