It is easy to overlook the human workforce responsible for the deployment of fibre networks, telecommunication towers and data centres around the world. But without the workers that are skilled in designing networks and installing and maintaining assets, the infrastructure that forms the bedrock of the modern digital economy could not exist.
Demand for these skilled workers is growing as the rollout of digital assets gathers pace. Amanda Woods, chief investment officer at Amber Infrastructure Group, says that the need for civil engineers has “increased substantially”, putting pressure on operators of data centres and fibre networks.
“With a limited pool of skilled resources to hire from, attracting and retaining these skilled workers has been a challenge across the industry.”
Tight labour market
Supply chain disruptions have made global headlines since the start of the pandemic, but the digital infrastructure sector also faces a shortage of highly specialised workers in both developed and emerging markets.
Woods notes that the pandemic “has certainly not helped the skilled labour situation”, with the international movement of workers heavily restricted for much of 2020 and 2021.
Some 84 percent of respondents in a survey published last October by Turner & Townsend, a professional services company, reported that they had encountered skills shortages for data centre construction teams.
“A tight labour market has gotten tighter,” agrees Benn Mikula, co-chief executive at Cordiant Capital. “Digital infrastructure requires certain unique capabilities, particularly in the areas of cooling and power redundancy, fibre connectivity and internet access. These are the skills in shortest supply.”
The situation is somewhat different in emerging markets, where the requirements for the build-out of new digital infrastructure are greatest. “We’re just at the early stages of the digital infrastructure journey in big parts of the world,” says Thor Johnsen, head of digital infrastructure at Triple Point. “There’s still a billion people to be connected to the internet.” He notes that demand for skilled labour in emerging markets will have global consequences for the labour market, further tightening the supply of specialist personnel.
Abhinav Sinha, head of technology and telecoms at British International Investment, the UK’s development finance institution, adds that civil engineering skills tend to be plentiful in emerging markets. “What is not available is network planning,” he says, with many countries lacking specialists who can plan and execute network rollouts.
According to a report published last year by the Uptime Institute, an advisory firm, an extra 300,000 workers will be needed in data centres by 2025, taking the global workforce to 2.3 million. Almost half of the new staff requirements will be in Asia-Pacific, although the workforce is expected to grow in all regions of the world.
Johnsen believes the current labour market does provide a generally sufficient supply of workers in developed markets – but he is concerned for the future. “Looking forward, there is absolutely a problem,” he says. Due to the advancing age of the workforce and its lack of diversity, a career in hard assets appears less attractive for younger workers. “When you think about the pool of people that are engineering-oriented, they tend to find themselves going towards Silicon Valley.”
Investing in training
“An improvement in the labour supply in digital infrastructure will take time,” says Mikula. “There is no magic solution.” He acknowledges that with covid apparently subsiding, some countries are now easing restrictions on the movement of skilled technicians – “but this merely moves the problem around the world”.
Ensuring that a pipeline of skilled workers is available in the future ultimately rests on reforms to education and training systems. Andy Green, one of the UK’s National Infrastructure Commissioners, tells us that the “government should redouble efforts to promote STEM education at all levels and encourage employers to continue with apprenticeships and other employer-led skills programmes”.
Johnsen emphasises that reforms to education must go beyond simply training more engineers. “A lot of these jobs are not so engineering-intensive,” he says. “When I think about the broader talent to deliver and plan and coordinate, yes there is a deep component of engineering, of course, in this industry, but I think that sometimes people forget about the broader literacy that’s needed as well.”
Training the workforce of the future to be ‘engineering literate’, argues Johnsen, will provide the foundation for delivering the next generation of digital infrastructure. “We need to make people engineering literate in a broad spectrum of educational backgrounds,” he says. “That, I think, will help solve a lot of the problems.”
Inexperienced managers could lead to ‘digital bridges to nowhere’
Skills in network design, engineering and construction are vital for the digital infrastructure sector – but fund managers also need specialist skills to be able to create value in the sector.
Triple Point’s Thor Johnsen notes that digital infrastructure is a niche asset class – something not always understood by managers of general infrastructure funds. “This is a very unique space and it requires a depth of industry knowledge that I don’t think naturally comes from a generalist,” he says.
Bigger problems may arise when managers from other asset classes enter the digital infrastructure space. “A data centre is not a real estate investment. Real estate investors do not understand the industry,” warns Johnsen. “If you have a shortage of talent, a shortage of investment managers, and a lot of opportunity, all of a sudden, you’re going to see people throwing money at things. There’ll be ‘bridges to nowhere’, as they say.”