EU falls behind the US in workplace digitalization

Digital transformation has been essential in the pandemic as teams have been geographically dispersed. The need for a digital workplace has been reflected in the skyrocketing value of communication tools like Zoom.

European companies rapidly introduced new ways of working as they accelerated their digital plans during the pandemic. However, questions remain about the impact of these changes and where they leave organizations in the present day.

Fortunately, the annual EIB (European Investment Bank) Digitalization in Europe survey aims to answer questions about the investments being made in digital transformations. To do this, EIB spoke to 13,500 small (below 250 employees) and medium (above 250 employees) sized businesses across the European Union the United Kingdom, and the United States between April to July 2021.

There are plenty of positive findings but the EU has some ground to make on its US counterparts.

Digital transformation in the EU

The report found that 46% of businesses in the European Union took action to become more digital in 2021. However, the technology that is being implemented varies, with advanced implementations like 3-D printing and advanced robotics being in the plans of 61% of companies.

This figure is slightly less than in 2020 (63%) but shows a general willingness to adapt to the continuously changing world of work.

Of course, small to medium-sized businesses are not investing equally in different countries. The Czech Republic was found to have made the most investment in advanced digital technologies, while Finland led the way in digital infrastructure and the use of formal strategic business monitoring.

Elsewhere, Austria had the greatest uptake of digitalization during the coronavirus pandemic, Cyprus made the greatest investment in software and data, and Sweden spent the most on employee training.

It is worth noting that despite progress being made by companies, digital gaps are emerging. The EIB found that larger firms are much more likely to invest in technology, this means that smaller companies are struggling to do the same work with the same amount of people.

In terms of HR technology, practices such as the automation of documents and compliance will take up hours of a professional’s time. This leads to a greater chance of burnout.

Reflecting on a gap between businesses, EIB chief economist, Debora Revoltella said: “Most EU companies tell us they used the pandemic as an opportunity to transform and start their digitalization process.

“But over the period, the divide among firms increased, with less responsive ones facing the risk of falling behind. A lack of skills remains the main barrier to firms’ investment. In response, we need multifaceted policies to support digitalization: technical assistance, skills and access to finance all play a role.”

Comparing the EU to the US

58% of small and medium-sized businesses in the US have taken action to become digitally equipped in the pandemic. This is significantly more than the EU (46%).

A trend of US businesses being more tech-savvy extends to advanced digital technologies which have been invested in by 66% of US companies surveyed and only 61% of those in the EU.

As an increasing number of businesses are happy to hire internationally, companies in the EU will need to ensure that their technology enables talent if they want to make the best hires. Naturally, great tech doesn’t mean a top-of-the-line talent pool, but it can make the hiring process easier and make staff happier in their day-to-day work.

Improving investments

Assessing the findings, EIB’s Vice-President Ricardo Mourinho Félix commented: “During the pandemic, digital transformation often became essential for firms’ survival and sped up the transformation of the European economy.

“Yet we are also observing that the crisis forced many firms to put more complex digitalization processes on hold. As we are entering a ‘new normal,’ it will be crucial to restart these processes and accelerate the pace of advanced digital transformation in the European Union.”

Investment is required to restart the transformation process. On top of that, skills are needed to carry out business priority changes. As a result, EIB recommends that employees receive training in new skills so that they can adapt and enable transformation.

This upskilling process can be done through mentoring, company-paid certification courses, and education applications. Regardless of which option is pursued, non-enterprise companies need to act now.

Otherwise, businesses may lose their best talent and ultimately fall behind the larger competition.