Rescuing Human Capital: How CEOs Can Shape the New World Order

The U.S. led world order and economic freedom are rapidly eroding. The war in the Middle East and Ukraine are flashpoints in an unstable, multi-polar world where control over companies that command technological superiority and elite talent has become the focal point. A few weeks ago, Beijing banned iPhones for government officials despite their production in China and Apple’s creation of 5 million jobs in the country. China’s retaliation is symptomatic of a disintegration of a stable world order in a new Hobbesian technology war of “all against all.” New sweeping regulations such as U.S. restrictions on public and private technology investments in China in the areas of advanced computing chips and microelectronics, quantum technology and artificial intelligence prohibit cross-border flows and specifically target “intangible benefits” such as managerial expertise and talent networks. U.S.-based venture capital investment in Chinese tech start-ups have plummeted to $1.2 billion in the first 10 months of 2023 from $9.7 billion in 2022 and $32.9 billion in 2021. Rising digital walls and semiconductor sanctions are fueling an AI arms race where countries such as Germany and Russia are seeking “technology sovereignty,” amidst rising anti-immigration sentiments even towards highly skilled talent despite historic labor shortages. The pandemic accelerated a discontinuity, taking us from universalism to tribalism, as democracy and immigration continue to backslide in the face of religio-politics, populism, and irredentism. What’s underneath the annihilation of socially popular technology companies such as Apple and TikTok is a “clash of civilizations,” where an expanded NATO and its Indo-Pacific allies are confronting a rising Sino-Russian-GCC partnership committed to fighting an artificial intelligence driven arms race.

The Decline of Globalization

Today, the four pillars of globalization – production, finance, information, and talent – are crumbling. With respect to production, the degree of integration of global value chains (GVC) continues its decline since 2008 and the U.S. has also adopted the highest tariffs in its recorded history. Meanwhile, several countries are establishing alternative reserve currencies, China-based companies have opted for secondary listings in Hong Kong and Saudi Aramco, the largest IPO ever at $25.6 billion dollars is listed on the Tadawul stock exchange. 

A decline in global talent and Information flows has huge implications for Western Countries

Information flows are also suffering with the rise of digital firewalls, including internet infrastructure, social media as well as cloud and data storage. LinkedIn’s once global professional community has exited China after 30 years of investment due to increasing regulatory costs, greater censorship, and data controls. This leaves Chinese talents in the world’s largest service economy of 70 million people without a professional networking platform to showcase their skills, network with peers or seek employment in international companies.

Around the world, people flows, including legal immigration of skilled talent, are facing severe bottlenecks. Brixit has exacerbated labor shortages in the U.K. in critical sectors such as healthcare and cybersecurity, the waiting period for a U.S. visa is over 500 days for Indian travelers, and the massive backlog of H1B Visa applications risks slowing AI product cycles. International travel, including Chinese arrivals, is also significantly under-indexed relative to pre-pandemic levels and is set back by higher prices and a lack of feeling welcome in many Western countries. In this context, President Xi’s unveiling of the “Global Civilization Initiative,” where countries “should refrain from imposing their own values or models on others and from stoking ideological confrontation,” is gaining traction in foreign capitals. In India, freedom of the press has been seriously curtailed and in the Middle East, “Saudization,” bans employers from recruiting expatriate workers, transferring their services, assigning work to them, or using them in the jobs mentioned, whether directly or indirectly.

A Talent Disruption is Spreading Across Industries

In the West, CEOs are playing defense as a talent disruption, marked by the parallel rise of the gig economy and unionization, is crippling entire service industries with labor strikes from hospitality and entertainment to healthcare and commercial real estate that placed bets on the return of a traditional labor model post-pandemic. 

However, a vast undersupply of 5 million highly skilled trapped talent exists in markets such as China, Russia, Iran, Pakistan, Bangladesh and India that can use AI to transform industries and create entirely new ones. The decisions CEOs make in the coming year regarding the talent supply chain will determine which countries and industries capture talent and whether the free movement of people can be rescued for future generations.

Key Strategic Opportunities in an Unstable Multi-Polar World

In the coming years, Western CEOs have a unique opportunity to capitalize on global instability by building talent marketplaces, with supply chains that attract a disproportionate share of highly skilled, elite talent pools in artificial intelligence, data science and climate technologies. To achieve this end, CEOs should set three strategic priorities over the next five years to balance creating shareholder value in the short term with the long-term interests of key stakeholders.

The first opportunity is to import 2 million highly skilled AI-ready talents from distressed labor markets, such as China where youth unemployment is above 20% to secondary or allied markets such as Australia, New Zealand and Canada, who are facing long-term labor shortages and could be springboards to the U.S. Unfortunately, the building blocks employed by most companies today are deeply flawed: legacy HR technologies including applicant tracking systems and job sites are exacerbating labor shortages. A comprehensive study by Harvard Business School found that over 27 million “Hidden Workers,” including those with employment gaps of more than 6 months, immigrants, caregivers, relocating partners and spouses, veterans, and those with physical disabilities, were excluded from consideration by existing HR technologies in the U.S. Hence, the process begins with CEOs investing resources to build AI-driven global talent marketplaces that identify and source rising talents from distressed markets and use augmented and virtual reality to offer experiential learning and development capabilities that convert analysts into managers faster and cheaper than ever imagined.

The second opportunity is to gain talent share, build human capital and strengthen their brands as global citizens and employers of choice. The UNHCR estimates the total number of people worldwide who were forced to fleetheir homes due to conflicts, violence, fear of persecution and human rights violations (“displaced people”), surpassed 100 million in 2022, of which 22 million were classified as refugees, a 200% increase from a decade earlier. CEOs can start by establishing talent safe havens that protect the rights of women, minorities, and displaced people and by pooling resources with stakeholders and non-profits. The long-term goal should be to pool resources to sponsor highly skilled employees and their families in alignment with NGOs to manage logistics of moving people across borders. 

The third opportunity is to restructure their talent supply chains to capitalize on the new geopolitical fault lines. As relationships between Washington D.C., London, Beijing, New Delhi, San Paulo and the GCC become more tempestuous, governments will introduce new regulations to trap skilled workers and wall off data. In the process, new growth opportunities will also emerge from the chaos as regional talent alliances are formed between civilizations – for example, between the West, India, Japan, South Korea, and Vietnam on one hand and between China, Russia and the GCC, on the other. In conclusion, it is critical for leaders to understand that the forces that are fomenting a global talent disruption are here now and no industry is immune. The decisions CEOs make in the coming year will determine whether we win the AI arms race and preserve global talent flows for future generations. 

Alexander Mirza is the CEO of Mogul Hotels, a venture-backed AI technology company, board member of Cornell’s Center for Innovative Hospitality and Employer Relations and Strategic Advisor to Indian software developer Kiwitech. He is the author of the book, Talent Disruption: Employees Are The Brand, Using AI to Build Human Capital.