ASIA'S booming technology industry will soon face a serious manpower drought, leading to talent wars which could erode the cost advantages of markets like China and India, a new research report shows.

According to a recent survey which polled 153 senior executives in technology companies across various geographies, the regional IT talent tool could dry up within the next three years. The research was conducted by PricewaterhouseCoopers (PwC) and the Economic Intelligence Unit. Thirty per cent of the respondents were based in Asia.

The survey revealed that both Asian and European executives expect to be hit with a severe manpower shortage in the next three years.

Forty-one per cent of the respondents have already reported difficulty in finding technical talent in emerging markets and 48 per cent of them noted difficulties with hanging on to existing staff.

'Competition for talent has never been as fierce as it is now. The technology industry has experienced steady growth in hiring over the past three years, and even a small increase in demand could signal the beginnings of another industry-wide talent war,' said Greg Unsworth, partner and Asia-Pacific technology industry leader at PwC.

'Technology executives must upgrade talent management capabilities in their companies and create innovative programmes in order to attract, develop and retain the best talent,' he added.

With intensified competition, coupled with scarce supply, emerging countries like China and India have witnessed a jump in the salaries of IT workers. The situation has gotten to a point where both countries, which have traditionally been viewed as low-cost destinations for technology companies, will no longer be viewed as favourable from a cost perspective for good talent, PwC said.

In the light of the looming manpower shortage, Mr Unsworth highlighted the need for companies to do more to retain their top employees.

'It's no longer a mere battle to attract talent in the door. The real contest will be won through the development of tools and strategies for managing and developing human capital across the enterprise,' he stressed.

The report showed most companies are waking up to this fact and have placed human capital and talent management as their top priority, but most respondents said they lack the capabilities to follow through with more concrete people development plans.

Some companies however, are now working with schools to improve their curriculum and to encourage students to study subjects like mathematics and sciences to combat the diminishing talent pool in these areas. Other firms are using tools like talent maps and worker surveys, and establishing better employee benchmarks to manage and hold on to their skilled employees.

However, the survey showed that Asian companies are lagging behind their North American and European counterparts when it comes to talent management programmes.

Only 11 per cent of Asian respondents said they could 'very adequately' provide career development to all levels of the organisation, compared to 14 per cent in North America and 18 per cent in Europe.

Specifically, 7 per cent of regional executives surveyed said they could 'very adequately' define, measure and reward collaboration among employees while only 6 per cent of them said they could comfortably provide appropriate executive training programmes. By comparison, North American and European executives scored higher on both counts.

This article first appeared in BT on December 11, 2006