The seven biggest telecom industry trends
The telecom industry is evolving quickly, as businesses and consumers seek out game-changing use cases—from autonomous vehicles to robotic surgery to an unfathomable range of seamless digital interactions—that operate on the back of telcos’ substantial 5G infrastructure investments.
Telco leaders are broadly aware of the magnitude of transformation that the moment demands, and many are creating elaborate plans to overhaul everything from business models to operations to customer experience. Ongoing excitement about the potential of AI, driven by advances in generative AI, is pushing the industry to rethink the scope of its transformation plans. However, many telco leaders are struggling to manage the talent implications of these shifts, including determining what talent they need and how to beat out the competition to get it.
The industry has certainly not lacked for engineering PhDs or other markers of technical acumen over the years. But the tech talent market, and telcos’ position within it, have changed dramatically since the generation that is now on the brink of retirement embarked on their careers.
Moreover, not all tech talent is created equal. As telcos evolve to deliver on the opportunities that AI, augmented and virtual reality, and other emerging technologies unlock, they will need to be highly strategic about identifying and attracting talent with the expertise and abilities that each technology demands.
To frame the path ahead, we outline seven broad tech trends that are reshaping the telco industry, along with the talent implications of these trends—including the specific skill sets and capabilities required, as well as those that will likely be phased out. These current tech trends create an urgency for telcos to act now and identify critical talent pools to develop.
We then offer an approach to guide telcos through the complex process of fulfilling their immediate and long-term talent needs. While this approach is rooted in the present trend landscape, it is designed with adaptability in mind, and as such, will be relevant and applicable to future tech trends that may rise in prominence.
The terrain here is not friendly. Long gone are the days when telcos were the employer of choice for technical talent. Over the next decade, demand for certain tech roles is expected to further increase 20 to 30 percent across US industries—potentially outpacing the supply of recent STEM graduates, which grew just 5 to 10 percent annually from 2015 to 2019. For some roles, telcos’ demand is expected to outstrip that of other industries: by 2031, for example, telcos’ demand for electrical engineers is expected to grow 24.4 percent, compared with 5.9 percent in other sectors (Exhibit 1).
Telco operators with ambitious goals regarding diversity, equity, and inclusion should be particularly intentional about developing sustainable, long-term talent pipelines. McKinsey research shows that diverse organizations increasingly outperform their nondiverse peers. Telcos’ current tech talent pools tend to be less diverse than their overall talent pools; if operators’ current talent acquisition and development patterns continue, they stand to become even less diverse overall as their tech talent pipeline grows.
Seven tech trends shaping telcos
As digital transformation continues to accelerate, we are on the cusp of further seismic changes to how we work, live, travel, and interact. The seven trends described below are poised to redefine customers’ expectations of telcos—and the role that telcos can play in individuals’ lives and the success of organizations.
Each technology will require telcos to grow and stretch in new ways, compelling telco leaders to determine early on where to place bets and to continually refine their priorities as the landscape shifts and technology evolves further. As telcos hire the talent needed to embrace the seven tech trends, they will have less need for skills that can now be automated or are specific to outmoded legacy infrastructure.
At every stage, having the right talent in place will distinguish the leaders from their less successful peers.
1. Ever-expanding connectivity
Fifth-generation (5G) telecommunications infrastructure is dramatically expanding and improving connectivity, and sixth-generation (6G) infrastructure is poised to amplify this trend.
Near-limitless connectivity will pave the way for new services like remote patient monitoring and next-generation customer experiences like virtual dressing rooms and conferences that take place entirely in the metaverse.
Demand for connectivity is expected to increase further as customers seek out these innovative solutions and as the number of connected devices grows to a projected 51.9 billion by 2025, up from 43 billion in 2020. Remote work is also fueling demand, with 51 percent of Americans working from home at least one day a week. Moreover, 5G and 6G are estimated to expand connectivity to up to 80 percent of the global population by 2030.
To meet this demand, telcos will need to exponentially increase network capacity, improve data throughput and spectrum, and reduce latency and energy consumption. In addition to extending coverage to individuals, telcos may have an opportunity to raise B2B revenues by developing premium connectivity solutions for specific use cases.
This will require talent with skills in network and spectrum design to work on strategy and architecture; network engineering, to design architecture and develop applications; network innovation, to develop emerging RAN (radio access network), network functions virtualization, Kubernetes, etcetera; network maintenance monitoring, to handle emergencies and to fix breaks; and IoT, to develop applications, platforms, and APIs.
Engineering and operational capabilities specific to legacy technologies, such as digital subscriber line (DSL), 2G and 3G cellular networks, and traditional cable TV infrastructure, will likely no longer be needed. The talent base, therefore, will need to adapt.
2. Edge computing
As computing workloads are distributed across remote data centers located closer to end users, latency will drop, bandwidth will increase, and organizations will gain more sovereignty over their data. Edge computing allows for real-time data processing, which will unlock use cases across industries—from remote healthcare treatment to remote management of mining operations to sustainability solutions like smart grids that optimize energy consumption.
A recent McKinsey survey of 75 telco executives across North America and Western Europe detected a great deal of interest in a variety of edge computing use cases (Exhibit 2). The survey results showed that a majority of telcos are engaging with edge computing on some level, with a quarter already deploying it or actively planning to scale it. More than half of the executives (55 percent) surveyed said their primary goal is improving network efficiency and performance, while others cited enabling new use cases for businesses (21 percent) or for consumers (18 percent).
As telcos embrace edge computing, they will face rising costs from energy consumption, network maintenance, and investments associated with reconfiguring network backhaul and backbone.
The move toward edge computing requires telco talent with skills in network and system design to work on data strategy and architecture; network engineering, to enable the installation and integration of devices, software, and systems; network innovation, to improve the performance of systems; network maintenance, to fix breaks and handle emergencies; database management, to manage data storage, distribution, and analysis; and security, to minimize fraud, monitor risk, and handle compliance.
The rise of cloud-based solutions, automation, and managed services will reduce demand for on-site IT setup and maintenance roles.
3. Next-generation transportation
The first two tech trends, expanded connectivity and edge computing, lay the groundwork for a third: next-generation transportation. The shift toward autonomous, connected, electric, and smart technologies has vast implications for air and land transportation, with the potential to make human travel and the transport of goods far more efficient and environmentally sustainable.
The transportation industry will increasingly prioritize electric, hydrogen-based, and hybrid propulsion as new modes for ground and air mobility. An expected rise in data traffic and autonomous-landing applications may allow businesses to expand their markets, reaching new customer segments in previously unserviceable locations.
As transportation evolves, telcos will need to increase bandwidth for mobility, particularly in remote areas, and provide flawless emergency backup coverage. They will also have an opportunity to combine core connectivity with vehicular technologies and real-time mobility data to offer solutions like hands-free driving, infotainment, networks of smart electric vehicle chargers, and “vehicle to everything” (V2X) technology—which allows vehicles to connect with their surroundings, including other vehicles and human drivers.
Telcos will need talent with skills in network design to develop algorithms for vehicle connectivity; network engineering, innovation, and maintenance, to enable vehicle-to-infrastructure connectivity; automation, to leverage machine learning and AI for infotainment; IoT architecture, to enable voice recognition and gesture control; UX design, to enhance the user experience; and data science, for collecting and processing data.
4. xRAN
New approaches to RAN can bring flexibility to telcos’ relationship with OEMs and even reduce physical-asset requirements like towers, antennas, and cabling, thereby cutting capital and operational spending, accelerating the deployment of new network services, and spurring competition among vendors.
Falling under the umbrella of “xRAN,” these new approaches include open RAN (ORAN), which will allow for seamless interoperability among hardware and software from disparate vendors when it reaches maturity; centralized RAN (CRAN), which allows multiple mobile sites to share equipment; and virtualized RAN (VRAN), which supports scalability and network agility by decoupling network hardware from software.
xRAN has the potential to improve telcos’ total cost of ownership by allowing them to choose different suppliers for different needs—a dynamic that may encourage new vendors to enter the market and lead to more competitive pricing. This flexibility may lower the risk telcos face when they adopt new hardware or software solutions. And the availability of intelligent, virtualized, and interoperable functions will allow organizations to assemble tailored solutions that increase their capacity.
Our survey of telco executives indicates a strong interest in ORAN in particular, with 76 percent of executives at incumbent telcos and 88 percent of executives at new entrants planning to invest in the new approach. Overall, 60 percent of executives indicated that they plan to use ORAN for at least 20 to 30 percent of new network build-outs.
To accomplish this, telcos will need talent skilled in agile working to enhance engineering practices and innovation deployment; data engineering, to develop architecture; cloud, to develop and test solutions that xRAN enables; product management, to enable the evolution of xRAN; and DevOps, to build solutions and accelerate the transition to xRAN.
There will be less need for proprietary hardware knowledge, closed system integration skills, and manual operational capabilities specific to legacy RAN systems.
5. Trust architecture and digital identity
As organizations build and scale digitally enabled products and services that hinge on collecting vast troves of customer data, trust and privacy will become even more essential. Zero trust architecture, digital identity, and privacy engineering will become more prevalent as companies seek to gain a competitive edge by establishing stakeholders’ trust.
To meet rising consumer expectations around digital trust, IT security, and data visibility, telcos should consider investing in cybersecurity solutions. Those that do so will position themselves to introduce new offerings by building digital identity services on next-generation networks and technologies.
To realize this potential, telcos will need talent with skills in digital identity development to provide solutions and trusted technologies; cybersecurity solution architecture and engineering, to ensure assessment and secure access to networks and applications; automation, to create digital identity solutions and tools; privacy engineering, to handle risk and compliance; network engineering, to develop apps and architecture; network maintenance, to monitor and manage emergencies; and DevOps, to automate configuration, continuous delivery, and infrastructure.
Manual production and review of compliance documentation will be phased out.
6. Artificial intelligence
Advances in AI—and in generative AI, in particular—are unlocking opportunities for organizations at every point along the value chain. Telcos can use AI to optimize networks (by managing resources based on real-time traffic and data analysis); proactively address maintenance issues (by analyzing patterns and anomalies to identify problems before they occur); and minimize churn (by analyzing customers’ behavior to identify those most likely to leave). By coupling AI-powered cameras and sensors with AI-enabled network maintenance automation, telcos can substantially reduce the costs associated with network infrastructure management.
Generative AI can transform customer experience by supplying customers with highly personalized content, offers, and proactive service-related outreach based on usage patterns, purchase history, and other considerations. By analyzing customer behavior trends, generative AI can enhance product development and accelerate innovation; it might suggest new features for a mobile app or new plans targeting specific customer segments. By using generative AI to simulate sophisticated cyberattacks, operators can identify vulnerabilities and enhance network resilience.
To maximize the AI opportunity, telcos will need talent with skills in interface design to create excellent user experiences; natural language processing engineering, for AI speech recognition; data engineering, to work on data architecture, software, and big data; data science, to create mathematical machine learning models; and security, to prevent and manage cyberattacks.
As infrastructure is increasingly managed through software, AI will supplant the need for routine manual troubleshooting.
7. Quantum technology
Our survey reflects broad consensus among telco executives regarding the impact of quantum technology, with 52 percent saying they believe that quantum will be a differentiating advantage for telcos in the next five years (and an additional 32 percent saying they somewhat agree with this assessment).
Executives see the highest strategic value in developing quantum key distribution (QKD) networks, which allow for the secure exchange of cryptographic keys. Roughly half of executives are already engaging with quantum technology to protect customer data or improve procedures for authenticating users’ IoT devices (55 percent), protect telco infrastructure through encryption (53 percent), or encrypt traffic within the network (48 percent).
At the same time, quantum computing will put conventional encryption methods at risk by opening new attack vectors. Organizations are already growing concerned about “harvest now, decrypt later” attacks, in which bad actors steal encrypted data in hopes of using quantum computers to decrypt it in the future. By harnessing quantum technology, telcos can equip themselves with tools to combat these sophisticated threats; QKD, for example, allows communicating parties to be alerted any time an intruder attempts to eavesdrop on an encrypted exchange.
Advances in quantum technology also have the potential to exponentially increase computational performance and the speed of communication. But despite telco leaders’ enthusiasm, very few organizations are actively deploying quantum at scale.
To move beyond internal discussions and test-and-learn pilots, telcos will need talent with expertise in quantum technology (such as quantum algorithms, computer architectures, superconducting circuits, and machine learning); high-performance computing, to engage with the ecosystem on pilots in areas like QKD; software and hardware security and crypto-agility, to prevent cyberattacks and manage cryptography transformations as threat levels and standards evolve; network engineering, to design hybrid classical/quantum networks, codevelop and pilot critical equipment for optical communications, and explore the potential of satellite and fiber for quantum communications; and product management, to monetize quantum networks and security.
Engineering and operational capabilities specific to traditional network optimization methods, using classical computation, will become less relevant.
Designing a telco talent road map
To get ahead of these seven tech trends, telcos will need to develop long-term strategies for cultivating, attracting, and retaining the right talent, with the right skills. Leading organizations will prioritize diversity at every stage, from strategy design through implementation. They will also engage business leaders from the outset, ensuring that they help shape the tech talent strategy—and that they own it.
Phase one: Identify the talent implications of business strategy
When it comes to incorporating new technologies, one of the most common challenges telcos face is targeting investments directly to those capabilities that fully align with their broader business goals. In the context of a telco’s business strategy and competitive landscape, some of the seven tech trends outlined above may be more beneficial or immediately relevant than others.
Telcos can start the process of getting the right tech talent in place by defining their vision for business success over the next three to five years. They can then conduct thorough business impact assessments of the seven tech trends to evaluate how each trend might fuel ambitions like expanding market share, enhancing customer experience, or increasing operational efficiency. Telcos can then work backward to pinpoint the skills and capabilities required to lean into the technologies most pivotal to meeting business objectives. Some examples of the different approaches a telco might take depending on its primary goal include:
- A telco aiming to boost its B2B leadership might opt to invest heavily in edge computing and quantum technology. These tech trends enable faster data processing and secure communications, which are particularly attractive to business clients.
- A telco aiming to distinguish itself through superior customer experience might prioritize AI, which can enhance customer engagement and customer service through personalized offerings, automated responses, and proactive outreach.
- A telco focusing on global reach and seamless connectivity might prioritize ever-expanding connectivity by investing heavily in 6G. It may deprioritize trends like quantum technology, which may not immediately contribute to expanded network coverage.
- A telco seeking to increase network flexibility while reducing costs might prioritize xRAN. Such a telco may place less emphasis on ever-expanding connectivity, as its main goal would be improving the existing network architecture rather than expanding reach.
- A telco looking to position itself as a technology pioneer might prioritize quantum technology. It may place less importance on trends like xRAN, as its primary focus would be on pushing the boundaries of technology rather than restructuring the existing network.
Phase two: Assess talent gaps and define talent priorities
Once operators are clear on the work that needs to be done and the skills and capabilities required to do it, they can gauge the size of the talent gaps that will need filling and determine which types of talent to prioritize.
They can start by mapping out current hiring and attrition patterns against forward-looking assessments of how demand for each role will change. For operators that are serious about diversifying the workforce, it will be important to understand how demographic variations play out across the talent pool.
At this stage, telcos can also look at broader shifts in supply and demand for different types of roles across the economy. In addition to examining how their hiring rates must evolve, it will be important to consider the sheer numbers involved.
Here are some questions telcos might consider when determining which talent pools to prioritize:
- What is the business value at risk if we don’t secure this talent pool?
- How scarce is the market for this type of talent?
- How difficult is it to upskill existing or readily available talent to fill this gap?
- How demographically diverse are the traditional sources for this talent pool?
By clarifying which skills are most critical and which are most easily attainable, operators can focus investments in the areas that matter most. Over time, they can adjust and expand into other talent pools.
Phase three: Design tech talent strategy and operating model
After clarifying their talent needs, telcos can begin formulating a comprehensive talent strategy. This should include a portfolio of innovative initiatives to hire, train, and retain tech talent, as well as outline the necessary infrastructure and other enablers. Key enablers include flexible work arrangements, learning and development platforms that function as hubs for training resources and online courses, and talent management solutions that span the employee life cycle, from recruitment through succession planning.
When it comes to tech talent, it is difficult to overstate the importance of long-term thinking. Despite recent layoffs at high-profile tech companies, the tech talent shortage persists across industries and could last longer than expected. Tech unemployment in the United States is 2.1 percent—just over half the overall unemployment rate of 3.8 percent. Close to three-quarters of US tech sector workers who were laid off in 2022 found a job within three months, according to data from Revelio Labs. And the demand for tech talent will continue to soar.
Because tech talent pipelines tend to be particularly homogenous, telcos risk regressing on their overall diversity goals if they fail to identify new talent sources. In the United States, just 21 percent of those graduating with a bachelor’s degree in computer science are women, 9 percent are Black, and 11 percent are Latino.
By thinking ahead, operators can open up the available solution space and creatively expand their talent pipelines into nontraditional pools and geographical areas. Solutions like these take time but can turn the tide—helping the sector shed its reputation as hierarchical and stodgy, and reposition itself as an agile, nimble, tech-forward employer of choice.
Reimagine career development and the employee value proposition. As enablers of the most exciting technologies on the horizon, operators have a powerful opportunity to reshape how they are perceived in the talent market. Telcos that pay close attention to tech talent’s unique needs, desires, and priorities can reposition themselves to attract the caliber of talent that has seemed hopelessly out of reach for many.
Recent McKinsey research shows that digital talent places a premium on career development and advancement potential—prioritizing these on par with compensation. With new technologies emerging at a dizzying pace, tech workers crave opportunities to learn from experts and peers and to build skills by rotating among different projects and teams.
Our research also found that tech talent values purpose and meaningful work. They want to understand how the tasks that fill their own days support the mission of the broader organization. By creating innovative career development opportunities and a clear sense of purpose, telcos signal that they’re attuned to what tech talent wants.
Build holistic university partnerships. Across industries, leading organizations are reimagining how they work with universities. They are moving beyond discrete internship programs and transactional recruiting efforts that target graduating seniors—instead, they are establishing durable pipelines designed with their specific talent and diversity needs in mind. Done well, these partnerships also provide students with highly sought-after skills and enhance the communities in which telcos operate.
Leading operators are building detailed models to identify the best target universities for such partnerships. These models assess universities’ ability to deliver large volumes of high-quality, diverse talent. They also assess the operator’s ability to compete with other companies and sectors for talent at each university, based on factors including geographical proximity, alumni presence at the telco, network presence and performance on campus, and ability to meet graduates’ salary expectations.
Holistic university partnerships can take different forms. Qualcomm and several of its top executives or directors have invested heavily over the years in a single university, University of California San Diego; since the late 1990s, company cofounder Irwin Jacobs has invested more than $300 million in the university’s engineering programs, healthcare system, and School of Global Policy and Strategy through scholarships and other support for students, faculty, and research.
In another approach, Apple’s HBCU C2 initiative, launched in partnership with Tennessee State University, creates coding centers for learners of all ages at historically Black colleges and universities nationwide; it has already expanded into 45 educational institutions. And Lockheed Martin has partnered with the University of Colorado Boulder to fund a research center focused on radio frequency and space systems as well as an engineering management certificate program.
Launch or join tech talent consortiums. Organizations are increasingly seeing the value of partnering with businesses, government agencies, and other players to solve collective talent challenges. Tech talent consortiums, which provide learners of all ages and backgrounds with skill-building opportunities, are promising models for such collaboration. They may be regional or global in nature, and while some focus on specific industries, others take a broader lens to developing cross-industry tech talent.
Telcos may choose to start their own consortium or join one that already exists—like the National GEM Consortium (GEM), which recruits demographically diverse students interested in pursuing graduate-level degrees in applied science and engineering and matches them with member companies in need of their skills. GEM fellows receive stipends and paid summer work experiences with companies including Amazon, Meta, Ford, and Tesla.
As technology continues to evolve, so should telcos’ strategies for capturing tech talent. Early movers give themselves the runway to experiment with creative strategies that may pay dividends in the long run—and to adapt and hone these strategies based on rigorous evaluations.
Telcos’ future success rests on their ability to make the most of the opportunities that emerging technologies present. Multiple elements will need to fall into place, and telco leaders are developing ambitious transformation plans. But talent strategy is also a critical part of the equation, and it’s often not getting the attention it deserves. Business leaders would be well-advised to take the reins in shaping and steering tech talent strategy to ensure they have the people to get the job done.
