Opportunities or Obstacles? Sangmin Aum and Yongseok Shin published an article to draw on key insights from working paper "The Labor Market Impact of Digital Technologies", Digital technologies have become a driving force in reshaping today’s labor market, influencing how startups grow, how founders build their teams, and how investors evaluate opportunities. As automation, artificial intelligence, and other digital tools rapidly evolve, understanding their impact on workforce dynamics is more important than ever for tech entrepreneurs and stakeholders.
The paper offers a comprehensive analysis of how digital innovations are changing labor demand patterns, affecting the movement of talent, and altering the balance between opportunities and challenges in the tech startup ecosystem. By exploring these findings, we aim to provide actionable insights for founders and investors to better navigate the digital labor landscape.
The Shift from Coders to Creators
Digital transformation means startups no longer just need coders, they need versatile creators who combine technical skills with creativity, problem-solving, and strategic thinking. AI tools automate routine coding, allowing startups to focus on innovation and product development. Strong teams often consist of individuals who think outside the box and adapt quickly to change, making it crucial for founders to seek talent with creative and flexible mindsets.
The NBER study finds that in the IT services sector, adoption of big data technologies is linked to an 18.8% increase in job vacancies, highlighting a strong demand for workers with advanced digital skills. This demand contrasts with manufacturing and non-IT services sectors, where the impact of digital tech on new job openings is less pronounced or more neutral. This shows that the labor market impact of digitalization is highly sector-specific, a nuance that founders should keep in mind when planning their teams.
Key Skills in Demand for Startups
This study highlighted skills related to AI, machine learning, data analysis, and cloud computing are in high demand. However, equally important are soft skills such as adaptability, collaboration, and creativity to build agile and innovative teams. Hiring a balanced mix of technical and interpersonal skills helps startups stay resilient in a fast-evolving environment.
Interestingly, the analysis also reveals a paradox: while employment for some ICT professionals may decline, vacancy rates for these roles increase. This suggests that digital transformation is not simply eliminating jobs but reshaping labor demand toward new skill sets. For startups, this means continuously investing in talent development and upskilling is essential to keep pace with evolving technology demands.
Talent Mobility and Competition
Big Tech companies often fiercely compete with startups for skilled labor. Digital platforms increase talent visibility, making it easier for large firms to recruit startup employees. Therefore, a strong company culture and career growth opportunities become critical for startups to retain talent, often outweighing higher salaries offered by larger firms.
Opportunities and Challenges for Founders
Digital tech opens many opportunities, such as leveraging AI for faster development, reaching broader markets through digital platforms, and accessing advanced analytics for decision-making. However, securing funding for these technologies and protecting innovative ideas from acquisition by Big Tech remain challenges. Founders need a flexible long-term vision to harness opportunities without losing control over their innovations.
Digital technologies present both opportunities and challenges for tech founders navigating today’s labor market. While AI and automation enable faster innovation and broader market access, competition for skilled talent remains fierce, especially with Big Tech’s growing influence. Founders who strategically build agile, creative teams and foster strong cultures will be better positioned for sustainable growth. With the right preparedness and strategy, startups can not only survive but thrive amid fierce competition and rapid change. Investing in talent development and technology lays the foundation for a sustainable and innovative future.
References:
Sangmin Aum. Others. (2025). "The Labor Market Impact of Digital Technologies" (Link)
Editor: Della Namira
