To close the digital skills gap, try retraining instead of hiring

“We see many companies today laying off, restructuring, and at the same time hiring new people,” says Adecco Group CEO Alain Dehaze. “It’s quite strange.”

Such aggressive workforce churn within companies was a rising norm well before the coronavirus pandemic, as the rapid pace of technological and market change made agility a top priority. Dramatic shifts driven by COVID-19—such as downturns at airlines and restaurants, and surging demand for digital services—have only accelerated the trend.

But Dehaze, whose company provides job placement and temporary staffing services worldwide, says there’s a much better option as organizations’ needs continue to shift: retraining existing employees.

“It is much cheaper, much more socially responsible, much more effective [and] productive, to look at your own workforce,” Dehaze said during Fortune’s virtual Global Forum on Tuesday.

The social costs of the long-term trend toward increased job instability include growing political extremism. But even for the most pragmatic and mercenary executives, the cost advantage of retraining over outside hiring is attention-grabbing. According to Dehaze, the cost of a new hire can run to $100,000, while retraining an existing employee costs closer to $35,000.

And the possibilities for retraining are much broader than conventional wisdom might hold, particularly when it comes to older employees. “We found that many people who were very long tenured made a very easy switch” to new skill sets, said panelist Deanna Mulligan, board chair and former CEO of Guardian Life Insurance. Mulligan saw the flexibility of experienced and older workers firsthand when Guardian Life retrained employees on new cloud data tools, and other survey and research data support the point.

There’s an even bigger reason to cultivate skills internally: There may simply be no other option. Recent research estimates that talent shortages—including for digital skills and roles relying on emotional intelligence—could lead to 85 million unfilled jobs around the world by 2030, stifling growth. To get ahead of that chilling trend, “organizations need to commit to reskilling as a competency,” said panelist Liz Hilton Segel of consulting firm McKinsey.

Of course, a talent shortage at that scale can’t be addressed entirely within organizations. Dehaze described regulatory and management innovations that could make retraining and flexibility easier, such as frameworks for temporary employee transfers between companies. Adding new workers is key as well, with Mulligan highlighting a new partnership between Guardian Life and the City University of New York to offer digital skills training—with several trainees already in internships at Guardian.