Reskilling or Redundancy ? The Strategic Imperative of Workforce Transformation in Sri Lanka
The rapid implementation of AI practices
has resulted in a widening Velocity Gap which emphasizes that technological
adoption substantially outpaces adaptability. In a Sri Lankan context this disparity
is evident as firms are swiftly investing in digital transformation without partiality
towards investments in employee development.
Figure 1: Disruption to core
skills by 2030
Source: (World Economic Forum,
2025)
As exemplified in figure 1,
global evidence shows that 39% of employee skills are deemed to change by 2030,
highlighting on the gap between technological development and workforce
readiness (World Economic Forum, 2025).
From a theoretical overview the Human Capital Theory clearly emphasizes that employee skills and knowledge are central to a firm’s productivity and long term sustainability (Becker,1964). Moreover, organizations in Sri lanka perceive training as a cost rather than a strategic investment which prospers all stakeholders. This aspect has a severe contradiction with the Dynamic Capabilities Framework which entails a firm’s unique ability to sense opportunities and achieve them through strategic investments and alter internal capabilities to build competitive advantage (Teece, Pisano and Shuen,1997). According to (Garavan et al., 2019) firms that dynamically devote to employee reskilling have the ability to quickly respond to technological advancements and disruptions.
The challenge is further disrupted
by the obsolete nature of the psychological contract where employees imminently
expect organizations to provide them with career growth and continues learning
in exchange for their contributions. When
these aspects are not met, employees tend to show disengagement (Rousseau,
1995). The pattern is clearly evident with professionals in Sri lanka, specially
in the IT sector where employees prefer to work for companies that provide them
with rigid development pathways (De Silva, 2020). This trend has a critical
impact on organizational resilience and skills shortages in various industries.
Sector specific examples further illustrate
this imbalance, Banks such a Hatton National Bank (Hatton National Bank PLC,
2025) and Commercial Bank of Ceylon have significantly digitalized their services
via Chatbots and digital banking platforms (Commercial Bank of Ceylon PLC,
2023), yet they have not considered workforce transformation has a priority. Simultaneously in the apparel sector, MAS holdings
which is noted to be the largest apparel manufacturer in South Asia has implemented
automation initiatives and data driven process, requiring an urgent need for technical
skill sets rather than manual skills. These transformations expose the imminent
need for coordinated reskilling initiatives (MAS Holdings, 2024).
A collective Human Resource strategy
is therefore vital. Organizations should heavily show emphasis on upskilling
and reskilling frameworks integrating them with long term objectives and also encourage
a learning culture with leadership commitment.
Figure 2: The ROI of Upskilling and
its Impact on Retention and Turnover
Source: (LinkedIn, 2023)
As illustrated in Figure 2, firms
that immerse in upskilling often experience higher employee retention and
reduce turnover highlighting the importance of constant learning and development
(LinkedIn, 2023).
Conclusion
At its core, the choice between
reskilling and redundance is a strategic aspect shaping the future trajectory
of employees. For many organizations in Sri Lanka, continuous attention and
investments towards human capital is not an option but an essential aspect for
viability and survival in an economy vehemently driven by the rise of
Artificial Intelligence.
Becker, G.S. (1964) Human Capital: A Theoretical and Empirical Analysis. Chicago: University of Chicago Press.
Commercial Bank of Ceylon PLC
(2023) Leading through innovation. In: Annual Report 2023 –
Integrated Report: Management discussion and analysis. Available at: https://combank2023.annualreports.lk/integrated_report/management_discussion_and_analysis/leading_through_innovation.html
(Accessed: 5 April 2026).
De Silva, S. (2020) ‘Skilled
migration and brain drain in Sri Lanka’, Journal of South Asian Studies,
43(2), pp. 245–260.
Garavan, T.N., Carbery, R. and
Rock, A. (2019) ‘Mapping talent development: definition, scope and
architecture’, European Journal of Training and Development, 43(1/2),
pp. 1–21.
Hatton National Bank PLC (2025) Building
a future-ready workforce: HNB completes strategic HR transformation. 3
April. Available at: https://hnb.lk/about-us/news/building-a-future-ready-workforce-hnb-completes-strategic-hr-transformation
(Accessed: 6 April 2026).
LinkedIn (2023) Workplace
Learning Report 2023: The ROI of Upskilling [infographic]. Available at: https://learning.linkedin.com/resources/workplace-learning-report
(Accessed: 6 April 2026).
MAS Holdings (2024) Humans are very much at the center: Dineli Jayasekera on building an AI-augmented HR strategy that lasts. Available at: https://masholdings.com/blogs/humans-are-very-much-at-the-center-dineli-jayasekera-on-building-an-ai-augmented-hr-strategy-that-lasts/ (Accessed: 6 April 2026).
Rousseau, D.M. (1995) Psychological
Contracts in Organizations. Thousand Oaks: Sage.
Teece, D.J., Pisano, G. and
Shuen, A. (1997) ‘Dynamic capabilities and strategic management’, Strategic
Management Journal, 18(7), pp. 509–533.
World Economic Forum (2025) The
Future of Jobs Report 2025. Geneva: World Economic Forum. Available at: https://www.weforum.org/publications/the-future-of-jobs-report-2025/
(Accessed: 6 April 2026).
It is necessary for companies to reskill themselves for survival in the future by adapting to technology. Nevertheless, workers who have been doing manual jobs all their lives may find it difficult to cope with such developments, especially older employees who have served for longer periods within organizations.
ReplyDeleteYou are on point on your emphasis towards the fact that technology driven reskilling is vital for a firms survival and this could be an dauting perspective for employees who have heavily relied on manual skills for decades. Organizations should follow a balanced approach where they rapidly invest not only in digital training but also in measures such as gradual transitions and recognition of the value senior employees bring to the firm. This approach will enable employees to understand that reskilling is less about replacing people and more about supporting them to adopt while still showing emphasis to their valued contributions.
DeleteThis is a sharp take on the velocity gap in Sri Lanka. Many local firms are upgrading their tech but neglecting the "human operating system." When training is treated as a cost rather than an investment, the psychological contract breaks—leading top talent in sectors like IT and Banking to leave for markets that actually prioritize their growth. given the liquidity constraints many Sri Lankan firms face, what low-cost reskilling models could realistically bridge this gap?
ReplyDeleteA sharp observation Harshani, many organizations in Sri lanka often upgrade their technological platforms but show less emphasis on human operating systems. Low Cost approaches such as micro learning modules, Peer to peer learning circles, Job rotation and structured training via tools such as edX and coursera will aid firms to tackle this complex issue. The driving fact would be organizations to identify training as an investment in retention rather than an impending cost. Modest initiatives could reframe the mindset of employees and help preserve the psychological contract and radically reduce talent flight.
DeleteA thought-provoking post! The contradiction between Sri Lankan firms racing to digitalize while simultaneously treating training as a cost rather than an investment is a fundamental strategic failure. The Dynamic Capabilities Framework makes this point well — competitive advantage cannot be sustained through technology alone without continuously building the internal human capabilities to match it. Until leadership genuinely commits to learning culture as a business priority rather than an HR checkbox, the reskilling gap will only widen.
ReplyDeleteYour comment carries a critical contradiction. The Dynamic capabilities framework emphasizes that competitive advantage is not about achieving technological advancements but building a culture which will enable the internal human capabilities to match it. When the top level management perceives training as a cost, the psychological contract becomes obsolete and the reskilling gap further widens. Creating a genuine learning culture within the organization while showing importance to employee development will be the only way to sustain digital transformation in the future.
DeleteA sharp and insightful analysis of the growing gap between rapid digital transformation and slower workforce readiness in Sri Lanka. Your integration of theory with real sector examples clearly shows that reskilling is no longer optional, but a strategic necessity for long-term sustainability. So, How can Sri Lankan organizations balance short-term cost pressures with the need for long-term investment in employee reskilling?
ReplyDeleteThank you for your question. Firms in Sri lanka can balance short term expenditures and long term reskilling by a targeted approach which concentrates on key skill areas linked to digital transformation. Utilization of cost effective measures such as digital learning, internal training and fruitful partnerships with educational institutions will enable firms to tackle this issue. Organizations that embed reskilling to their long term strategy will remain competitive and viable whereas firms that treat reskilling as an operational expense will be less competent with a fragile structure.
DeleteReskilling is a strategic imperative rather than an optional HR intervention in Sri Lanka’s AI-driven transformation. From a Human Capital Theory and Dynamic Capabilities perspective, organizations that continuously invest in upskilling and reskilling can adapt to technological disruption, while those treating training as a cost risk redundancy-driven workforce decline and reduced competitiveness.
ReplyDeleteI completely agree with the fact that reskilling should be perceived as a strategic priority rather than a separate HR initiative. As emphasized in the Human Capital Theory and the Dynamic Capabilities perspective, companies that constantly capitalize in developing their employees are better equipped to tackle technological changes and build a competitive advantage. This supports the ideology that reskilling is fundamental not only for workforce development but also for organizational sustainability.
DeleteThat’s a powerful and very timely topic—especially for Sri Lanka as industries adapt to automation, digitalization, and shifting economic pressures. I like how your blog frames the issue as a strategic choice between reskilling and redundancy, because it highlights the real tension organizations are facing today.
ReplyDeleteYour focus on workforce transformation is spot on. Rather than seeing employees as replaceable, forward-thinking organizations recognize the value of reskilling to retain institutional knowledge, reduce hiring costs, and build long-term capability. In the Sri Lankan context, where talent development pipelines can be limited, investing in existing employees becomes even more critical.
You have highlighted the key point well, reskilling isn’t just about saving jobs, it’s about preserving institutional knowledge and building long term capability. In Sri Lanka, where talent pipelines can be limited, investing in existing employees is indeed critical. Forward thinking organizations that prioritize workforce transformation through reskilling will be better positioned to adapt to automation and digitalization while maintaining stability and competitiveness.
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ReplyDeleteGreat article! It clearly highlights the strategic importance of choosing reskilling over redundancy, especially in today’s rapidly changing business environment. I like how you emphasized that investing in employees not only builds resilience but also strengthens long-term organizational performance.
ReplyDeleteHow can organizations balance short-term cost pressures with long-term investments in reskilling?
Reskilling builds resilience and longterm performance, but short term cost pressures often push companies toward redundancy. A practical way to balance both is to treat reskilling as a phased investment by starting small with critical skill areas, use internal trainers or digital learning platforms to reduce costs, and align programs directly with future business needs. Organizations can also combine reskilling with redeployment, ensuring employees contribute value while learning new skills. This way, companies manage immediate financial constraints while still building a workforce that is adaptable and future ready.
DeleteGood Topic, very relevant topic for today’s HR world. In Sri Lanka also, many organisations are now balancing between reskilling employees and making redundancy decisions based on cost and future skills needs.
ReplyDeleteFrom HR perspective, the best approach is always prioritizing reskilling/upskilling first, because it protects talent and builds a future-ready workforce before thinking of redundancy
I agree with you, reskilling and upskilling should always be the first priority, especially in Sri Lanka where retaining talent is critical for long term competitiveness. By investing in employee development, organizations not only protect their existing workforce but also build future ready skills that reduce the need for redundancy. While cost pressures are real, companies that focus on reskilling create stronger loyalty, preserve institutional knowledge, and position themselves better to adapt to changing skill demands. Ultimately, this approach balances immediate challenges with sustainable growth.
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