Automation – Indian IT May Profit at the Cost of Jobs, Upskilling May Deter Job Loss

In 2012, the Indian IT players were busy playing on the post-downturn reinstated burgeoning outsourcing market, and adopting business models of regional diversification. Whereas, at the same time, there were a few companies that were busy creating avenues to encroach on the IT opportunities through their technology platforms. While software players were betting on engineering freshers for profitable outsourcing projects, the other set of game changers was wagering on robots and humanoids. In fact, Frost & Sullivan predicted the automation market to grow to $2,000 Million by 2016. Three years down the line, the realization has dawned. Cost structure and change of geographical targets can no more be a special USP to augment business, instead the new model zeroes on automation and upskilling of the work force. Technology is changing fast, and with the emergence of automation of the redundant processes, the $150 billion Indian IT industry faces a daunting task of creating new USPs, wherein revenues are earned based on volumes than on FTE hours.

Once Automation took a firm root as a business model, outsourcing projects began to dwindle and top IT firms have begun witnessing single digit growths. The threat was imminent, as through robotics and humanoids, companies can deliver the IT projects at a cost that is less than one-fourth the billing rates of engineers from top IT firms. Moreover, by building robotic capabilities onshore, the need for outsourcing lost the luster. Currently, the Indian IT industry is fervently looking to automate their processes within the next five years.

Operation-Level Automation – A Key Threat to Job
at all Levels

According to the report - "Process Automation & Instrumentation Market by Instrument (Pressure, Temperature, Level and Humidity Transmitter), Solutions (PLC, DCS, SCADA, HMI, APC, MES and Safety Automation), Application, and Geography - Global Trend and Forecast to 2020" - the process automation and instrumentation market is expected to reach $81.69 Billion by 2020, at a CAGR of 4.68% between 2015 and 2020. In fact, within the next four years, as per NASSCOM’s Chairman, machines will replace one-fourth of the jobs within the Indian IT industry. New roles will emerge for man to manage the machines, but the number of machines replacing human will exceed the number of man managing machines.

Various levels of automation have found their place within the IT industry. Robotic process automation (RPA) is expected to impact 30-40% of total business process management (BPM) spend. RPA reduces 35-65% cost for onshore process operations with an investment recovery period of only six to nine months. RPA has been playing a key role in automating banking and financial services (BFS) projects and the benefit of that is its applicability without any concerns for scalability. While RPA helps the IT industry maintain the equilibrium in revenue-profit ratio, the bottom level of the pyramid will have concerns, as 20-25% of the employees currently placed within the IT services and BPO industry are employed in entry-level jobs without any analytical scope. Hence, with RPA in place, the need for the low-skilled workforce will turn obsolete.

Cognitive computing, autonomics and artificial intelligence are other models, which are increasingly adopted within the industry. For instance, IBM’s Watson will be useful in a healthcare setting. It will aggregate information, such as a patient’s history, articles or journals published, and information on various tools and best practices surrounding a particular condition, and will further analyze the vast information to deduce a remedy. However, at the same time, it will reduce the need of subject experts required for similar data aggregation. While the primary concern is the freeze or slowdown in hiring of freshers, the current scenario will influence the job market across all levels. According to NASSCOM, the IT industry needed almost 50% less engineers to generate every additional $1 billion of export revenue in 2015-16, compared to that of 2009-10.With the decline in human intervention, the mid-level managerial role too will lose its significance.

The Next Phase – Workforce Upskilling

Emily Dickinson’s thought -“Not knowing when the dawn will come, I open every door” – rightly portrays the current need of the workforce in the industry. The looming uncertainty does not clearly determine the fate of the workforce. As per a McKinsey study, people management and development has only 9% automation potential; at the same time, decision making or planning roles have just 18% automation potential. To keep up with the changing models, skill enhancement is key. One must be open to garner new skill sets and open every door of opportunity.While robots function to fulfill mundane requirements, human intervention will be more crucial to infer new possibilities and manage the automated environment. Through domain knowledge and relevant technological skills, employees will be aware of the technological usage impacts and aptly determine the appropriate application of the technologies within the processes for business benefits.