Om Routray

How will automation impact jobs?

Blog Post created by Om Routray on Jun 12, 2017

The jury is out will remain out for some time if we go by numbers and not speculation. During the last few months, sheer speculation and back of the envelope calculations have fed the panic in the job market.

 

During the debates about H -1B visas, NASSCOM President, R Chandrasekhar said in one of the interviews that hype has gone much the reality. Every year only 20,000 IT professionals go to the US on H1-B. Even if that number dwindles, which has not happened so far, its impact won’t be significant for an industry that employs nearly 4 million. We are approaching automation in much the same way.

 

Will automation result in job losses? Will it create more jobs? Will it call for an industry wide realignment that will go beyond the existing skills, job roles, efficiency markers and ROI parameters? We don’t know yet but there are a few signs.

 

In an interview with Forbes, Vishal Sikka of Infosys highlighted the following datapoints:

 

About 65% of Infosys’ delivery workforce generates 55% of revenues from areas which are rapidly commoditizing. There is tremendous margin and cost pressure and these jobs are prone to automation. Dr Sikka expects about 75% of these jobs to be replaced by automation over the next five years. The balance 35% of Infosys’ workforce generates 45% of revenues. This segment grew 20% in FY2017 and it has close to 30% margin. The revenue productivity per employee in the first category is US$48,000/year while that in the second category is US$72,000/year.

 

In a recent report by Kotak on digitization, it is said Infosys “aims to leverage automation to enable transformation, far exceeding the basic objective of cost savings.” It is not just a statement, it is the way automation works. It will fundamentally change the way companies operate. Let’s look at another example: as per a report, Maruti has one robot for every 4 workers at its Manesar & Gurgaon car plants. For a labour intensive industry, it should have been catastrophic for workers. But that has not been the case.

 

We need to look at processes being automated, new job roles and some use cases before we can say anything specifically about the impact of automation. Till then, your guess is as good as mine.

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