The state of technology of a country is a reflection of the advancement of the economy. Even in India, where there is still a massive scope for development, the importance of technology is not doubted. At the inception of the Nehru era in the 1950s, the focus was on research and development and self reliance in the capital goods sector. During the 80s, the economy had shaped into a conductive environment for manufacturing and innovation proficiency, and this process accelerated further after the reforms of 1991. The progress that India has made in the IT industry since then is not hidden from the world. While the world celebrates better quality of life, have we neglected to identify the darker side of this seemingly colourful transition?
UNDERSTANDING TECHNOLOGICAL UNEMPLOYMENT
Technological unemployment is an evil that is slowly creeping up on us, and being naive creatures, we are slowly moving towards the impending doom. It may not be as dramatic as I made it sound, however it is a vital concern nonetheless. As the economist John Maynard Keynes coined it, “technological unemployment is the loss of jobs due to technological change”. With increased automation and innovation, machines are replacing humans in all sectors of the economy. So, while the economies are growing faster than ever, there is a bittersweet taste that this progress leaves behind. It can be easily said that the advancements in technology which provided a lot of jobs to people in India are now taking those jobs away from them. Let us see how…
The implications of technological advancements for the agricultural and manufacturing sector are somewhat obvious. However, the same cannot be said for the service sector. As the primary and secondary sectors are becoming increasingly mechanised, there is a ‘push’ effect of the workforce out of these sectors, and ‘pull’ effect into the tertiary sector, which is responsible for the major portion of the GDP. Therefore, in developing countries like ours, where the potential for the IT industry is tremendous, it may not be such a huge concern.
Developed western economies have traditionally outsourced their service delivery tasks to India, as India provides a shining source for cost effective and skilled labour in the IT sector. However with time, increased use of intelligent automation and robotics has now started to replace humans in routine and relatively low skilled IT tasks. Western countries which were once turning to India for their IT needs, now prefer their highly intelligent machines to do it.
Going into more detail, if labour can be classified into low- skilled, medium skilled and high skilled, the biggest threat is to the low skilled workers. Their processes have low autonomy and are routine and clerical in nature. As a recent study by Horses for Sources (HFS), India, which offers a majority of non customer facing labour intensive services, will lose 28% (640,000) low skilled jobs by 2021, due to Robotic Process Automation (RPA). This is an overwhelming statistic considering that these workers possess a very specific skill set and their relevance is somewhat limited in other sectors of the economy.
Supporters of technological advancement reasonably argue that with change comes opportunity. If on one hand there is destruction of low skilled jobs brought about through RPA, then on the other hand, there are also new high skilled jobs created with changing business models. According to the report by HfS, India will experience gain of 160,000 high skilled jobs by 2021. This is more than offset by the loss of 6.4 lakh low skilled jobs. So, India is predicted to face net of 14% decline in its workforce. Not to mention, this accounts only for the current workforce. According to a recent study conducted by Economic Times, there are additions of 15 lakh new engineers every year into the job market, and a demand for only 2-2.5 lakh per year. These additions clearly cannot fully be absorbed by the IT sector, and our obsession with creating engineers out of our children doesn’t seem to dwindle anytime soon.
HOW THREATENING IS IT?
One can argue that the technology advancements comes at a price and just because superior technology and intelligent automation is available, doesn’t mean it will be adopted by big corporate enterprises or provide the ROI. The price of the superior technology has automatically preserved the demand for labour so far. However, upon closer examination of the supply side, we can find that the market of innovators and service providers are slowly becoming more competitive. The threat of extinction from the market is a direct incentive for them to produce better technology at extremely competitive costs. Hence, as automation becomes cheaper, the threat to human labour is amplified.
IS THERE SOMETHING WE CAN DO?
There is a need to relocate the victims of the collateral damage as some studies have predicted that there will be a hollowing out of the medium skilled workers. In a developing country like India, where the government and banking processes have just begun to incorporate technology and go paperless, these seem to provide some solace. The Government of India is adopting e-Governance and digitization to transform the transport, passport and health departments, among others, and can provide refuge to the low and medium skilled workers. As mentioned in an article by NewGen, doing this will bring more efficiency in administration, higher transparency, building of knowledge base and will improve inter department coordination, and will reduce the scope for corruption.
The banking sector, too, is no stranger to automation. In India, there is still massive potential to adopt IT processes in banking. This is only accelerated by the need to improve efficiency and reduce costs as the banking sector becomes more competitive. This will also help to be better incorporated with the world banking system. Entrepreneurship is also on the rise in India. New avenues for business and the possibility of new industries lead to new start-ups opening up on a daily basis, and there is a perpetual need for engineers and IT professionals of all levels. According to Economic Times, the hot professions will include web production leads, data scientists, product developers, actuary, research and development engineers, among others.
Another, more fundamental argument that might bring some relief is that the population is ever growing. We are now beyond the 7 billion mark, and the needs of 8 billion are exponentially greater than the needs of 7. With such a constantly expanding economy comes a myriad of new opportunities for entrepreneurship, business processes, innovation and technology.
Going forward, those currently employed in the IT sector have to gear up and make the most of the inevitable change. Higher education in India needs to step up to enhance the quality of education and produce highly skilled professionals in an increasingly competitive world. The competition comes not only from other professionals, but also from highly intelligent machines. The future is yet to unfold, and with the unknown comes the uncertain.
This article is authored by Kriti Mamgain, under guidance from Praveen K. Dewan, Managing Partner Antal International India. His office based in Noida provides executive recruitment services in the highly specialized IT and ITES sector. He specializes in a wide range of disciplines like
- General Management
- Project Management
- Account Management
- IT Technical
- IT Product Management
- IT Architecture and Engineering
- IT Operations
- IT Pre-Sales