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Automation steals IT services and BPO jobs

Automation steals IT services and BPO jobs

By Charles F. Moreira, Editor

Automation puts at risk the jobs of low-skilled IT services and business process outsourcing (BPO) workers, not only in India but also in the United States and elsewhere too.

Head Hunter’s India founder-chairman and managing director K Lakshmikanth saying that up to 600,000 of India’s IT and BPO workers could lose their job over the next three years, according to a Press Trust of India report carried by India’s Economic Times of 14 May 2017, whilst according to an article by Phil Fersht in the Factor Daily of 15 February 2017, India is set to lose 640,000 low-skilled positions by 2021 or a drop from 2.28 million low-skilled service workers in 2015 to 1.64 million in 2012, which is a pretty hefty drop, given that around 3.8 million people work in the industry in India.

However, it’s even worse in the United States where 770,000 of such jobs will be lost over the same period – i.e. from 2.34 down to 1,57 million. Also over the same period, the UK will lose 200,000 (740,000 down to 540,000) of such jobs, whilst in the Philippines, the number of such jobs will drop from 730,000 down to 670,000 or 60,000 over that period, according to tables provided by Phil Fersht.

So what are IT services and BPO and what are these low-skilled jobs which which are at risk?

According to respected IT industry analyst Gartner, IT services is the application of business and technical expertise to enable organisations to create, manage and optimise or access information and business processes. The IT services market can be segmented by the type of skills that are employed to deliver the service (i.e. design, build, run). Business process services is one of the categories of IT services, the rest being application services and infrastructure services, and if these services are outsourced, they are referred to as BPO, applications outsourcing (AO) and infrastructure outsourcing.

The kinds of automation which will replace workers in these jobs are:-

  • Robotic Process Automation (RBA) – which involves digitising the process of collection of unpaid invoices which mimics the currently manual activities in the RBA software, the integration of electronic documents and the generation of automated e-mails to ensure that the whole collections process is run digitally and can be repeated in a high-throughput, high-intensity fashion.
  • Cognitive Computing – where an insurance adjudication system assesses claims, based on scanned documents and available data from similar claims and evaluates insurance payments.
  • Autonomics – i.e. a virtual support agent which continuously learns to handle queries and creates new rules or exceptions as products evolve and queries change.
  • Artificial Intelligence (AI) – i.e. where an AI system which manages a fleet of self-driving cars or drones which deliver goods to clients, manages after-market warranties and continuously improves the supply chain.
  • It’s pretty obvious that the kinds of tasks the above four types of automation perform are clerical and administrative in nature, currently performed by humans on IT-based platforms such as computers, communications and control systems.

Such jobs are also called “back-room” or “back-office” jobs and such workers are not really “IT workers”, any more than a journalist writing an article on a computers is an “IT worker”. Well it seems that the media has gotten into the habit of describing anyone who works for an IT company an “IT worker”, including the receptionist, telephone operator, tea lady or janitor.

Anyway, from 20% to 25% of the world’s IT services and BPO workers are based in India and a significant proportion of them are low-skilled workers conducting simple entry-level, process-driven tasks that require little abstract thinking or autonomy) and such jobs are most at risk from RBA.

Such workers’s jobs are most at risk from automation, unless they can upskill themselves to move up the value chain to perform mid-to high skilled jobs that require higher levels of complex problem solving, autonomy, creativity and emotional intelligence. These include engineering services analytics and data science, with proficiency for data and technology from the services perspective and in automation itself.

Meanwhile, demand for such mid-to-high skilled workers is increasing, with India expected to create 160,000 of such higher skilled jobs between 2015 and 2021 – i.e.1.11 to 1.27 million of such new jobs. Such mid-to-high skilled jobs will grow from 2.56 to 2.73 million (or 170,000), the UK will add 140,000 (800,000 to 940,000) and Philippines will add 130,000 such jobs (280,000 to 410,000) over that period.

However, it’s pretty clear from the above that the number of new jobs created by IT are far fewer than the number of jobs lost. Also, whilst it is easy to tell such workers whose jobs are at risk to reskill themsleves, a minority will be able to do so, since such changes in IT skills required is lateral, which means that they will quite literally have to learn new IT skills from scratch, unlike the incremental transition required between typing on a typewriter to typing on a computer. Also, with the breakneck speed at which information technologies are evolving, many skills acquired will likely be outdated and irrelevant within a person’s working years and to remain employable, they will have to reskill themslves several times during their career. This can be difficult for workers with children and family committments.

It is no wonder then that Malaysian parents are discouraging their children from pursuing courses in IT.



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