Automation will redefine talent acquisition in a big way
In April 2016, NASSCOM ruffled quite a few feathers when it announced that the IT industry will witness a decline of 20% in hiring because of automation. While NASSCOM does not anticipate a drop in revenue, it said, “Hiring will not be as linear as we have seen in the past”.
Automation is reducing the need for people in the IT industry. The Big 5 companies in the IT sector—Wipro, HCL, Cognizant, TCS and Infosys—are leading the automation drive, which has led to a combined deduction of 24% employees in 2015 at 77,265, according to brokerage Centum Broking. “Software vendors across the pack are focusing on automation and we believe that FY16 will be an inflection point. We see rapid scope for vendors improving efficiencies through expanding automation across multiple projects and service lines owing to sheer competitive pressure,” the report noted.
It is not just the IT sector that is being affected by the advent of automation and artificial intelligence. Automated check-in kiosks at airports, autopilot on planes, bar codes on products, automation in manufacturing be it a Nike factory or Bombardier—they have all increased the ease of business or work tremendously. But, with the advent of technology, the spectre of a large number of people being jobless has also arisen.
This fear is not misplaced as recent examples by major companies show. Nike recently terminated the contracts of 106,000 workers due to increased automation at their plants. The manufacturer decided that it was cheaper to invest in technology than to hire the world’s cheapest labour. Wipro expects automation to affect staff count by 47,000 by the next year. US bank Citi has forecasted that the continued growth of fintech startups means that nearly 30% of banking staff will lose their jobs over the next 10 years. We are already seeing the growth of online and mobile-based transaction and banking operations. In addition to that, back office operations are also increasingly being automated in an effort to cut costs. Throw in Google’s driverless car and Amazon’s drones and you get the picture.
According to Forrester Research, it is estimated that automation will displace 22.7 million jobs by 2025. The world’s largest economies, including India, will see a huge disruption in the labour market and lose over 5 million jobs in the next five years, a World Economic Forum Report titled Future of Jobs predicted. Automation along with redundancy and disintermediation are the chief reasons for the job loss. The maximum effect will be on white-collar jobs and administrative roles.
The impact of automation will just go beyond measuring productivity per employee; it could also lead a huge transformation in terms of education and mass hiring.
The major changes that one can expect in hiring strategies are:
- Focus to shift to skill sets and aptitude for learning: Traditionally, mass hiring has focused on getting candidates with a minimum base of requirements. The idea was to get a candidate whom you could train quickly to take up tasks or jobs that the company had in mind. Once automation comes into play, the hiring strategy would shift from quantity of candidates to quality of candidates. Hence, there would be an increased emphasis on the skill sets that a particular candidate brings to the table. Recently, Infosys moved 3,900 employees to work on higher value-added projects by replacing their current jobs with automation tools. Automation means that the candidate should be able to cope up and learn new technologies on the go and hence the learning aptitude of the candidate would be the turning point. In the WEF report, 48% of Indian employers said they would focus on re-skilling existing staff, support job-rotation and mobility. The ability to staff, manage and lead increasingly automated organisations will soon become an important competitive differentiator.
- From manufacturing economy to services economy: Traditionally, manufacturing has been the biggest employer besides agriculture. As countries move from a manufacturing-based economy to a service based economy, recruiters would do well to shift their attention to the services market. According to the latest forecasts from PricewaterhouseCoopers (PwC) the business services market could deliver 1.5 million extra jobs by 2025. Education and Health are also expected to add one million positions. On the other hand, manufacturing is set to see job losses of nearly 600,000 due to automation technologies. NASSCOM has predicted that the engineering and R&D services has the potential to create an additional one million jobs by 2020.
- Activities, not occupations, under threat: According to a McKinsey analysis, fewer than 5% of occupations can be entirely automated using the current available technology. However, about 60% of occupations could have a significant portion (30% or more) of their activities automated. Automation not only transforms business processes, but also leads to a significant change in job redefinition. Hence, recruiters should be nimble in not just understanding what kind of jobs will get affected by automation, but how. They could use tools like predictive analytics to figure out scientifically which occupations are going to go under the knife.
- Low-skill and low-wage jobs will persist: When we talk about automation, the one thing that comes to mind immediately is how it will replace low-skill and low-wage jobs. However, McKinsey’s research suggests that a significant part of activities in the highest-paid occupations, including that of a CEO, can be automated. However, low-skill, low-wage jobs like maids, gardeners, landscapers, maintenance workers, electricians etc. will still outlive automation. So, recruiters would do well to focus their energies on the blue-collar workforce.
Many concerns have been raised regarding the effect of automation on employment across the countries in the world. In fact, Erik Brynjolfsson, a professor at the MIT Sloan School of Management, and his collaborator Andrew McAfee, have been arguing for over five years that impressive advances in computer technology are largely behind the sluggish employment growth in the last 10-15 years. They claim that technology has been destroying jobs faster than it is creating them and while increased productivity meant good economic growth, it did not necessarily mean increased job creation or rise in median income. In their book Race Against the Machine, Brynjolfsson claimed that while the increased use of technologies made jobs easier and more productive, it also reduced the demand for many types of human workers. That is the great paradox of the world we live in now.
Of course, the recruitment function itself has undergone drastic changes thanks to the advent of technology. From manually going through thousands of resumes to helping candidates make their own SmartProfile™ and mapping the right candidate to the right job, automation definitely has its plus points. The question is are we ready for those changes?
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