Info-tech

Automation to kill 70% of IT jobs

Venkatesh Ganesh Bengaluru | Updated on January 09, 2018 Published on November 14, 2017

Indian vendors under clients’ pressure to embrace AI, cut costs

Automation is expected to gain further steam in 2018, rendering nearly 70 per cent of the Indian workforce irrelevant.

Tech analysts point out that this will impact future hiring in India, where around 65 per cent of the global IT offshored work and 40 per cent business process work is done.

“Ongoing reductions of headcount in outsourced businesses (due to automation) will eventually result in a scenario where (only) 30 per cent of the workforce will remain relevant,” said DD Mishra, Research Director at Gartner.

This, he believes has largely to do with the fact that as automation adoption increases, 70 per cent of the workload can be handled by machines, without the need for humans to intervene.

“It is bound to accelerate faster in the next year as companies look to enhance performance and garner insights from run-of-the-mill tasks,” according to Ashutosh Sharma, VP and Research Director, Forrester India.

Further, one of the main factors driving automation is that clients in developed markets are asking their outsourcing partners to embrace more automation as it helps them increase scale and competitiveness.

“Overseas clients of the software services industry are asking their Indian offshore vendors to invest on automation tools. In some cases, clients are willing to fund as they seek a 5-10 per cent cost reduction on a yearly basis,” said Kris Lakshmikanth, CEO, HeadHunters India.

Forrester says Artificial Intelligence and Robotic Process Automation will take over low-value repetitive tasks and rote work.

Analysts are also taking their cues from the World Bank, which said last year that automation threatens 69 per cent of the jobs in India. All this is bound to impact hiring going forward.

According to a survey by Experis IT ManpowerGroup India, the collective number of layoffs that the IT giants are contemplating is way higher than what the Indian IT industry has ever witnessed, and this trend is likely to continue for the next 6-12 months.

The $155-billion IT sector employs around 3.9 million people in the country, and McKinsey estimates that half of the existing workforce will be irrelevant as they are not skilled to stay tuned to the changing market needs.

Some industry watchers like Nasscom Chairman Raman Roy opine that despite rising automation, hiring will not come to a standstill. “The skillsets that the industry requires will change and it will intensify in the coming years,” he said.

Automation is commodifying older technologies, which formed the backbone of the Indian IT sector. Gartner expects costs of commodity services to decline by 15-25 per cent annually, which would negatively impact margins of outsourcing firms, which on an average get 60 per cent of their revenues from legacy business.

Published on November 14, 2017
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