Over last two years, all leading IT Outsourcing vendors have launched range of  RPA (Robotic Process Automation) offerings. They all claim to bring  in automation in business as well as IT processes, causing reduction in jobs, boosting efficiencies. Buzz got even bigger as Nasscomm-McKinsey confidently claimed that next wave of  IT revenue  will come from much smaller workforce, attributing to increase in productivity caused by such initiatives.

It sure gives an impression that large-scale adoption of Robotic process automation would lead to loss of jobs in IT as well as businesses alike.

While it is still early days to contempt job loss caused by IT automation, let us look at another sector which has been under pressure of automation for long time – MANUFACTURING.

As Scott & Mark mentions in their article ‘Don’t blame the robots for lost manufacturing jobs’,

Between 1993 and 2007 (the timeframe studied by Graetz and Micheals) the United States increased the number of robots per hour worked by 237 percent. During the same period the U.S. economy shed 2.2 million manufacturing jobs.

Even though, correlation is not causation here. If robots are equivalent of Human workers, then developed countries employing higher automation should show larger loss in manufacturing jobs.

As below, Germany employs almost three time robots in manufacturing than US, thanks to robust automotive industry.

Number of Robots worked

During similar period, Germany lost only 19% of jobs as compared to 33% in US and more than 50% in UK. So, evidence suggests that there is no relation in loss of manufacturing jobs and extent of robotic automation.

Loss in Manufacturing Jobs

Overall,  net impact of robotic automation to jobs is not easy to understand, as job market is driven by so many other factors.

If you look at  IT job market, Gartner predicts 5% drop (only) in per-unit labor costs/effort by 2020 especially for mature segments. While RPA would be one of the key influencer, other factors are –

  • Use of intelligent tools by Outsourcing vendors
  • Re-use of code and other assets, Knowledge management platforms
  • Businesses leveraging ‘as-a-service’ pre-configured solutions with minimal customizations etc.

If you add it to stable labor rates and much optimized global delivery models, it is obvious that you will be able to deliver same set of services with much less labor for mature segments such as packaged application implementation/support services.

Would expect all these factors cause re-skilling of IT labor instead of large-scale reduction as feared.

How much RPA will contribute to it – jury is still out there.

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