Escaping the automation led redundancy shaping the Indian IT industry final
TWB_ / LEADER IN COMMUNICATING TECHNOLOGY 1
Escaping the automation led
redundancy shaping the
Indian IT Industry
, Founder & CEO, TWB_ii
Recent data is for half a million employees being made
redundant over the next 5 yrs. due to automation. Is it true?
And what is that the industry, companies and employees
can do about it.
The first half of the next decade will bring a lot of pain to the Indian IT business as
automation sets in and we go through the transition from people to technology +
people. But the real opportunity is still available to people, as the enterprise still
craves more human-centric skills at scale that cannot be fed into an AI platforms.
These are challenging times, but the change brings the opportunity.
The Manpower Shrinkage
Technology has and will continue to fundamentally reshape the world. But the largest
move is not from more people creating more technology but of machines creating
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technology and delivering services. As that happens, the job market shrinks. World
Bank President Jim Kim said in March 2017 that technology could fundamentally
disrupt the pattern of traditional economic path in many societies and threatens 69 per
cent of the jobs in India and 77 per cent in China. However it the relative wage that
will determine the relative pace of automation and it is here that the Indian IT
industry is most vulnerable since the cost structure is closely linked to the ability of
the customer in developed economies to absorb this cost.
In the technology-led businesses AI and Automation are already present -- whether as
the evolution of autonomous cars or as software that writes itself. Consider this,
Google’s Deepmind can now read lips better than humans and play and beat
different 30 video games at the same time. It is writing its own algorithms to
better itself. And to translate languages where no translation has previously
IBM Watson can now not only read a physician’s notes but also go through a
massive library of related information and figure out, say, a particular type of
Chatbots are already being used by Amazon and Facebook to automate
And this is just the tip of the iceberg. However, a large part of the Indian IT
outsourcing industry is directly being impacted by different levels of automation
creeping into its customers. To expand their operations a US-based customer today is
not looking at additional headcount, but at automation. More insurance claims
processing requires a platform to scale for the extra work. Greater IT infrastructure
management requires more cloud-based orchestration tools then. Not more people. So
the scale and/or productivity gain is coming from autonomics management, and not
Worldwide the total IT Service and BPO industry employed 15 million people in
2015, with ~3.5 million in India, ~1 million in Philippines, ~5 million in North
America and ~4 million in Europe. The impact of automation on this global industry
of 15 million IT services and BPO employees is expected to be a net decrease of 9%
or ~1.4 million jobs. Of this, India's services industry workforce is expected to shrink
500,000 by 2021 - a decline of 14-15% (explained below)1
The workforce is in three categories: low-skilled, medium-skilled, and high- skilled.
Low-skilled employees conduct simple entry-level, process-driven tasks that require
little abstract thinking or autonomy. Medium and high-level employees undertake
more complicated tasks that require experience, complex problem-solving, the ability
to learn on-the-job, and to work autonomously. In terms of impact, it is the low-
skilled Indian services workforces that will be most impacted.
The HfS future workforce scenario through 2012
TWB_ / LEADER IN COMMUNICATING TECHNOLOGY 3
The Impact on Indian Industry
India's services industry is set to endure the largest negative impact with a 14%
decline in its workforce. India is set to lose 640,000 low-skilled positions by 2021,
which amounts to a decrease of 28%. This is largely because of the repetitive nature
of India’s outsourcing service. 2
At the same time, though, India is expected to create 160,000 positions, or 14%
growth, at the mid-level. But with 640,000 low-skilled jobs at risk, being offset by
just 160,000 mid- or high-skilled jobs, this will be a net job loss of 500,000 through
The impact of automation is already being felt. The industry added 200,000
employees in FY16 as compared to 230,000 in FY15. This is ample indication of the
fact that automation has begun to replace jobs that were earlier done by humans. The
industry expects to add around 200,000 employees for FY17, the same number of
employees added as in FY16. The combined net additions of employees of TCS,
Infosys, Wipro, HCL Technologies and Cognizant during the October-December
period stood at 28,182, down 38% from the year-ago period. 3
The IT services industry is estimated to have required 16,055 engineers to generate
every additional $1 billion of export revenue in 2015-16, compared with 31,846
engineers in 2009-10, according to NASSCOM. This is a near doubling of the
efficiency of labor. Services companies are likely to see lower hiring, pointing to
increasing automation and productivity.
Impact on companies
Infosys, India's second-largest software services exporter by revenue, hired 5,719
people in the first nine months of this fiscal, down from 17,196 in the same period the
previous year. In the third quarter, Infosys 'released' about 2,650 full-time employees'
worth of effort in application maintenance, package system maintenance, BPO, and
infrastructure management, taking the total number to 9,000 in a year. Wipro's target
was about 4,500 in April 2017. The employees who are released are trained to work
on more advanced projects.
The rapid adoption of AI platforms will create higher demand for up-skilled engineers
in niche areas which will result in a steady decrease in demand for entry-level or
lower-level engineers for tasks such as coding, back office maintenance, and
applications testing. Half a million employees to be re-employed elsewhere is a large
number, not to mention the armies of ‘fresher graduates’ leaving the colleges --
essentially low-skilled employees neither willing nor capable of learning new skills
and new ways of working. India needs to focus on new avenues to create services
jobs, where it has strength in numbers and strength in potential.
The HfS future workforce scenario through 2012
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Three things for companies to do
1. Move into more engineering services and analytics, with there being such
proficiency for data and technology from services talent.
2. Do more automation! Companies that help their customers automate will be
the next generation of outsourcing. Wipro launched an AI platform (Holmes)
in 2016 followed by TCS (Ignio) and Infosys (Mano). The objective is for IT
firms to achieve non-linear revenue growth for themselves, and efficiency for
3. Look for niches with customers where your management is directly involved
with your customers’ management in decision-making, problem-solving and
creative + strategic processes.
Impact on sectors
While automation and the resulting redundancy is a reality it should be remembered
that this is not the first time it will happen. For instance in the United States the share
of farm employment fell from 40 percent in 1900 to 2 percent in 2000, while the
share of manufacturing employment fell from approximately 25 percent in 1950 to
less than 10 percent in 2010. However in both cases, new activities and jobs were
created that offset those that disappeared though not in the same industry.
Outside of the IT sector and at a global scale sectors such as manufacturing or
accommodation and food services, both of which have relatively high automation
potential, compared with the proportion in sectors with lower automation potential
such as education. Clearly automation potential is high in sectors such as
manufacturing production, and lower in the job titles such as management which
involve decision making and critical thinking.
In the IT sector impact this bias will show clearly in the most data-collection and
data-processing led verticals such as Finance and Accounting, Medical Process
Outsourcing. Everest Consulting estimates that 80% of offshore IT jobs and 30%-
40% of finance and accounting jobs in India will be eliminated by automation.
Telemarketing, Software Testing, all-types of billing and claims management.
Three things the industry should do
1. Work with the education system to create the right talent: The industry must
create a workforce with knowledge of computer science as against just
coding, mathematical, analytical and statistics skills, communication skills,
and a working knowledge of business intelligence tools.
2. Change onboarding processes: Most onboarding focuses on developing
narrow skill sets that most employees should have learnt at the college level
itself, when they should be focusing on creative thinking, and more
managerial skills, including critical decision-making and problem-solving.
TWB_ / LEADER IN COMMUNICATING TECHNOLOGY 5
3. Innovate: Indian IT has seen inflection points before. 2000 AD brought with
it Y2K and its scenario of possible doomsday but the IT industry innovated to
catch the internet trend, and, subsequently, the inflection called Digital. The
industry has however always been customer-led, and consistently avoided
investment in innovating on basic technology creation.
Re-skill or Perish
The industry focus has to move from hiring to re-skilling, and re-skilling quickly. As
a whole, the industry is hiring fewer fresher graduates. Given the macro environment,
people are hiring more onsite. And while jobs at the bottom of the pyramid are the
first to get automated, there are still ways to stay relevant as an Indian IT
Three things for employees to do
1. Move up the IT development value chain: If you have the background and
experience, please develop the skill and expertise to grow into data analytics,
engineering design, cloud, digital automation.
2. Move across the value chain: There are functions outside of software
development where you can leverage your IT skills and create value, so do
consider business, sales and marketing management, etc.
3. Move into adjuncts: There are several non-IT sectors that are thriving
currently, but are starved for professionals with technical backgrounds who
can thrive on creative and communication processes, such as content
development, education, and more.
It is not as if all jobs and business is being lost. There will be new jobs created in the
future to focus on higher value work, and this will require the workforce to evolve
their skills to take on roles with higher degrees of complex problem-solving,
creativity, and emotional intelligence. It only means that companies and individuals
that resist innovation and rest on legacy skills won't be around in half a decade.
Rakesh Shukla is the Founder & CEO of TWB_ the pioneer in technology content and has
been automating content for Fortune 500 customers for several years.
TWB_ has a customer base of more than forty Fortune 500 technology majors and a
footprint of customers ranging from the Silicon Valley, the US East Coast, France,
Luxembourg, Germany, India, Taiwan, Korea and Japan that have consumed more than 1
million person hours of content. AXA, ABB, Cisco, Fidelity, IBM, Intel, Microsoft, Oracle,
Société Générale, Siemens, Toyota are some of the clients that leverage TWB’s content back
office to delivery higher content quality, faster, and at lower cost.