Tech analysts say that automation is expected to increase further in 2018, making nearly 70 per cent of the Indian workforce irrelevant.
Automation is expected to increase further in 2018, making nearly 70 per cent of the Indian workforce irrelevant. Tech analysts say 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. 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.
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.
“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.
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. Some clients are also willing to fund automation, as they target 5-10% cost reduction per year.
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.
But 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.
Source: The Hindu Business Line