TCS, Infosys, Wipro, HCL, Tech Mahindra, and Cognizant are expected to slash 3 million Jobs by 2022.
According to research, with automation happening at a far quicker rate across industries, notably in the IT field, domestic software businesses with over 16 million employees are on track to cut headcounts by a staggering 3 million by 2022, saving them a phenomenal USD 100 billion in wages yearly.
image source: AP
According to research, with automation happening at a far quicker rate across industries, notably in the IT field, domestic software businesses with over 16 million employees are on track to cut headcounts by a staggering 3 million by 2022, saving them a phenomenal USD 100 billion in wages yearly. According to Nasscom, the domestic IT sector employs about 16 million people, with around 9 million of them working in low-skilled services and BPO positions.
By 2022, 30% of these 9 million low-skilled services and BPO jobs would be lost, or about 3 million, owing to the influence of robot process automation, or RPA. According to a Bank of America research released on Wednesday, RPA will replace around 0.7 million jobs, with the remainder owing to other technical improvements and upskilling by local IT players. RPA will have the greatest impact in the US, with almost 1 million jobs lost.
Based on fully loaded employee costs of USD 25,000 per year for India-based resources and USD 50,000 for US-based resources, this will save up about USD 100 billion in yearly wages and related expenses for cordial relations.
"Because of RPA up-skilling, TCS, Infosys, Wipro, HCL, Tech Mahindra, and Cognizant, among others, look to be planning a 3 million drop in low-skilled positions by 2022.
"By 2022, this represents a USD 100 billion savings in pay and other expenditures, but it also represents a USD 10 billion windfalls10:1 cost savings for IT firms who effectively use RPA, as well as a USD 5 billion potential from a thriving new software niche. Given that robots can work 24 hours a day, this implies a 10:1 cost savings over human labor, according to the research.
RPA is the use of software rather than real robots to do regular, high-volume operations, allowing workers to focus on more specialized jobs. It varies from other software programs in that it imitates the employee's work style rather than creating a workflow into technology from the bottom up, lowering time to market and cost significantly compared to more typical software-led approaches.
Offshoring aided the domestic IT sector's growth from around 1% of GDP in 1998 to 7% today, a highly strategic sector for the country's economy. It has also significantly outgrown its Western counterparts (primarily Accenture, Capgemini, and Atos), with annual revenue growth of 18% between 2005 and 2019.
Another explanation for the employment losses caused by RPA is that many nations that have previously offshored their business are likely to return the jobs back to their native markets.
To protect their digital supply chain and assure future robustness of their national technological infrastructure, developed nations will increasingly want to bring back offshored IT employment and either deploy local IT professionals or domestic software robots like RPA, according to the research.
When the personal computer gained popularity in the 1970s and 1980s, key international players began to turn their focus to trade liberalization, software offshore began. Despite such widespread automation, major economies such as Germany (26% shortage), China (7%), India (5%), Korea, Brazil, Thailand, Malaysia, and Russia are likely to face labor shortages, according to the report, which also notes that South Africa, Greece, Indonesia, and the Philippines will have surplus labor for the next 15 years.
Faster automation, according to the research, is driven by a diminishing talent pool of high-skilled occupations in developing countries, where demand will only increase, while the global high-skill talent pool is shrinking, exposing outdated immigration processes.
The research goes on to say that emerging economies, particularly India and China, are the most vulnerable to technological disruptions, which may affect up to 85% of jobs in Kenya and Bangladesh.
India and China are the countries most at risk of losing their talents, whereas ASEAN, the Persian Gulf, and Japan are the countries least at risk. Because of the low/mid-skilled character of industries like manufacturing, the most concerning tendency is that developing market jobs are most at danger of automation, underlining the potential of premature de-industrialization. India's manufacturing peak was in 2002, whereas Germany's was in 1970 and Mexico's was in 1990.
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