Whether it's half a million or three million — 'low skilled' IT jobs in India are definitely at risk

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Whether it's half a million or three million — 'low skilled' IT jobs in India are definitely at risk
Analysts at Bank of America have estimated that around 3 million 'low skilled' employees at Tata Consultancy Services (TCS), Infosys, HCL Tech, Wipro and others could lose their jobs during the ongoing fiscal year while NASSCOM asserts that the IT industry will continue to be a 'net hirer' of skilled talentBI India
  • NASSCOM and Bank of America are at odds about the job cuts set to occur across the Indian IT industry in the ongoing fiscal year.
  • Bank of America asserts that up to three million people could find themselves unemployed as a result of automation while NASSCOM asserts that only 1.4 million are employed in the ‘low skill’ segment to begin with.
  • Companies in the Indian IT sector may continue to be ‘net hirers’ in FY22, but that doesn’t mean that people won’t be losing their jobs to software programs that can perform day-to-day tasks better than humans.
India’s leading information technology (IT) lobby, NASSCOM, and analysts at Bank of America are sparring over how many employees in the sector are set to lose their jobs this year. Whether it's half a million or three million, ‘low skilled’ IT jobs are under threat of automation — and even the executives recognise this.

Bank of America has estimated that Tata Consultancy Services (TCS), Infosys, HCL Tech, Wipro, Tech Mahindra, Cognizant and others will see a 30% reduction in ‘low-skilled’ jobs globally by 2022 because of robot process automation (RPA).

The global financial services company gauged that around 9 million people are employed in such roles in India, which means 3 million — one third of the total — will find themselves unemployed by the end of the year.

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NASSCOM has hit back saying that only 1.5 million people are employed in low-skilled and BPO roles, not 9 million. Which means, even if there are to be job losses, at the same rate as Bank of America is predicting, they may only amount to around half a million.

However, the IT lobby asserts that the sector will be a net creation of jobs in the ongoing fiscal year.

The Industry continues to be a net hirer of skilled talent, adding 138,000 people in FY2021, and robust hiring plans for FY22 with the top 5 Indian IT companies planning to add over 96,000 employees.

NASSCOM statement

Who should be afraid of automation?


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RPA isn’t actually robots — it’s software. And it’s programmed to complete specific business processes, which are routine, high-volume activities like routine help desk requests, call centre operations, data migration and other applications. RPAs can be chatbots, virtual assistants, data retrieval as well as claims processing algorithms.

The justification for their use — despite the threat to actual human jobs — is that they will allow employees to focus on more specific tasks that require soft skills. At the same time, they will save companies a bucket-load of money.

Job roles in decreasing demand across industries:
Data entry clerks
Administrative and executive secretaries
Accounting, bookkeeping and payroll clerks
Accountants and auditors
Business and administrative managers
Client information and customer service works
General and operation manages
Financial analysts
Sales representatives
Relationship managers
Human resources specialists
Source: World Economic Forum’s ‘Future of Work 2020’ report

Bank of America estimates that $100 billion in annual salaries and associated expenses will come in as savings as a result of automation. “Given that robots can function for 24 hrs a day, this represents a significant saving of up to 10:1 versus human labour,” said the report.
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However, according to NASSCOM, existing business process outsourcing (BPO) employees won’t be impacted by automation because most of the work that is being done now involves “higher end expertise”. That is to say, that ‘low skilled’ jobs have already been ‘filtered out’ — employees were either fired or upskilled — over the last few years.

But one of its members, Tech Mahindra, disagrees. During an analyst call in February, the company’s chief financial officer (CFO), Manoj Bhat, disclosed that automation will result in savings for the company.

India’s fifth-largest IT exporter also disclosed that it planned to lay off 5,000 employees within its BPO vertical by April this year with chatbots and virtual assistants increasing the productivity per employee.
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Hiring trends by Indian IT companies in the previous and ongoing fiscal years:
Indian IT companyFreshers hiring in FY21Freshers hiring plans for FY22
TCS40,00040,000
Infosys21,00026,000
HCL Tech12,00012,000
WiproAround 9,000Undisclosed
Tech MahindraUndisclosedAt least 5,000
TOTAL82,00083,000
Source: Quarterly earnings calls by the respective companies

Automation is a global phenomenon — not an India-specific problem


While India is among those most at risk due to automation, it’s hardly alone in trying to face this dilemma. The US, which was grappling with high unemployment numbers during the pandemic, is set to see 1 million jobs disappear due RPA, according to Bank of America.

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“We are seeing increasing use of artificial intelligence, robotics, and automation, which can destroy millions of jobs,” American economist Nouriel Roubini said during the Business Insider Global Trends Festival 2020.

With the COVID-19 crisis, the adoption of automation has accelerated. Globally, around 85 million jobs are on the line, according to the World Economic Forum (WEF). Not just in IT, but other sectors like retail and healthcare. And, India is racing ahead of the rest of the world.

“While 58% [of businesses in India] are accelerating automation of tasks, compared to 50% globally, as many as 87% are accelerating digitalisation of work processes, above the global average of 84%."

World Economic Forum’s ‘Future of Work 2020’ report

While some jobs may go out the window, new jobs will also be created as a result of automation. Overall, with 85 million jobs expected to disappear globally by 2025, 97 million new jobs will be created, as per the WEF report — that’s a net addition of 12 million jobs.
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For those caught in the crosshairs of ‘digital transformation’, upskilling and reskilling will be their saving grace. However, that window of opportunity is getting smaller.

"The Industry is upskilling more than 250,000 employees in digital skills and has hired more than 40,000 fresh digitally trained talent, indicating at its commitment and investment towards rapid enhancement of workforce capabilities," said NASSCOM.

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