IT sector to lose 6.4 lakh jobs to automation by 2021: HfS Research

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MUMBAI | DELHI: A US-based research firm is predicting that India's IT services industry will lose 6.4 lakh "low-skilled" jobs to automation in the next five years, quantifying the extent of likely pain for the first time, but Indian industry experts are urging caution and point to the other side of the coin — the creation of new jobs in large numbers.
By 2021, HfS Research said that the IT industry worldwide would see a net decrease of 9% in headcount, or about 1.4 million jobs, with countries like the Philippines, the United Kingdom and the United States also taking hits.
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For its part, IT industry body The National Association of Software and Services Companies (Nasscom) said that the report may not have taken into account all the jobs being created by newer technologies.
"Nobody's really seen what automation and robotics will really lead to. There will be some impact of automation but overall we believe that technology adoption will actually lead to more job creation across sectors," Sangeeta Gupta, senior vice president at Nasscom, told ET. "Focus on talent increasingly has to be on skill and not scale. Jobs will exist in other places also, it's not fair to say these many jobs will get eliminated.
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The IT-BPO industry employs 3.7 million and the impact of automation will mainly fall on those working in the BPO and infrastructure management space, both of which are adopting automation.
The HfS report states that though "low-skilled" jobs will fall by 30%, "medium-skilled" jobs will increase by 8% and high-skilled jobs will rise by 56%.
Low-skills are defined as those that follow a set process and are repetitive and do not require much in the way of educational qualifications. Medium skills are those that require some amount of human judgement in the process, dealing with more challenging problems.
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High-skilled jobs require creative problem solving, analytics and critical thinking.
"We've already precisely pinpointed that 30% of routine, low-value positions are being phased out through automation over the next five years, far outweighing the expected new jobs being created in the medium-high skills areas," Phil Fersht, CEO of HfS Research, said in a note.
The HfS report is based on a survey of 1477 industry stakeholders. Though IT industry executives accept that automation will cause the number of people in the industry to fall, they are disputing the amount.
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"This number is too high—6.4 lakh seems too high," said an IT industry executive, who declined to be identified.
"The BPO industry is going to be facing the problem of robotic process automation in the next two years. This is a challenge the industry and the country will face," Asheesh Mehra, CEO of BPO firm Antworks, said.
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Mehra was a vice president and head of Infosys BPO for Asia Pacific. The first steps on the road to fewer IT jobs have already been taken.
Tech Mahindra's headcount dropped by 2,000 in the last quarter, which the company attributes to the automation drive it began last year.
Tata Consultancy Services, which has over 350,000 employees, said headcount addition had peaked at around 90,000 in FY16 and that it would hire fewer people going forward. Even Accenture has said it will not be hiring as many people.
"The total headcount, which we all expect will continue to grow less, than our revenues moving forward, due to the factors of automation and productivity in our operations," Pierre Nanterme. Chairman and CEO of Accenture, said in a post-earning conference two weeks ago.
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IT sector to lose 6.4 lakh jobs to automation by 2021: HfS Research IT sector to lose 6.4 lakh jobs to automation by 2021: HfS Research Reviewed by SSR on 23:33:00 Rating: 5
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