Technology is replacing workers in many industries across the globe, but this global threat may be an Irish opportunity.
The first signs of revolution can come from the most unlikely and the most seemingly modest sources. After all, a relatively minor colonial dispute about tax equity indirectly led to the foundation of the United States.
Similarly, the early portents of what is being described as “the fourth industrial revolution” or “the rise of the robots” may well have come in the form of recent statistics in relation to the global outsourcing sector.
KPMG’s latest Sourcing Advisory Global Quarterly Pulse Survey on business process outsourcing (BPO) reported a significant drop in demand for third-party services in 2015, with an overall decrease of 54 per cent in the number of contracts placed.
This trend is reflected in a Wall Street Journal report of a near 50 per cent drop in revenue for the Indian outsourcing industry between 2010 and 2014. That fall resulted in India’s largest information technology service providers cutting 100,000 jobs in a single year to June 2015.
The cause of these quite dramatic reversals in fortunes is generally believed to be the development of new automated technologies, which offer companies more productive solutions. In other words, automation is making it cheaper to do the work yourself.
This is merely one small element of a revolution that will lead to radical changes in the way most of us live and work in the not-too-distant future, according to KPMG head of innovation Niall Campbell.
This cognitive and digital workforce revolution will see robots take over many of the elements of jobs that were previously thought to be incapable of automation. These will include professionals such as accountants and lawyers, and is all down to the increasing power of computer technology.
Campbell recalls a famous quote from 1943, rightly or wrongly attributed to former IBM chief Thomas Watson: “I think there is a world market for maybe five computers”. He notes how IBM itself has changed and moved into the cognitive computing space with its appropriately named Watson platform, which uses natural language processing and machine learning to reveal insights into large amounts of unstructured data. In other words, it can learn and absorb information in human-like ways, just an awful lot quicker.
Such advances led to a 2013 study by Frey and Osbourne, The Future of Employment: How Susceptible Are Jobs to Computerisation?.
“The study looked at over 700 occupations across the blue and white collar space,” says KPMG innovation manager Beibhin Behan. “[It] had an interesting methodology highlighting the variables for robotic bottlenecks like social and creative intelligence, perception and physical manipulation”.
“It was widely portrayed in the media at the time as a sort of robot calculator,” he says, “which would give you a percentage probability of how likely it is that an individual will be replaced by a robot in the future.”
Perhaps the most alarming outcome of the study was an estimate that about 47 percent of total US employment was at risk from replacement by robots. And no one is really safe in the long run. Campbell mentions another book, The Future of the Professions, by Richard and Daniel Susskind, which predicts a decline in today’s professions and points to a future where we will not want doctors, teachers, accountants, architects, lawyers and many others professionals to work in the same way they do now.
Their contention was supported by a 2013 McKinsey Global Institute study, which predicted that the next wave of automation technologies with machine learning capabilities will directly impact 100 million global knowledge workers by 2025.
“We are seeing the early signals of this at the moment in areas like business process outsourcing and other labour intensive sectors,” says Campbell. “Not surprisingly, it’s the bigger countries like the US, the UK and Germany where this is being felt first, but all the signs suggest that these technologies will have an impact across all industries in Ireland.
“The future of work in Ireland will be challenged in the coming decade,” he adds, “particularly in the more labour-intensive sectors such as financial services, shared services, professional services, the civil service, education, healthcare and so on.”
All this sounds quite frightening. But Campbell says it could offer significant opportunities for Ireland. The key will be the approach we take to it.
“There is a question which Ireland Inc must answer,” he says. “Do we want to wait and let this happen to us, or do want to become a leader in the field and gain a competitive advantage in the process? We have a lot of the keys to this in place here already.
“This is being powered by the leading internet and technology companies who are all here. Cognitive and digital labour will become an industry sector in itself, and we should become an element of our FDI strategy.”
According to Campbell, Ireland has the opportunity to become a global centre of excellence in this emerging new industry.
“The internet of things is part of it, for example, and we have a lot of companies already here doing excellent work in that area. The important thing is that we take a lead in the area and don’t allow businesses here to get overtaken and get automated out of it.”
A positive mindset is required, Campbell stresses. “People can think it’s scary and that robots are going to be taking over their jobs and their offices, but it needn’t be like that. As a professional services firm, we in KPMG are having to look at how it will affect us. The services we offer might not change all that much, but the business model will definitely be different.
“The technology will allow people to do much more high-quality work with the time available to them.
“This is surely a good thing. It might even offer a chance to address that work-life balance issues that everyone has been talking about for the past 50 years.”
The following article appeared in The Irish Times’ on 29 February 2016 and is reproduced here with their kind permission.