Indian IT to shed half a million jobs by 2021; reskilling, automation only way forward

Automation has already begun shaking the Indian IT industry at its core. Vishal Sikka, CEO of Infosys, as part of his 2017 New Year message wrote that unless everyone innovates, they’d be rendered “obsolete by the tidal wave of automation and technology-fuelled transformation” that’s sweeping everything. With about 3.5 million people employed directly by the industry, any oncoming transformation will have a huge impact on jobs across the country.

While the good news is that automation isn’t about to have the armageddon impact many outlandish futurists have predicted, India’s services industry is set to endure the largest negative impact (across the globe) with a 14% decline in its workforce by 2021.

Low-skilled jobs are at high risk

India is home to 20–25% of the global IT services and BPO industry employees and a significant percentage of them are low-skilled workers (conducting simple entry-level, process-driven tasks that require little abstract thinking or autonomy). This is the greatest population at risk from Robotic Process Automation (RPA).

India is set to lose 640,000 low-skilled positions by 2021.
The counter-argument to job losses caused by automation is the new higher value work it will create in future. In India, mid to high-skilled jobs are set to grow with around 160,000 jobs likely to be created.

As the demand of medium-high skilled jobs begins to rise, many workers will be challenged to migrate and evolve their skills to take on roles that require higher degrees of complex problem solving, autonomy, creativity and emotional intelligence.
Net-net, about 480,000 jobs would be at risk due to automation, and the Indian IT industry is set to shrink by 14% by 2021.

Reacting to the change

India has enjoyed hyper growth in its IT services industry for over two decades now, and this is the first time a decline is setting in, in terms of the number of workers. Its leading service providers will maintain high margins for several years to come, but their growth through linear employee scale addition is on the slide.

Half a million workers to be re-employed elsewhere is a large number, not the mention where the armies of “freshers” leaving colleges are going to go. And let’s not forget the low-skilled employees not willing to or capable of learning new skills and new ways of working. Meanwhile, the focus on affordable, multilingual customer work has been a masterstroke for the Philippines government, while the UK similarly benefits from a robust call centre economy  —  industries core to their strengths in numbers.
We are beginning to see the winds of change. In the course of last year, Infosys has released about 9,000 full-time employee worth of effort through digitisation and automation. These employees will need to be trained to work on more advanced projects. This is just the beginning.
The service providers cannot mess around here  —  their very competitiveness is at stake and they have to adopt Intelligent Automation aggressively if they want to remain competitive with the growing ambition of demand.

What can India focus on?

India needs to focus on new avenues for services job creation where it has strength in numbers and strength in potential.
Engineering services is a bright spot, and so is analytics and data science, with an available proficiency for data and technology from its services talent. Moreover, India has a very strong competency for process and, believe it or not, automation capability. So, why not become a leader in helping clients access better data from better automated processes?

Yes, the next five years will be painful ones for India as we go through this transition from people to technology-plus-people services, but the five after that could well be a different story as enterprises crave more human-centric skills at scale that can’t be fed into a software object recording or a Software-as-a-Service platform.
India needs to embrace the change and invest in the next waves of opportunity.