Automation impact: By 2021, one in four job cuts may be from India

New Delhi: A quarter of people losing their jobs because of automation by 2021 will be from India, according to research by human resources (HR) solutions firm PeopleStrong.

“These job cuts due to automation will not happen immediately, but the impact will become prominent by 2020. The change has started, with companies introducing bots for customer service, managing warehouses, etc.,” said Pankaj Bansal, co-founder and chief executive officer of PeopleStrong.

According to the company’s research, India will make up around 23% of jobs to be lost to automation globally by 2021.

“As the world gets more competitive, as manufacturing gets more competitive, it will use more automation, robotics, technology,” said Sunil Kant Munjal, chairman of Hero Corporate Service Pvt. Ltd and former joint managing director of Hero MotoCorp Ltd, India’s largest two-wheeler company.

Information technology (IT), IT-enabled services (ITeS) and security services, followed by banking, will be the first sectors to feel the heat, wherein manual transactions and processing jobs will become obsolete.

Huge numbers of services jobs in these sectors will be made redundant as a few lines of code will be able to perform the same tasks efficiently and effectively, according to PeopleStrong, which has over 175 corporate customers and over 500,000 users.

But IT industry veteran T.V. Mohandas Pai says concerns over job cuts stemming from automation are exaggerated.

“Impact will be felt where the jobs cost the highest in the next 10-15 years. If India grows at 8% a year, with a labour productivity increase of 1.5% a year, jobs should grow at a rate of 6.5% a year. With automation, jobs may grow within a band of 4-5% a year for the next 10 years,” said Pai, former human resources head at Infosys Ltd and chairman of Aarin Capital.

The cost of initial automation and robotics is high. In a country where wages are much lower than such costs, impact will be felt at a slower pace and much less than elsewhere, Pai added.

More than job cuts, new job creation is a big concern for India. Jobs will be generated at a slower pace than the economy’s growth rate. “Overall, India will not see job losses as much as a slower growth of jobs, compared to GDP,” Pai said.

Going by the 2017 World Employment and Social Outlook report released by the International Labour Organization in January, India has something to cheer about. According to the report, in 2016, a major share of the 13.4 million new jobs created in South Asia were in India.

However, the same report also says that unemployment in India might go up from 17.7 million in 2016 to 17.8 million (in 2017) and 18 million a year later.

Creating more opportunities for the unemployed will be crucial. Strengthening “the mid-market segment in India to create more jobs and re-skilling the workforce to take up the new jobs which will be emerging” are vital, said PeopleStrong’s Bansal.