The rise of the gig economy
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Digital disruption and the consequent transformation of business models and industries would certainly have given many businessmen sleepless nights this year. The scenario will be no different in 2018.
The technologies, which are bringing about this disruption and transformation, will mature further with their impact weighing all the more across industry verticals. This trend is only expected to intensify over the next three-five years.
These disruptive technologies, especially artificial intelligence (AI), robotics and automation, are also shaping the future of the global workforce, giving rise to the so-called gig economy. A gig economy envisages an environment wherein temporary positions are common and organizations engage independent workers on short-term contracts. This may happen sooner than we expect. An estimated 7.6 million Americans will be regularly working as providers in the on-demand economy by 2020, more than doubling the current total of 3.2 million, according to a 13 August study and forecast (intuit.me/2BBuFzq) from Intuit Inc., and Emergent Research.
The trend is not restricted to developed economies. McKinsey Global Institute, in its report released this December, predicts that even if there is enough work to ensure full employment by 2030, about 75 million to 375 million workers (3-14% of the global workforce) will need to switch occupational categories because of automation technologies that include AI and robotics even as automation generates “significant benefits for users, businesses, and economies, lifting productivity and economic growth”. The extent to which these technologies displace workers, the report adds, will depend on the pace of their development and adoption, economic growth, and growth in demand for work.
The good news is that automation is expected to create new occupations that do not exist today, much as technologies of the past have done. The McKinsey report, for instance, notes that most jobs created by technology are outside the technology-producing sector itself. For instance, driverless cars, smart chatbots, smart personal assistants and algorithms that respond to customer service inquiries in retail stores or banks, are some examples of new forms of automation.
AI may be good for the economy too, even developing ones. Research released on 21 December by Accenture Plc., reveals that AI could add $957 billion to the Indian economy by changing the nature of work to create better outcomes for businesses and society. The report, Rewire for Growth, estimates that AI has the potential to increase India’s annual growth rate of gross value added (GVA) by 1.3 percentage points, lifting the country’s income by 15% in 2035. AI’s likely impact on jobs, though, may be a valid matter for concern.
However, automation will not affect all workers. For instance, the above cited McKinsey report suggests that jobs in unpredictable environments—occupations such as gardeners, plumbers, or providers of childcare and eldercare—will generally see less automation by 2030, “because they are difficult to automate technically and often command relatively lower wages, which makes automation a less attractive business proposition”.
Mint’s Technology Report, released every quarter, focuses on these very challenges and highlights ways that businesses are using to overcome these hurdles.
In this issue, among other things, we explain why Industry 4.0 is a phenomenon that is more than a flashy catchphrase; how the internet of things, cloud computing and cognitive computing are leading to the emergence of the ‘smart factory’ in this fourth industrial revolution; the essentials of an analytics strategy; what 2018 holds for bitcoins and blockchain; why gene testing is important; the changing nature of the banking sector which is seemingly under threat from well-funded fintech start-ups; and the outlook for the payments industry in 2018. Your feedback as usual will help us improve this quarterly Technology Report.