Shifting technologies require new way to look at employment

From the beginning of this year, there has been a spurt of industry reports, including from World Economic Forum (WEF), projecting automation to be the cause for lowered hiring in time to come. Closer home, Nasscom chief forecasted 15-20% lower hiring in IT in India this year on account of automation, with an industry growth guidance of 10-11%.

Another industry report quoted 24% lower hiring done by the five major Indian IT services players put together in 2015 when compared with previous year. Individually though, while TCS, Cognizant and HCL shrunk their hiring year over year (YoY), Infosys and Wipro continued to grow headcount YoY. However, percentages can be misleading when we have a mixed bag. For example, TCS net additions in 2015 were close to Wipro, Cognizant and HCL put together. Hence, it may be unjust to look at all of them en masse.

Different headcount management strategies across these IT services organisations, but they all converge on one point — their focus on automation to improve revenue productivity and delivery efficiencies, i.e. accomplish more with lesser people and deploy freed up resources to new projects, thus requiring lower hiring. Automation also sits well with customer need for faster-better-cheaper solutions and the efficiencies sought justify the revenue growth guidance sustained with a relatively smaller headcount growth. The lowered hiring guidance will resolve to a gap of 6-8% of net additions in 2016 against linear growth, which is well within the range of 5-10% under performers in the bell curve. Any target set in this range is not an aggressive one, hence, not as worrisome.

Evolving landscape

Secondly, the employment landscape is constantly churning and evolving. Time immemorial, unskilled jobs have been shrinking and demand for skilled jobs with specialisation and higher expectation is rising. A couple of years ago, the US Department of Labor had reported a prognosis that 65% of current primary school children would eventually take up jobs that are yet to be created. Quite true, since roles like a Social Media Analyst or a Chief Data Officer (CDO) were non-existent till a few years back. These are new roles that have emerged from the demand created by omnichannel customer experience in the socially connected data driven world.

These also require new skills that will provide natural progression to say, someone from a marketing background, to skill up on social media monitoring tools and hone skills and evolve in the specialist role. On the other hand, when we look around, we find fewer postmen, accountants, tax consultants, typists, tailors, system programmers, and a long list of such roles that have shrunken or wiped across industries and hierarchies. These shifts from traditional roles to contemporary roles are occurring at a fierce pace, creating more employment across industries, not fewer.

Let us look at India Post for instance. With the last telegram sent out, telegraph operator jobs at the post office have been wiped. Fewer paper letters are sent as they are largely replaced by emails, instant messaging apps and e-cards, requiring fewer postmen. But the post office is unlikely to lower its hiring guidance as it transforms from a post office to a post bank automating its 144,000 branches, into a full-function bank. It will require more people with a completely different skill set and job functions than the older roles. The existing employees would need to pick up the contemporary digital skills with specialisation to maintain employability.

Monolithic projects

Thirdly, IT is moving away from one-size-fits-all approach such that businesses are choosing against monolithic projects to see incremental value. Technology is more connected, and much more modular in approach, providing many more options in terms of value, time and budget, that customers can choose from. This has enhanced uptake of IT and broadened the customer base with more up-sell and cross-sell opportunities for services organisations. This will drive the growth of 10-11% as well as fuel the need to hire.

Lastly, just as the digital technologies are new, most roles necessitated by such technologies are also new, hence, many times loosely defined with unclear objectives. Early adopters are both learning and evolving in real-time. Businesses are thus recognising the value of failing-fast to achieve the higher level of maturity quickly. This skillgap may be best addressed by hiring ready skills and experience from the market instead of waiting to build in house. Those who will be proactive about up skilling their current staff, will remain ahead of the curve.

Summarily, we are already in the age of lights out management, cloud-based systems that are accessible from anywhere and everywhere, the complex and time taking manual tasks are being broken down to pieces run by bots that do not require constant human monitoring or intervention, freeing up effort and time.

The expectation is already raised. With these dynamics, IT services organisations are growing and hiring at rates that are not always commensurate with each other. While driving up utilisation rates is a key focus area, we are witnessing an unprecedented rate of technology churn that is fuelling its uptake as new roles are being created.

This enhanced uptake will likely offset the lower pace of hiring. In these times, it will be important for IT employees to add contemporary skills routinely and stay in touch with the market shifts to maintain employability.

(The author is a Singapore-based independent IT consultant)