A lot of people are thinking about the implications of AI/Robotics/3D Printing, etc., in terms of potential job losses and on society as a whole. I am optimistic about the next couple of decades. I believe that entrepreneurship and entrepreneurial capitalism can be democratised, and wealth can be created in the middle of the pyramid using capitalistic principles. In the next 2-3 decades, the potential for 'distributed capitalism' is high and the outcome should be extremely positive around the world. That is the mission upon which my current work with One Million by One Million is based.
However, there is tremendous inequality due to technology and automation on the horizon. In the 30 to 50-year timeframe and beyond, technology and automation will create tremendous disruption. Some 60-80% of ALL jobs will likely get automated. Now, that is a scary situation.
I am sure you're thinking, "Oh, I've heard this before. Machines replacing jobs. New jobs always emerge". Yes, in the Industrial Revolution, for instance, that was a major concern, but we've seen tremendous job growth since then. This technology revolution is, however, different. Before, machines could not think. Now, they can. And because of the processing power available in tiny chips, they can think incredibly fast, process unbelievable amounts of data in a nanosecond. Artificial Intelligence, Machine Learning and Robotics are moving forward at breakneck pace right now. The march of automation looks pretty much unstoppable. And it will cause huge suffering due to lost livelihoods. In the long run, the human species will bifurcate into Man and Superman. The former will struggle, the latter will thrive.
Artificial Intelligence and robotics are evolving. Currently, AI cannot produce AI (code cannot write code), but they are expected to be able to do so in the future. When that happens, there will be a net destruction of jobs for sure. There will also be new jobs like robot technicians and household IT managers, and those would be large categories of new jobs, potentially. But the sheer magnitude of job loss will be enormous. The programmers are often relatively smart and capable people, and can retrain themselves into, say, Data Scientists. But what about the truck drivers? They cannot become Data Scientists. It's beyond their intellectual capacity. So, again, Man and Superman. Man struggles. Superman thrives.
India dreams of bringing a large number of farmers into an industrial economy and grow by exporting manufactures, just as China did. But it is too late in the game. Manufacturing and agriculture are both becoming massively automated. India's path to development will not come through manufacturing-generated jobs. Manufacturing, to the extent India can attract investment in that sector, will be vastly automated. And at that point, there is little incentive to do that in off-shore locations. US will get its manufacturing back, and it will be 95% automated. So will Europe. I don't think this will work for India at all.
China managed to do tremendous poverty reduction on the back of manufacturing over the last couple of decades. But no longer can industries employ huge masses of people and drag populations out of poverty. FoxConn, one of the largest manufacturing companies in China that makes iPhones for Apple, last May, eliminated 60,000 people out of their 1,50,000 workforce at its Shenzhen factory. These people were replaced by robots. We can safely assume that India's poverty reduction strategy cannot be manufacturing, because new factories would inevitably use robotics, not people. Agriculture is seeing very similar levels of automation as well, by the way.
India's famed outsourcing industry, too, will shrink terribly. India's growth story is in for a rude awakening. India's development over the last two decades owes a lot to globalisation and IT outsourcing from the West. Today, the Indian IT-BPO industry employs 3.7 million people. A large portion of this is relatively low-skilled or, at best, mid-range skilled positions. But low-skilled tasks that can be automated WILL be automated.
This will start showing impact relatively soon. Some analysts like HfS Research have projected a loss of 640,000 jobs by 2021.
Moreover, automated code generators stand to replace human programmers at mass scale as well. This, perhaps, is somewhat farther out, but still will happen well within the next two decades. For an economy that in 2015 grew at 7.5%, one of the fastest in the world, the outlooks I have seen still forecast between 5.5-7.2% growth till 2030. I wonder, to what extent the IT-BPO sector shrinkage is factored into these projections!
But there's hope
But there are some positive developments. First, Indian entrepreneurs have become a credible force in developing software products, not just contract services. It happened slowly, but it has now come about, and the woes of the IT services industry will accelerate the trend.
My prediction: more product entrepreneurs will hit the market. This may very well be an inflection point for India's quest to become a product-based industry, moving away from its services legacy. Of course, there will be services as well, but not as much low-end, commodity services.
There will be higher value services. Integration of products that are built in India, for example.
Second, Indian SMEs have so far been unable to afford technical talent because of the industry's appetite for skilled resources. As such, India's product entrepreneurs catering to this market have had a hard time scaling. Sales cycles are very long. This implosion will free up large numbers of technically skilled professionals.
My hope: this immense body of technology-comfortable professionals will get redeployed into the Indian SME sector, bringing with them the ability to dramatically upgrade technology penetration in that sector. If we can infiltrate Indian SMEs with a million tech-savvy people, India will experience an unlocking of productivity and value on a giant scale.
The coupling of the above two trends – more product entrepreneurs catering to Indian SMEs equipped with savvy technology buyers on the other side – would be the single biggest positive outcome of the imminent death of India's outsourcing industry.
(The writer, a Silicon Valley-based serial entrepreneur, is founder and CEO of One Million by One Million, a virtual accelerator for entrepreneurs)
