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Jobs in information technology (IT) are meant to be automating tasks in all other sectors causing job loss in those sectors. With the increasing penetration of IT in every sector of the economy and the society as a whole, there has been rapid expansion of the IT sector. Particularly, the spectacular success of India's IT service industry creating as high as 3.9 million jobs in a span of just 30 years has been remarkable. Such development gave the impression that jobs in the IT sector will keep expanding causing job loss in all other sectors. But, it's quite an irony to observe that IT sector itself has become the target of massive job loss due to automation. It's being reported by The Economic Times citing McKinsey & Company that nearly half of the workforce in the IT services firms in India will be "irrelevant" over the next 3-4 years.
With the emergence of mainframe computer in 1950s and mini computers in 1960s, information technology started to get integrated in major productive activities. Although, the need for scientific computing, primarily meant for the US air defense system gave birth to modern computing, business applications rapidly started to grow up. Even in 1960s, some developing countries like Bangladesh or India bought mainframe computers. The limited application of computing in these countries created only a handful of jobs in public sector and large corporations, until 1980s.
The emergence of personal computers made their use affordable to millions of small businesses in the USA and many other Western countries. Such rapid expansion of PC diffusion ramped up the demand of software and IT infrastructure service jobs. Particularly, the Y2K bug fixing issue surged the demand of low skilled IT workforce. To address this situation, the USA expanded the H1 visa to allow large number of low skilled IT work force to migrate to the USA. Developing countries, particularly India, started to send growing number of graduates, even fresh graduates with very basic IT skills to the USA. With the expansion of submarine cable connectivity at an affordable price, remote service delivery as an alternative to H1 visa emerged. Among many, Indian firms like Infosys or Tata Consulting Services, which were struggling for decades to take off, ramped up recruitment of IT workforce for clients of US and other countries. The business model was quite straightforward: Work for hire, or linear revenue model. To meet the surging demand of low skilled IT service jobs, not only existing firms ramped up recruitment, but also numerous new firms started to show up overnight. To tap this opportunity, many well known foreign firms started to set up low skilled IT service delivery centres in India.
Among developing countries, India just over a span of 30 years emerged as the major IT service revenue earner, crossing USD100 billion. India's achievement inspired many other developing countries to replicate this success. Although most of the developing countries could not succeed to replicate India's success, the Philippines came out as an exception. By taking the advantage of American accent, the country succeeded in developing large call centre service businesses, amounting to a revenue of USD18 billion creating 1 million jobs.
The development of technologies such as speech processing, machine learning and artificial intelligence have been automating many of the low skilled IT service jobs, which India or Philippine-based companies used to deliver, and are still delivering. In many applications such as IT infrastructure monitoring or software code testing, or responding to customers' query, software based intelligent agents have become better alternatives to low skilled IT workforce. Training and skills development will enable some of the workforce to move to higher segments of the value chain, but many of them losing jobs to automation will not likely find jobs in the IT sector. According to the Managing Director of McKinsey India, "So, when we analyse these figures, it is clear that 30 to 40 per cent of the workforce cannot be retrained or re- skilled. So, assume that half of this workforce can continue to work on old skills, then balance will become redundant." It's being estimated that the number of people who will become redundant in the next three years will be about five to six hundred thousand in India.
Does it mean that global job opportunity in IT services will keep disappearing due to automation? Unfortunately, the answer could likely be -- yes. Higher level of automation is making IT equipment and infrastructure far easier to use than before. For example, smartphones are far more computationally richer than even high-end computers of 1980s. Although more or less every office in 90s had computer operators, but today, even kids can use smartphones by themselves. Unlike in the past, automation is killing low skilled jobs without opening new job opportunity for them. In the past, the loss of a single artisan's job created many jobs for low skilled workers. But this time, the scenario is opposite. Many jobs of low skilled workers will be lost with the intelligent machines developed by a few high-end experts. Particularly, the implication of software intensive automation on jobs is extremely high, as the cost of replication of software machine is virtually zero. And most of the IT service jobs, which companies of developing countries are performing, are subject to software-based automation. With the growth of software intensive automation, it's likely that existing IT service and call centre jobs, mostly delivered by companies in India and the Philippines or Bangladesh, are destined to be wiped out by automation.
Does it mean that IT job opportunity for developing countries is reaching an end? Fortunately, the growth of IT is also opening new opportunities, which are not being seriously targeted by developing counties. The same technology which is driving automation killing existing low skilled service jobs is also forming the core to support innovation to improve most of the production processes of developing countries. By capitalising on this opportunity, developing countries can pursue process innovation to improve the quality and reduce the cost of whatever they are producing now. For example, by innovating smart process solutions, farming yield could be improved manifold, while wastage of inputs as well as pollution could be reduced.
Instead of looking at IT as an isolated service export sector, developing countries should focus on integrating IT innovations to improve every productive activity. Such change in focus from service export to creation of local innovation market could open the opportunity of creating far more wealth from IT than in the past. It's time for developing countries to redesign their economic development agenda to take advantage from local process innovation, by upgrading IT from simple service export sector to a strategic tool for driving competitiveness of all sectors of the economy and the society as a whole.
M Rokonuzzaman Ph.D is academic, researcher and activist on technology, innovation and policy.