Much of the expected labor shifts have already begun reshaping skill set preferences and talent demands, making many people who don't possess the right skills, completely obsolete in contributing towards the growth of the company.
A key strategy for businesses over the last few decades has been to be able to accurately predict the future and take proactive steps in accordance with incoming changes. This ‘staying ahead of the curve’ as it was, has had a slow process evolution and acceptance within the larger business community. And not without its own reasons. Our understanding of how one economic parameter impacts the other in today's globalized world has far improved and technology today perhaps has a strong claim to be more disruptive today than any time in the past few decades.
Business processes today are rapidly changing, many reactively to keep up with the ebb of time. Traditional parameters of exchange and interaction between the business and its stakeholders have rapidly evolved and the future of work remains no exception to this. While developed economies have already begun facing mass restructuring in how jobs are accessed, developing countries like India, with their own ever-growing working population stands at the cusp of pivotal changes within its labor markets. Much of such expected labor shifts have already begun reshaping skill set preferences and talent demands, making many people who don’t possess the right skills, completely obsolete in contributing towards the growth of the company.
This has, in turn, spurred the need for reskilling programs, both undertaken by the company or through public means. For companies, it means focusing on learning and training paradigms of not just new recruits but also for those who have been ‘in this line of business’ for decades. And the trend is only projected to rise in the coming years.
Forces driving these changes
During the 1930s, economists came up with a transaction cost theory of firm growth1. To summarise its understanding of labor policies and expanding company, the theory put forward a simple transactional analysis to take decisions of either retrenchment or expansion. If internal cost—the cost of undertaking a specialized operation within the company—remains lower than external costs, the firm should expand and ensure such a task is performed in-house. On the flipside, if external costs go down, it becomes important for firms to outsource rather than spend more on completing the task in-house. Although a rudimentary explanation of the theory from a time quite different to the one we live in today, it helps to understand the current state of the economic change the business market is undergoing today. And, in turn, how jobs within certain fields are diminishing or evolving because of such changes.
With the increased access to technology and its open and decentralized usage, today, a number of business functions are beginning to emerge for whom external costs become relatively cheaper than internal costs. Companies, mostly in the form of startups, are slowly but surely chipping away traditional job roles and are providing companies a cheaper and more efficient way of undertaking such roles, usually providing a disruptive tech-dependent solution. The major uses of automation, machine learning, and robotics today all fall under this role.
Market trends show how many core functions within a modern day company like finance or management, have had key parts automated or outsourced to be handled by a more efficient service provider. This fall in external costs, driven by growing access, and understanding of what technology can do, is projected to rise further in the coming years. With reports2 showing how globally, 64 percent of companies cite labor costs as their main concern, aspects like gig economy are on the rise.
Assessing the current impact
The rise of tech adoption and the consequent evolution of the business ecosystem could result in many companies shortening their in-house staff and job roles evolving to take on more transformational and creative angles as many traditional roles either become obsolete or end up getting automated. Not just are current age technologies enabling a shift in job roles by significantly bringing down firms operating external costs, but are also redefining such roles in a more direct manner. Today, almost all companies are mandated to have a digital presence. Most also employ digital technologies liberally across both their internal- and external-facing functions to improve their efficacy. Other aspects such as big data analytics and cloud computing are changing how jobs operate and interact with each other.
The number of hours spent by humans on particular tasks is expected to go down in the next five years as machines and programs begin to do much of the heavy lifting when it comes to transactional and often routine-based activities.
Tech profiles like cybersecurity and the ability to work with nuanced programs like machine learning and blockchain are slowly growing in importance. Geographical proximity has no longer remained an important consideration and businesses have actively begun changing their talent priorities to attract the people with the most relevant skill sets. Even office workspaces are currently charting their own journey towards catering to companies which operate on completely new and often agile work conditions. According to the WEF report on the Future of Jobs, there were “four specific technological advances—ubiquitous high-speed mobile internet; artificial intelligence; widespread adoption of big data analytics; and cloud technology—that are set to dominate the 2018–2022 period as drivers positively affecting business growth”.
Where is this impact being felt?
Despite an increase in total employment, on an average, 1 in 7 individual workers will be faced with job loss as a direct result of automation3. The changing nature of jobs has been an enduring feature of past waves of technological progress and will ultimately lead to the emergence of newer work types.
These new jobs will require new and different skills. According to the Randstad Workmonitor Q2 2019 report, while a major portion of this rising demand would be for hard STEM skills and basic digital skills, there is also growing evidence for a rise in the demand for soft social skills. Over 38 percent of businesses surveyed for the WEF Future of Jobs report have expressed that they would extend their workforce to new productivity-enhancing roles, and more than a quarter expect automation to lead to the creation of new roles in their enterprise. For companies, this would mean a greater focus on employee productivity and reskilling. It would also be important to see how effectively can private-public partnerships be fostered and education systems be brought to a level where relevant skills are imparted with a larger focus on quality. It will become important to enable access to life-long learning opportunities to support workers in their careers and to help them transition securely to new jobs.
Other changes within the labor markets are to be in how modern day workforces are deployed. As external transaction costs begin to fall, the rise of the gig economy today has meant that companies have found ways to further reduce their labor investments. It’s been projected that businesses are set to expand their use of contractors doing task-specialized work. As per the Randstad report, many respondents have highlighted their intention to engage workers in a more flexible manner, utilizing remote staffing beyond physical offices and decentralization of operations. The number of hours spent by humans on particular tasks is expected to go down in the next five years as machines and programs begin to do much of the heavy lifting when it comes to transactional and often routine-based activities.