IT Firms Likely to Cut 3 MIllion Jobs by 2022 due to Automation

As automation takes place at a much faster pace across industries especially in the tech space, domestic software firms that employ over 16 million people are set to slash headcounts by a massive 3 million by 2022, which will help them save a whopping $100 billion mostly in salaries annually, according to a report from Bank of America.

The domestic IT sector employs around 16 million, of them around 9 million are employed in low-skilled services and BPO roles, according to Nasscom. Of these low-skilled services and BPO roles, 30 percent or around 3 million will be lost by 2022, principally driven by the impact of robot process automation (RPA).

Roughly 0.7 million roles are expected to be replaced by RPA alone and the rest due to other technological upgrades and upskilling by the domestic IT players, according to the report.

Based on average fully-loaded employee costs of $25,000 per annum for India-based resources and $50,000 for US resources, this will release around $100 billion in annual salaries and associated expenses for corporates, the report says.

“TCS, Infosys, Wipro, HCL, Tech Mahindra and Cognizant and others appear to be planning for a 3 million reduction in low-skilled roles by 2022 because of RPA up-skilling,” says the report.

“This is a $100-billion in reduced salary and other costs, but on the flipside, it offers a likely $10 billion boon for IT companies that successfully implement RPA, and another a $5 billion opportunity from a vibrant new software niche by 2022. Given that robots can function for 24 hours a day, this represents a significant saving of up to 10:1 versus the human labor,” says the report.

Another key reason for the RPA-driven job loses is that many countries that had off-shored their work in the past are likely to bring the jobs back to their own home markets.

Developed countries will also look to increasingly bring back off-shored IT jobs and either use native IT workers or domestic software robots like RPA to secure their digital supply chain and ensure future resiliency of their national technology infrastructure, reasons the report.

According to the report, faster automation is driven by the shrinking talent pool of high-skilled jobs in developing economies, the need for which will only jump, but the global high-skill talent pool is shrinking and exposing outmoded immigration systems.

The report goes onto warn that emerging economies mostly India and China face the most risk of technology driven disruptions which can impact up 85 percent of jobs in countries like Kenya and Bangladesh.