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Three million job cuts coming at Indian services giants by next year, says Bank of America

Report says robotic process automation to shrink headcount by 30 per cent and boost profits — yet the outsourcers keep talking about hiring sprees

The Bank of America’s global research team has predicted that India’s IT outsourcers are planning three million job cuts by 2022, with "low-skill" humans to be replaced by robotic process automation.

The prediction is found in a report [PDF] titled “Robo Sapiens: Future of Work Primer”.

A section of the report, headed “Robots won’t take over the world but we can’t ignore risks,” includes a section on robotic process automation (RPA) that opens by noting that in 2005 the difference between the wage for a UK or North American techie and their Indian equivalent was $92,000. By 2019 that gap had narrowed to around $40,000.

“India-based IT outsourcers appear to be planning for a 3 million/30 per cent reduction in ‘low-skilled’ roles globally by 2022 because of RPA up-skilling,” the report states, with $100B of salary savings the result — along with, presumably, a restoration of price competitiveness for Indian outsourcers.

The report continues: “It offers a boon for IT services companies that successfully implement RPA — likely a $10bn opportunity, as well as a vibrant new software niche.

“Given that robots can function for 24 hours per day, this represents a significant saving of up to 10:1 vs. human labor.”

The Register tracks India’s big four outsourcers — Infosys, HCL, TCS, and Wipro — and in public statements such as quarterly results announcements they almost always reveal an intention to hire thousands of new workers, and efforts to keep staff attrition rates low.

The big four recruit tens of thousands of staff each year, and most have increased rates of pay in recent months to help with staff retention.

The Register has checked the four companies’ most recent quarterly results announcements, and all mention intention to hire — and often to expand into new offshore destinations to find talent. Some have also signalled the desire for new hires in the UK and USA over a multi-year period.

Automation was mentioned by all but Wipro, but in the context of automation projects for customers rather than internal automation. All four also tout their RPA expertise as something they can offer to clients.

Evidence of internal RPA projects capable of delivering 30 per cent staff cuts starting from next year is also hard to find.

Consider, too, that Indian tech lobby group NASSCOM estimates the IT services industry generates four million in-country jobs.

None of which proves that the Bank of America’s assessment is incorrect. It could be that the Bank sees new hires as coming into higher-skilled roles that are less likely to be automated away.

But on the face of it the research report’s assertion of a 30 per cent headcount reduction is not supported by the big outsourcers’ frequent statements. ®

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