Automation: Promise or Threat to Employment in the Sourcing Industry?


The next evolutionary step for the sourcing industry is not exporting jobs farther afield in search of labor-arbitrage savings. It is—and will continue to be—the wide adoption of automation. Already, in back offices around the world, software robots are taking on many repetitive and rules-based transaction processing tasks to support business process management (BPM) services and managing IT infrastructure.

As the jobs at the bottom of the pyramid are automated with the use of robotic processing software, new possibilities and requirements will emerge. Those who play a role in business decisions, innovation, creative design and launching new business products will have plenty of opportunity to contribute. With more data comes more need to analyze and interpret it. A new level of consulting will be needed to define and drive transformation. And, of course, developers of these new solutions, algorithms and platforms will be in high demand to continue building the growing advanced technology ecosystem.

Of course, the shift will not be without pain. The implications to employment are clear. Automation will set off a series of events that will call for a reskilling/upskilling of talent and a willingness to adjust to the new requirements. Those paralyzed by inertia or unable to make that shift may be bypassed altogether.

This also applies to enterprises. Organizations that are able to shift their focus and investment areas over time will find the move toward automation will drive greater standardization and heightened competition. For enterprises, automation will deliver:

  • Higher productivity, cost efficiency and accuracy
  • Better risk management and regulatory compliance
  • Better audit trails and quality of data
  • Ability to make better business decisions.

The jury is still out on whether widespread adoption of automation will result in a corresponding widespread loss of employment or if it will generate new jobs at an adequate pace. As in the previous automation waves, the current wave should result in greater prosperity with higher GDP and disposable incomes. However, we may experience short-term pain before we see the anticipated long-term gain.

These are my views. What are yours? Contact me to discuss further.

About the author

Dinesh is a highly experienced and well-respected advisor in the outsourcing industry with more than 23 years of experience in management consulting and outsourcing. He works with enterprises to craft sourcing strategies, structure and negotiate complex sourcing transactions and design and implement sourcing governance organizations. Prior to joining ISG, Dinesh worked with Infosys and Accenture, where he led large transition programs and consulted on IT strategy and implementations, business process-reengineering and operational improvement programs. He is a published thought leader and a regular speaker at industry conferences. Dinesh manages the ISG India Business.