Jobs Jumla: How Technology is Upending Modi’s Monumental Plans to Put India to Work

An article in ‘The Wire’ talks about Automation is deindustrialising India, which is not sufficiently innovative to face up to the threats posed by artificial intelligence, nor equipped to build on its mainstay capabilities in agriculture and other traditional industries; along with inputs from Manish Sabharwal.

Automation is deindustrialising India, which is not sufficiently innovative to face up to the threats posed by artificial intelligence, nor equipped to build on its mainstay capabilities in agriculture and other traditional industries.

Prime Minister Narendra Modi alluded, yet again, to the creation of jobs in his Independence Day speech, an economic priority that he has underscored on almost every occasion, both in speeches and at events over the past two years.

“As the scope of work expands, the possibilities of employment generation also increase… today, we have stressed in that direction,” he claimed, pointing to India’s credentials as the largest manufacturer of vehicles, leading exporter of software and home to the world’s most ambitious public sanitation programme that has purportedly led to the construction of two crore toilets under his regime.

All of this, coupled with investments in new factories that the prime minister seemed to suggest in his speech, has led to employment generation and new job opportunities for India’s 800 million who are under the age of 35.

A granular look at employment trends, however, shows that job creation dropped significantly during Modi’s reign – down from 4.2 lakh incremental jobs created during January-December 2014 to 1.35 lakh in the following year across eight core sectors. Also, a structural shift in India’s labour markets – an increased emphasis on automation across industries and the inability of policy makers in gauging the looming threats posed by mega tech trends – has made an already monumental task of providing jobs to 12 million new market entrants every year over the next two decades, into an exceptionally onerous one for the NDA government.

Disruptive bots

The fact that India lacks the coping mechanisms to deal with large-scale tech disruptions to its labour markets has been put on show by its IT services sector.

The sector has been the solitary engine for job growth in the past two decades – when India was transformed from a largely agrarian nation to a services-driven economy, bypassing the traditional manufacturing-led industrial expansion that could absorb millions of new graduates into the workforce.

However, as machines and robots now undertake the simple, manual tasks that lakhs of engineering graduates traditionally performed, India’s outsourcing job boom has come under threat. Faced with a scenario of rapidly shrinking employment opportunities in the IT sector, it is for the first time since 2009 that campus recruitment for engineering graduates is expected to decline – according to the IT industry body NASSCOM, which predicted a 20% drop in its most recent outlook.

India’s IT companies hire around 2-2.5 lakh of the roughly 14-15 lakh engineering graduates every year. But, as delivery functions are getting automated, a minimum of 10% of the incremental jobs will “disappear”, Mohandas Pai, the former CFO and HR head at Infosys, recently told PTI.

A US-based research firm, HfS Research, has calculated the damage at 6.4 lakh “low-skilled” IT jobs over the next 5 years.

“We’ve deployed an element of automation across all our new projects in the last one year,” said L Ravichandran, the president and chief operating officer of Tech Mahindra, India’s 5th largest IT company that launched its robotics automation and artificial intelligence (AI) framework, AQT, last year. “Not only have we been able to see improved process efficiencies, but also reduce manual errors. [It] saves delivery time, while skilling our hires to do more value tasks”.

Such benefits have, however, come as a direct cost to job creation, a fact that has openly been acknowledged by India’s tech giants. Tech Mahindra, in fact, has an index that tracks the decrease in manpower needed per project, while Wipro, in an analyst conference call last year, is openly known to have admitted to the fact that automation, through its AI platform Holmes, could reduce its staff count by at least a third.

TCS and Infosys, the other IT bellwethers, who also use their own AI platforms – Ignio and Mana – are rapidly adapting to the new environment to make their companies more productive and increase their revenue per employee.

The effects of this are increasingly becoming more noticeable than ever. India’s top five IT vendors, including Cognizant, reported a 24% year-on-year decline in hiring, as per a recent analysis by Centrum Broking.

There is also a question mark over whether India’s economy has the replacement capacity to take up this pool, barring, as Pai quipped, a driving job with taxi aggregators such as Ola and Uber which have seen a migration of software engineers to them in the recent times.

“There are other areas of absorption in the economy, but it is true that the employment elasticity of growth in IT companies has definitely come down,” said Manish Sabharwal, Chairman and Co-Founder of TeamLease Services, a leading staffing company. “IT companies can clock higher growth numbers with far fewer numbers of people today”.