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Outsource magazine: thought-leadership and outsourcing strategy | June 24, 2017

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OPINION: A new world order beyond automation and offshoring

OPINION: A new world order beyond automation and offshoring
Ravichandran Venkataraman

Centuries ago, many Indians believed that crossing the oceans is a sin. Even though they had built ships that could work in oceans, it was still felt that crossing the oceans was a sin. Of course, there are different views on whether Indians really believed in this or not, because a lot of globalisation in terms of trade, exchange of ideas in science and mathematics, etc. started with ocean travel. Lot of sea travel is documented well before the 5th century AD. We have heard of kings who travelled across oceans to conquer lands. These were amongst the first form of globalisation.

In today’s context, companies have replaced these kings and have been relentlessly offshoring or outsourcing to reduce their cost to serve. Given what I call as the Wall Street Syndrome (for want of a better choice – not that there is no greed elsewhere in the world), where a company needs to show growth whether or not the world around it is growing, these companies have tried to increase profits and revenues every quarter. If revenues remain flat, they have at least tried to reduce costs. It is this chase that triggered off offshoring and/or outsourcing. The industry then matured and many companies have very matured outsourced operations (whether these are shared service organisations or factories). Now, the stage is set for automation to kick in so that these very companies can eliminate jobs

Automation is great: it reduces the labour element, provides for better access to and the democratisation of data, reduces chances of error, increases speed to market and is very scalable. However, the biggest issue with automation is job loss.  It also comes at a significant upfront investment.

This job loss is a problem in today’s world. With increase in life expectancy and with number of births higher than deaths, providing jobs is a major problem to the governments across the world today. Job losses, unemployment and underemployment come with other issues – terrorism, theft, civil strife, arson and looting, etc.  Effectively, as mankind, we are paying more because of these job losses and also have unhappiness. As this cost is spread across society, companies are still making more profits.

Should we look for other options? Should we say that crossing the oceans is a sin?  I was thinking of this and have come up with few thoughts.

a) Get listed companies to get out of this Wall Street Syndrome. Performance and reporting need not just be financial but also reporting related to the impact of the company on all stakeholders – customers, shareholders, employees, society at large, suppliers, the environment, etc. The stock price must factor in all of these. This must be made mandatory.
b) Give extra tax breaks to companies that employ more differently abled people – today this is done as a Corporate Social Responsibility (CSR) activity but this should be encouraged to go beyond CSR. One of the biggest issues facing the world is autism and Down’s Syndrome. Why should companies not hire more people who are suffering from autism or Down’s Syndrome so that as a society we can help them become financially independent? Why can’t we hire more differently abled people instead of automating the last job?
c) Give tax breaks to companies that spend money in helping employees and the society at large to re-skill themselves to remain relevant in the current world. Developing new skills is a must in this cyber-physical age that we live in. If we do not continue to re-skill and remain flexible, we will be replaced with people who possess skills that are needed in this ever-changing world.
d) Give tax breaks to companies that create jobs in the rural areas of every country. Ruralshoring should be encouraged. This will help moving jobs within the country rather than globalisation. It will also help with equitable growth.
e) Make it mandatory for companies (domestic or foreign) operating in a country to invest in job creation and a more equitable growth within the societies in which they operate.
f) Encourage automation but ensure that companies spend to re-skill employees and get them other jobs – encourage employees to remain flexible as a new job may not pay as much as an old one. But provided they are paid well enough to live with dignity, it should be fine.

Don’t mistake me. I am a huge supporter of automation and offshoring/outsourcing. However, it cannot come at the cost of lives. I was travelling in Pontiac (a city which has a huge presence of General Motors). It is not a shade near the city that it used to be: run-down infrastructure and huge unemployment. When I was talking to the cab driver who took me to the airport, he introduced himself as an engineer who was working in a factory in Pontiac and the factory had been shifted to China. Similarly, we see this relentless move of jobs across the world to places where labour is cheaper.

However, in the long run, this automation and offshoring seems to have resulted in us not being happy at all.  If 80% of the world’s population today lives on less than $10 a day and 20% of the world’s population own more than 83% of the world’s wealth, it is something that we just cannot be proud of.

What is the world that we are leaving to the next generation? We are paying a significant cost for this disparity in incomes, loss of jobs, underemployment and unemployment. This cost comes in the form of higher taxes and higher costs to manage terrorism, civil strife, theft, wars, etc. – not to mention the time wasted because of elaborate security arrangements that we have to make at airports and railway stations. Is it worth the trouble?

I would go for a new world order where we can share wealth more equitably. Where we can skill people to ensure they live with dignity. Where we do not see differently abled people as people who just need to be carried along only by their families. Where the rural youth have as much opportunity as their urban counterparts. Where we are able to provide employment to every citizen in the world.

Is it a sin to cross the oceans?

Comments

  1. Guy Kirkwood

    Excellent opinion piece Ravi. I’ve posted a review and response on LinkedIn entitled “A Challenge to Outsourcing: Build a Better Society”.

    • Ravichandran

      Thank you so much Guy

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