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Outsource magazine: thought-leadership and outsourcing strategy | August 19, 2017

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OPINION: “It is not robots, but humans who can save the economy…”

OPINION: “It is not robots, but humans who can save the economy…”
Outsource Magazine

I am an industrial engineer by qualification, and I love business process improvements as well as workflow automation. Being in the BPO industry it is one of our responsibilities to deliver faster and accurately, handling data securely.

There has been lots of hype around Robotic Process Automation (RPA). Will RPA replace human workers? No chance, except for highly complex work, which in any case cannot be done by human beings. From what I see RPA is mainly for this kind of work (typically replacing one or two FTEs). Looking back about the similar hype about robots in the ’70-’80s, I am not worried RPA will replace large-scale outsourcing. The International Labour Organisation (ILO) puts the global number of unemployed at 202 million (2013) against a working population of over 3 billion out of a total 7 billion people in this planet. As per World Robotics, there are probably about 1.3 million industrial robots (and another 6+million service robots including toy robots). We have a bigger problem than worrying about robotic automation.

Born and brought up in India and married to a Chinese working in China, I always admired the daunting tasks of both Chinese and Indian governments in creating employments and feeding billions of lives. Both governments have taken different routes.

In the next 20-30 years India will have the largest population in their twenties. Though this is great, leaders have a mammoth task of creating sustainable long-term employment and eliminating poverty. India’s outsourcing service industry has been a role model for many countries in the past few decades, creating direct and indirect employment for millions. But India’s open and democratic political model has also created inequalities, corruption and large pockets of poverty in many regions. According to World Bank figures India’s poverty stands at 32.7% of total population (about 394 million) as at 2010.

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On the other hand, moving from a communist to capitalistic model, China has reduced poverty at a much greater speed with a global industrialised manufacturing outsourcing model. China’s infrastructure/telecom development and e-commerce trend is surpassing even that of the United States creating more entrepreneurs, jobs and economic activity. China has reduced the number of poor from 680 million in the 1990s to 157 million in 2010.

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The Industrial Revolution (and automation) was started in Europe; however Europe’s economy has shrunk and GDP growth is very slow. Places like Greece, Spain, and Italy have been extremely vulnerable in recent years.

While Japan had been a leader in robotic development – especially in the auto industry – with an ageing population, Japan’s economy has been slow for the last few decades. According to the International Federation of Robotics’ statistical department, which publishes World Robotic-related statistical information, the global average is 55 robots per 10,000 employees in the manufacturing industry: Japan has the highest density of 1,600 robots per 10,000 employees followed by Italy, Germany and the United States with about 1,100 to 1,200. Unable to afford local labour many Japanese companies have set up operations in China, Taiwan, Thailand or elsewhere employing high numbers of foreign workers. Increasing competition and innovation makes it difficult for them to bring those jobs back to Japan. Robotic automation has not solved the overall manufacturing problems; it has only helped a few industries like automotive and electronics where exponential demand and complexity has driven the usage of robots.

Even Japan, with high automation, wants to bring back women to employment as more than half of Japanese women quit their jobs after the first child is born. If more women returned to the workforce, it could give a huge boost to household income in the country, says Kathy Matsui, chief Japan strategist at Goldman Sachs in 2013: “Increasing income levels will boost consumption,” she says. “Consumption would increase profits, profits would increase wages, and that turns into a virtuous cycle.”

There is also a negative impact on career women in Japan, with fewer and fewer women choosing to bear children. It is not robots, but humans who can save the economy.

I support productivity increases to help individuals earn more and thus increasing purchasing power and spend, moving the economic wheel. Globally the unemployment rate has been increasing especially after the recession, and governments everywhere are scrambling to create employment to increase GDP. Job creation is the mantra for all politicians from US President Barack Obama to Australian Prime Minister Tony Abbott. Some African countries have the highest unemployment rates – as high as 95%.

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The Rockefeller Group, Microsoft and other corporates are spending millions of dollars towards education, skills training and employment creation to pull millions of people out of poverty through Impact Sourcing initiatives. It is estimated there are 400+ million living below the poverty line of £1.25/day in Africa alone as of 2010 (from 200 million in the 1980s).

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As per the World Bank’s 2013 World Development report, 25% of youth aged 15-24 in Middle East and North Africa lack jobs. Unemployment remains a stubborn problem. The report finds that poverty falls as people work their way out of hardships and jobs empower people to invest more in their children. Efficiency increases as workers are more skilled and societies flourish as jobs foster diversity.

When I was young my uncle used to read the Bhagavad Gita and quote “Loko Binna Ruchi” which means “Everyone has a different taste”. We human beings have evolved, continually improving from the Stone Age to the Digital World, every time doing better and better – but it is the “human factor” and social behaviour which has glued us together to innovate.

The great Tamil poet Bharathiar, wrote angrily “Thani Oru Manithaniukku Unavillayel, Jagithinai Azhithiduvom” meaning “if an individual is denied a meal, we must destroy the world”. His anger and compassion for fellow human beings is needed more in this current time. This resonates with Time selection of Ertharin Cousin, head of the United Nation’s World Food Programme, as one of the top 100 influencers, whose goal is eradicating global hunger.

Let us create dignified work for the millions of disadvantaged youth, women, disabled and transgender for an inclusive society and alleviate poverty. If process automation helps to carve out work and increase productivity gains that is the best of both worlds. Efficiencies are important as long as they do not eliminate jobs, and help to expand prosperity for all. After all, I am firm believer of “Live and Let Live”.

About the Author

Roger Pactera 150Srirajan Rajagopalant (Roger) is Vice President of Operations, Pactera Technology International Limited. Roger has more than 25 years’ experience in IT services, Consulting and BPO with strong strategic and project management skills. At Pactera he works with multinational corporations on digitisation, Accounts Payable Invoice Processing, Expense Claim Processing, Medical Claim processing, Credit Card Processing and others, creating work for women and disabled in Africa, Bangladesh and China. He is passionate about sales and marketing, process improvements and team building. Roger is an industrial engineer and an entreprenuer with consulting experience in banking, finance and insurance, supply chain, retail to improve business processes and build business intelligence. Roger enjoys teaching English to under-privileged children in his spare time and is engaged in Impact Sourcing and Community Technology Centre initiatives to alleviate poverty.

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