INDUSTRY

Indian IT companies set to slash 30 lakh jobs as automation gains ground

With automation taking place at a much faster pace across industries, especially in the technology space, domestic software companies that employ over 1.6 crore are set to slash headcounts by a massive 30 lakh by 2022. This will help the companies save a whopping $100 billion, mostly in salaries annually, says a Bank of America (BoA) report.  


The domestic IT sector employs around 1.6 crore, of whom around 90 lakh are employed in low-skilled services and business process outsourcing (BPO) roles, according to industry body National Association of Software and Services Companies (NASSCOM). Of the 90 lakh low-skilled services and BPO roles, 30 per cent or around 30 lakh will be lost by 2022, principally driven by the impact of robot process automation or RPA. Roughly 7,00,000 roles are expected to be replaced by RPA alone and the rest due to other technological upgrades and upskilling by the domestic IT players. RPA will have the worst impact in the US with a loss of almost 10 lakh jobs, according to the report. 


Based on average, fully-loaded employee costs of $25,000 per annum for India-based resources and $50,000 for US resources, this will release around $100 billion in annual salaries and associated expenses for the companies, the report says. 


RPA is application of software, not physical robots, to perform routine, high-volume tasks, allowing employees to focus on more differentiated work. It differs from ordinary software applications, as it mimics how the employee has worked instead of building a workflow into technology from ground up. This minimises time to market and greatly reducing cost over the more traditional software-led approaches. Another key reason for the RPA-driven job losses is that many countries that had offshored their work in the past are likely to bring the jobs back to their own home markets. 


Developed countries will also look to bring back offshored IT jobs increasingly and either use native IT workers or domestic software robots, like RPA, to secure their digital supply chain and ensure future resilience of their national technology infrastructure, reasons the report.  

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