The biggest threat to India's growth is unstoppable

Smart machines, robots, and other forms of automation could either be an economic poison or cure in a developing country like India – and this change will affect how businesses worldwide outsource work.
World Bank data estimates 69% of today's jobs in India are threatened by automation
Ravi is one of thousands of Indian IT workers who will lose their jobs this year, caught between a slump in India's previously booming IT industry and new technology threatening to replace human workers.

Until last month he worked at Cognizant Technology Solutions – a firm headquartered in the US but with the bulk of its workforce in India. The company is under pressure to cut costs and is expected to shed between 6,000 and 10,000 'underperformers' this year.

Market volatility and rising protectionism in countries like the USA, where much of India's IT outsourcing work comes from, saw Cognizant's revenue grow at its slowest pace in two decades last year, and its peers in the Indian IT industry are in the same boat.

IT body Nasscom's annual review predicted a 20-to-25% reduction in jobs in the industry over the next three years.

Ravi, whose name has been changed, worked as a software tester – a role particularly vulnerable to automated takeover. "In testing, already it has been introduced and it's coming in very fast," he says. "If a job requires four manual testers, automation can reduce it to one."

India's IT weak spot?

Since the 1990s Indian firms have carried out back office tasks, and IT services like data entry, running call centres and testing software for foreign companies at cut-price rates by throwing cheap labour at them. But as machines become adept at this repetitive, rule-based work, the low-skill jobs – where the bulk of Indian IT workers are employed – are the most at risk.

"It's been happening for the last two or three years in an accelerated fashion," says Gopinathan Padmanabhan, head of innovation at IT company Mphasis. "It's a reality you can't shy away from."

This shift will go hand-in-hand with new opportunities in emerging areas – data science, artificial intelligence and big data – but these will require new skills and probably fewer employees.

Still, robots replacing jobs en masse is unrealistic in the medium term in India – or anywhere else – but the effects are already being felt. Last September, Indian textiles giant Raymond said it would replace 10,000 jobs with robots over three years.

Union leader Vinodh Kumar works at BMW's factory in Chennai – India's automotive hub. His facility isn't in danger of automation, but he knows union leaders at Hyundai's plant where the entire body shop and most of the paint shop was automated.

"The majority of the body shop employees lost their jobs," he said. "The permanent employees they tried to relocate, but the contract labourers and the trainees lost their jobs."

Other sectors at risk include pharmaceuticals, food and beverages, logistics and security.

Samay Kohli, co-founder of home-grown warehouse robotics company Grey Orange, agrees. India lags well behind the developed world on labour productivity, which acts as a major handbrake on growth.

"You have to automate to be globally competent," he says. "If we don't improve our infrastructure, our productivity we will not have a chance to compete globally."

Grey Orange builds 'Butler' robots that fetch and store products and 'Sorters' that automatically scan and sort packages in the warehouses of e-commerce and logistics giants like Flipkart, Jabong and DTDC.

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Heads of IBM Research India Sriram Raghavan agrees that in a developing country like India, automation normally fills gaps rather than replacing people. India has 330,000 fewer doctors than the WHO's minimum recommendation, but Raghavan says automation can help plug this kind of talent shortage.

India's education system has a reputation for learning by rote and Indian Institute of Technology Madras engineering professor Ashok Jhunjhunwala agrees most institutions aren't adequately preparing young people.

But things are changing. He leads a government-sponsored pilot where professors from leading colleges use virtual labs to teach students at other colleges to take on-the-job training more seriously. And start-ups are introducing extra-curricular robotics classes teaching problem-solving skills vital for future jobs.