Automation can lead to 25% job cuts in IT services companies by 2020, predicts poll

Nine out of 10 global sourcing professionals polled at the recent Sourcing Industry Conference (SIC) hosted by Information Services Group (ISG) , a market intelligence and advisory services company, say they expect advances in automation will lead their companies to shed jobs in the next five years. A third of respondents expect job losses to exceed 25 percent of their current work forces by 2020.

SIC 2015, held September 28-29 in Dallas, brought together more than 170 representatives from the world’s leading service providers to discuss and debate the future of the global services industry. The record turnout for SIC 2015 comes at a time when the industry is experiencing significant disruption from emerging technologies and the ongoing transformation to digital business models.

Ninety percent of those polled by ISG said they expected automation to result in some job losses in next five years, with the largest number (32 percent) saying they expect employment reductions to exceed 25 percent of their current work force. Only 4 percent said they expected no job cuts, while 5 percent thought automation would actually create more jobs.

“Given the rise of process automation – essentially software bots that can perform repeatable tasks – and the future promise of cognitive computing and autonomics, these findings come as no surprise,” said Todd Lavieri, president of ISG Americas, Australia and New Zealand. “What the results don’t reveal is the many new jobs we see being created to support the future of digital business and the growth of the As-as-Service economy.

“One thing is clear: the age of labor arbitrage is coming to an end, and a whole new era of digitized service provision is taking its place. That shift will create many benefits for our clients, as they transition to a digital state that is more secure, delivers more capabilities at lower cost, and continuously reveals new market opportunities and enables future growth.”

Service providers will need to continue investing in new digital capabilities in partnership with their clients to bring about the full benefits of this digital transformation, Lavieri said.

The service providers attending SIC 2015 were asked about the areas in which they expected their firms to make the largest innovation investments in the next five years. In line with expectations about the growing use of automation, the greatest number said their firms would make the largest investments developing their automation capabilities, followed closely by mobile technologies and the Internet of Things.