Indian IT (Information Technology) firms are planning to lay off as many as three million employees by 2022 due to the automation of processes. This workforce reduction would help these companies save a whopping USD 100 billion mostly in salaries annually and robot process automation (RPA) up-skilling, as per a report.
The report released by the Bank of America on Wednesday, June 16, has stated that automation taking place in various industries, especially the technological space, is the primary reason for this transformation, reported Wion.
The domestic IT sector has almost 16 million employees. Out of these, nearly 9 million employees are in BPO(Business Process Outsourcing) roles and low-skill services. Around three million or 30% of these services and positions will be dissolved by 2022.
This would occur mainly due to the impact of Robot Processed Automation (RPA).
What Will Drive These Layoffs?
The report has pointed out that RPA alone will replace 0.7 million job roles approximately. However, there will also be other factors resulting in these layoffs — upskilling and up-gradation in technology.
Additionally, RPA will have its worst impact in the US, laying off around one million people. Based on employee costs of USD 25,000 per annum for India-based resources and USD 50,000 per annum for US resources, this move will release almost USD 100 billion in salaries and other corporate expenses.
The report stated that leading IT firms such as TCS, Infosys, Wipro, HCL, Tech Mahindra and Cognizant, and others appear to be planning a reduction in the low-skilled workforce.
"This is a USD 100-billion in reduced salary and other costs, but on the flip side, it offers a likely a USD 10 billion boon for IT companies that successfully implement RPA, and another a USD5 billion opportunity from a vibrant new software niche by 2022.
Given that robots can function for 24 hours a day, this represents a significant saving of up to 10:1 versus the human labour," read the report.
What Is RPA?
Robot Process Automation (RPA) is the use of software to do routine, high-volume tasks. This saves the time and energy of the employees, who can then concentrate on more differentiated work.
Unlike ordinary software, it does not build a workflow into technology from scratch. Instead, it imitates the way an employee would work. This reduces the time to a minimum and cuts down a considerable amount of cost as well.
IT Industry body Nasscom has, however, pointed out that the business process management (BPM) sector in India, which has been called out as the sector ripe for automation, employs over 1.4 million people (excluding domestic and in-house) and not 9 million as the report had mentioned.
In a statement, it further said that the sector continues to be a net hirer of skilled talent and that the top five Indian IT companies are planning to add over 96,000 employees in 2021-22, reported Financial Express.
"With the evolution of technology and increasing automation, the nature of traditional IT jobs and roles will evolve overall leading to creation of newer jobs. The industry continues to be a net hirer of skilled talent, adding 1,38,000 people in FY2021," the body said in a statement.