Like I already mentioned in the previous article, I
have spent two weeks with my colleagues on a business trip to India, on behalf
of my supermarket chain. It was a truly wonderful experience and one that I
hope to repeat in 2018.
During our stay in Noida, close to (New) Delhi, I was
struck by the fact that – apart from the large European and American ICT companies
that one would expect there – the globally operating audit firms had also opened large
subsidiaries in Noida.
Accenture, EY and KPMG were only three of the audit and
consultancy firms that I saw during a short car trip on the “Silicon Expressway”
(i.e. the name I gave it) from Noida to Delhi.
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| Office of Accenture in Noida, India Picture courtesy of Accenture India Click to enlarge |
For me this was a tell-tale sign that the danger for
many American and European middle class knowledge workers in the audit and
consultancy industry does not (yet) come from the robotization of their
workplace. No, it are the extremely qualified, but nevertheless much cheaper chartered
accountants/auditors and consultants in India that might pose an immediate
threat to such jobs in the Western world. And they are far from science
fiction.
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| Office of KPMG in Noida, India Picture courtesy of KPMG India Click to enlarge |
Of course, I don’t close my eyes for the recent emergence
of IBM’s
Watson and other robotized administrative tools in the bullpens of
modern offices. I am convinced that within roughly a decade such strategic tools
have eaten away a substantial amount of the moderately complex administrative
work from the people that do it now on a daily basis.
And perhaps these tools might then even execute a large
share of the more complex and cautious assessment and advisory work, that is
the very heart of strategic auditing nowadays.
Nevertheless, as a seasoned ICT consultant and software
tester with over 25 years of working experience, I know how darn hard it is to
deploy new and extremely complex information management tools in organizations
that are not yet familiar with them. Especially when the managers and normal
employees don’t understand how they must use these tools in the most beneficial
way.
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| Office of EY in Delhi, India Picture courtesy of EY, India Click to enlarge |
Even though IBM advertises Watson as “the answer to all
future questions”, I suspect that the first strategic implementation programmes
and projects for Watson might become an expensive failure. Just for the reason
that many new and extremely complex ICT projects tend to fail initially, due to
a lack of experience among the contractors and lack of focus, as well as massive
resistance, among the people that should use such systems and tools.
Only in a decade or more, there is probably enough
experience and confidence available to bring such projects to a successful end,
as then seasoned consultants will know about the challenges and pitfalls in
such complex, strategic information projects.
So for now... perhaps you should forget the robotized office
tools and think about the Indians first. They are smart and very well educated
and trained... and they can be deployed immediately for all kinds of
administrative and assessment labour. At least, that is my idea after seeing
all these Western audit firms in Noida and elsewhere in India.
Of course these Western audit firms in India will probably
also have more than enough assignments within the Indian domestic market itself;
assignments that will undoubtedly yield a substantial share of their annual sales
figures in India.
Nevertheless, in India there is ample availability of
very high qualified workers, with a profound – close to native – knowledge of
English and very good education and skills. Therefore, to these eyes, it is already
a sound strategy for the large audit firms to outsource a large share of their moderately
complex, routine assessment work to India.
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| New housing facilities for the emerging middle classes in Noida, India Picture copyright of Ernst Labruyère Click to enlarge |
By doing so these companies strongly increase the audit
capacity of their branches in Europe and the United States and it saves them roughly
50% in cost and expenses to do so.
Yesterday, I spoke with the (Indian) capacity manager
of a large, Dutch ICT consultancy firm and he told me how hard it was to find
sufficient qualified personnel in The Netherlands at this moment. And even
though this capacity problem is most imminent for the Dutch and European ICT
industries, this will also apply to complex administrative work, like auditing
and accountancy. Hence, India...
The availability of sufficiently qualified and
well-trained personnel is never a problem in India, with its population of
roughly 1.3 billion people, among others existing of countless well-educated and
very eager male and female professionals, with a strong desire for a better
life for them and their loved ones.
In the past many outsourcing projects had to deal with huge
setbacks and tough challenges, caused by cultural differences and mutual
misunderstanding between the Indian knowledge workers and their Western
principals. Nowadays, the number of knowledge workers with sufficient, hands-on
experience in European and American companies, is growing. This strongly
increases the success rate for large and complex projects in Europe and the
United States, that are partially or fully executed on Indian turf.
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| Picture of shops in Delhi, India Picture copyright of Ernst Labruyère Click to enlarge |
There is, however, a dark side about the success of the
Indian knowledge workers in the ICT, consultancy and audit industry... A dark
side for which the Indian consultants cannot be blamed at all, but that has
nevertheless much influence upon the chances of the Western knowledge workers.
Many middle class workers in the Western world have
dealt with stagnating or dropping purchase power during the last fifteen years,
under pressure of the enduring economic crisis and earlier the popping of the
dotcom bubble.
While the costs and expenses of most middle class
workers have been rising by the year in especially Europe, due to inflation and
tax hikes, their salary increases remained (close to) nought for many years in
a row. Eventually this led to a stable, even dropping purchase power for many,
many middle class workers.
But now the crisis has finally ended in the Western
world and there is ample money at hand within the larger, profitable companies
and the government. Therefore it would be the perfect time for such companies
and government bodies to administer a sturdy wage hike, in order to get the
middle class – as the motor of modern society – back on its feet again.
However, many large consultancy and audit firms – just like
the ICT firms did twenty years before them – are now trying to cut their
expenses (in my humble opinion), by deploying large numbers of knowledge
workers in India. They do so in order to perform routine assessment activities overthere
against lower costs, which were formerly done in the Western countries themselves.
I don’t think this development is solely prompted by the lack of qualified
workers in the Western world, even though this might have been a trigger initially.
Personally, I suspect it to be an ordinary austerity
measure, that could have far-reaching impact on employment in the Western
world. Especially as the costs for securely storing and shipping large packages
(i.e. Terabytes) of classified data all over the world have dropped to almost
nought and the possibilities for international video conferencing and other forms
of direct communication are nearly endless and of excellent quality against low
cost.
This whole development will inevitably lead to enduring
downward pressure on the salaries of the middle class workers in the Western
world and could hamper the oh so necessary wage hike that many Western workers
are craving for. And of course this will also apply to the lower qualified
workers in the Western world, who are already in a very awkward situation.
This is the reason that this development gives me mixed
feelings. I am happy for the wonderful people in India, who have a good chance
to rise above poverty and lead a prosperous and decent life with their
relatives and friends. All these people do very well deserve to have good jobs
and a good life and future ahead.
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| New housing facilities for the emerging middle classes in Noida, India Picture copyright of Ernst Labruyère Click to enlarge |
Nevertheless, I have some worries about the middle and
lower classes in Europe and the United States. They are already suffering from
the ongoing decrease in administrative and non-administrative routine jobs at
their employers and from their slowly diminishing purchase power over the last
fifteen years.
The current developments in India could have additional
negative impact on their direct labour situation and their immediate future, in
contrary to the robotization of their workplace. The latter seems only an issue
for the more distant future (say, ten years), in my opinion.
So please don’t worry too much about the robots yet...
as the people that might take over your jobs in the near future are still very
human and very well qualified for the job.
