Impressions from India, Pt II: Forget the robotized office tools for the next ten years... the Indians are coming now!

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.

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.

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.

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.

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.

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.

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.