How Data Enabled Services Can Create Employment Opportunities In Small Towns?
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Automation Replacing Human Workers
The single major issue that is worrying governments all over the world is to provide employment or jobs to ever increasing work force that is being added every year. The global economy is growing around 3 percent per annum without any appreciable increase in the number of jobs. The Indian Gross Domestic Product (GDP) is clocking between 7 to 8 percent annually during last few years yet employment growth is meagre.
One of the main reasons for the jobless growth is due to the impact of technologies that is increasing efficiencies by automating many routine tasks that were done by human workers. Several existing industries are becoming obsolete as new ones are being established.
Indian IT Industry Created Jobs
One of the positive things that happened in India during last three decades is the dawn of Information Technology (IT) industry. It is unique and unparalleled in history since a developing country has excelled in high technology industry to meet the needs of advanced countries. The Indian IT industry created employment in India to meet the demands outside the country. Most of the IT companies were set up in metros and Tier 1 cities due to infrastructure requirements.
The Indian IT industry has created about four million direct jobs and three times that number in indirect employment. Its revenue for last fiscal year is estimated to be USD 180 Billion contributing to nearly seven percent of national GDP.
Disruption by Digital Technologies
Today, combined force of multiple new technologies is creating an unprecedented disruption all over the world. The advent of digital technologies comprising of Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), Robotics, 3D Printing, Block Chain etc. is having profound impact at all levels individuals, organizations, businesses, governments, etc. It is feared that there is a threat that these technologies will displace millions of jobs even faster. For example, robots are replacing low-wage jobs in the coming years.
On the flip side, digital technologies will create opportunities in the form of new class of jobs which require different type of skills. But the beneficiaries are different from those who lose their current jobs.
Data Enabled Services
The key element of all digital technologies is underlying data that drives them. It has been said that data is the new oil of digital economy. Data needs to be collected or created, enriched, analysed and finally monetized by businesses. For example, annotation and labelling of recorded video data is essential for all autonomous vehicle projects. One hour of video data requires about eighty hours of labelling by humans. In Industry 4.0, ML plays an important role in using the data generated by robots for resource optimization. Most AI/ML algorithms need training data sets before they become useful. We may call such services as data enabled services. These services are like traditional Business Process Management (BPM) services.
In addition, we also need highly specialized skills such as data scientists, statisticians, algorithm experts etc. These are like high end IT services being offered by current IT companies.
Characteristics of Data Enabled Services
The key characteristics of data enabled services are very large volumes, high quality and low-price points. It has the potential to create several million new jobs in India for global markets. Though current IT industry has the capability to undertake data enabled services, their cost structure won't meet the expected price points. They have gathered large overheads due to its operations from metros and Tier 1 cities. It requires huge investments into land, buildings, campus recruitment, training, bench, attrition, reskilling, transportations, etc. but viable at scale of their operations.
The obvious option for metro-based IT/BPM companies is to locate their delivery centres for data enabled services in small towns / Tier 2/3 towns where cost of operations can be substantially lower. However, such efforts in the past by them were not successful as they followed the large city model in small towns. The financial benefits accrued were paltry at their size.
Several governments encouraged entrepreneurs from small towns to set up IT companies through incentives. However, such units didn't scale and suffered from inadequate marketing and management competencies.
Distributed Delivery Model for Data Enabled Services
So, what is the right model for data enabled services? We suggest a hybrid one that combines centralized management from a city and multiple delivery centres distributed in small towns. The city unit can take care of all customer facing functions and manage small town centres remotely. They can do high-end work needing data scientists, statisticians and algorithm developers etc., as such talent will not be easily available in small towns.
On the other hand, small town centres can take responsibility for infrastructure, recruitment, training and delivery. It is essential that small town centres must be managed by entrepreneurs who have the required qualification, experience and emotional connection to the location.
The proposed distributed delivery model not only meets expected price points but also creates good social impact like arresting migration to cities, development of local economy, employments of women and people with disabilities etc. If work can move from overseas developed countries like United States to Indian cities, why not we move the work from Indian cities to small towns?
In summary, Indian IT companies are in an advantageous position to assist the global economies to adopt digital technologies and create new employment opportunities in India both in metros and small towns. We should not let go this opportunity.
NASSCOM has already identified data enabled services as next big opportunity for India and working out strategies to address in association with all the stakeholders- Industry, government and academic institutions.
Automation Replacing Human Workers
The single major issue that is worrying governments all over the world is to provide employment or jobs to ever increasing work force that is being added every year. The global economy is growing around 3 percent per annum without any appreciable increase in the number of jobs. The Indian Gross Domestic Product (GDP) is clocking between 7 to 8 percent annually during last few years yet employment growth is meagre.
One of the main reasons for the jobless growth is due to the impact of technologies that is increasing efficiencies by automating many routine tasks that were done by human workers. Several existing industries are becoming obsolete as new ones are being established.
Indian IT Industry Created Jobs
One of the positive things that happened in India during last three decades is the dawn of Information Technology (IT) industry. It is unique and unparalleled in history since a developing country has excelled in high technology industry to meet the needs of advanced countries. The Indian IT industry created employment in India to meet the demands outside the country. Most of the IT companies were set up in metros and Tier 1 cities due to infrastructure requirements.
The Indian IT industry has created about four million direct jobs and three times that number in indirect employment. Its revenue for last fiscal year is estimated to be USD 180 Billion contributing to nearly seven percent of national GDP.
Disruption by Digital Technologies
Today, combined force of multiple new technologies is creating an unprecedented disruption all over the world. The advent of digital technologies comprising of Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), Robotics, 3D Printing, Block Chain etc. is having profound impact at all levels individuals, organizations, businesses, governments, etc. It is feared that there is a threat that these technologies will displace millions of jobs even faster. For example, robots are replacing low-wage jobs in the coming years.
On the flip side, digital technologies will create opportunities in the form of new class of jobs which require different type of skills. But the beneficiaries are different from those who lose their current jobs.
Data Enabled Services
The key element of all digital technologies is underlying data that drives them. It has been said that data is the new oil of digital economy. Data needs to be collected or created, enriched, analysed and finally monetized by businesses. For example, annotation and labelling of recorded video data is essential for all autonomous vehicle projects. One hour of video data requires about eighty hours of labelling by humans. In Industry 4.0, ML plays an important role in using the data generated by robots for resource optimization. Most AI/ML algorithms need training data sets before they become useful. We may call such services as data enabled services. These services are like traditional Business Process Management (BPM) services.
In addition, we also need highly specialized skills such as data scientists, statisticians, algorithm experts etc. These are like high end IT services being offered by current IT companies.
Characteristics of Data Enabled Services
The key characteristics of data enabled services are very large volumes, high quality and low-price points. It has the potential to create several million new jobs in India for global markets. Though current IT industry has the capability to undertake data enabled services, their cost structure won't meet the expected price points. They have gathered large overheads due to its operations from metros and Tier 1 cities. It requires huge investments into land, buildings, campus recruitment, training, bench, attrition, reskilling, transportations, etc. but viable at scale of their operations.
The obvious option for metro-based IT/BPM companies is to locate their delivery centres for data enabled services in small towns / Tier 2/3 towns where cost of operations can be substantially lower. However, such efforts in the past by them were not successful as they followed the large city model in small towns. The financial benefits accrued were paltry at their size.
Several governments encouraged entrepreneurs from small towns to set up IT companies through incentives. However, such units didn't scale and suffered from inadequate marketing and management competencies.
Distributed Delivery Model for Data Enabled Services
So, what is the right model for data enabled services? We suggest a hybrid one that combines centralized management from a city and multiple delivery centres distributed in small towns. The city unit can take care of all customer facing functions and manage small town centres remotely. They can do high-end work needing data scientists, statisticians and algorithm developers etc., as such talent will not be easily available in small towns.
On the other hand, small town centres can take responsibility for infrastructure, recruitment, training and delivery. It is essential that small town centres must be managed by entrepreneurs who have the required qualification, experience and emotional connection to the location.
The proposed distributed delivery model not only meets expected price points but also creates good social impact like arresting migration to cities, development of local economy, employments of women and people with disabilities etc. If work can move from overseas developed countries like United States to Indian cities, why not we move the work from Indian cities to small towns?
In summary, Indian IT companies are in an advantageous position to assist the global economies to adopt digital technologies and create new employment opportunities in India both in metros and small towns. We should not let go this opportunity.
NASSCOM has already identified data enabled services as next big opportunity for India and working out strategies to address in association with all the stakeholders- Industry, government and academic institutions.
