View: India can meet the unemployment challenge only if it adapts to new reality of a digital economy
Digital transformation, enabled by cloud computing, data analytics, the IOT and more, offers a gold mine.
The Indian Council for Research on International Economic Relations (ICRIER) working paper, ‘Changing Task Contents of Jobs in India: Implications and Way Forward’ by Pankaj Vashisht and Jay Dev Dubey (goo.gl/FQwfK1), attributes the ongoing digital revolution to the advancement of ‘non-routine cognitive’ (analytical) tasks. India cannot be oblivious to the global debate on the impact of automation and artificial intelligence (AI) on job growth. Nor can it brush aside the importance of upgrading skills in tune with the demands of the market.
Digital interventions could mean the need to redeploy or re-skill an estimated 40-45 million workers, and an opportunity to create about 20 million new tech-enabled jobs. India can succeed only if it adapts to the new reality of riding the tiger of the digital economy, focusing on quality education and imparting better levels of skills.
Without doubt, Indian IT has progressed steadily over the last three decades or so, starting with a rise in exports, fuelling job growth. If the 1980s saw the country take baby steps, the 1990s witnessed new confidence in India’s computer and software prowess. Large scale IT adoption in the banking sector was a visible sign of the readiness to impact a critical sector of the economy to digitisation.
Even as the hardware industry missed the bus, there was no looking back for the Indian software industry. Aided by de-licensing and a host of incentives, the country emerged as a leader in outsourcing. First-generation entrepreneurs forayed into the software sector that drew a huge talent pool. Supply was plenty, given that many in the middleclasses were attracted to the industry. The cost-arbitrage helped entrepreneurs tap global opportunities to grow their business and create wealth. Private engineering colleges mushroomed to meet the sector’s demand. Industry adapted as well to absorb graduates from all disciplines.
Looking for an Opening
Jobs grew as the industry grew. And that was steady for nearly two decades. But technological changes, new automation and protectionism have led to the slowing down of the growth of jobs, with nominal additions over the last few years, compared to the boom days. Thankfully, the IT industry has managed to ward off threats of large-scale layoffs by inducting a young workforce that can handle new technologies and restore growth rates of about 8-12% — even as this is a fall from the 20-40% growth during the peak years. Yet, net job addition in the sector has dropped over the last five years — to an estimated 1.05 lakh in 2017-18 from 3.01 lakh in 2013-14. Layers of middle management have been rendered redundant. This is forcing Indian IT companies to change their business models.
Digital transformation, enabled by cloud computing, data analytics, the Internet of Things (IoT) and more, offers a gold mine. A recent government report, ‘India’s Trillion-Dollar Digital Opportunity’ (goo.gl/uP3Bcx) projects an opportunity for a $1 trillion digital economy by 2025 (from the current $200 billion), and along with it, 65 million jobs. It also favours a ‘demand-pull’ model of skilling, in which aspirants seek out the skills in demand and get trained. Surely, Indian IT companies will get a whole lot of new work in a tech-driven future. That calls for new skills and new ways of doing things.
The long-term interests of industry hinge on the quality of talent produced in the country. Reforming education should begin with schools that must teach children to learn. Radical steps must be taken to improve the quality of our universities across disciplines to make them employable.
Every sector will be affected by the power of digital transformation, and must be prepared. When banks adopted IT in the 1990s, it led to the emergence of banking correspondents. Agricultural correspondents may emerge to support farmers for advisories on soil health, sowing and choice of crops, leveraging IT. Increasingly, healthcare services will also be delivered through digital devices for diagnostics at remote places and advisories by doctors through telemedicine, supported by AI. So, GoI’s focus must be to improve digital infrastructure and design policy that will make use of spectrum in an efficient way.
Update, Upgrade, Upscale
Startups are emerging as the bright spot and proving to be the new avenue for the growth of the economy and jobs in general, and for the IT and IT-enabled sectors, in particular. Next only to the US and China in attracting investment, India seems to be in a pole position. Startups have also given a push to the ‘gig economy’, with people taking up contractual, part-time and online jobs.
What is needed in the jobs debate/discussion is to slice and dice data — sector-wise — to assess which sector’s performance has not been matched by growth in employment, and why. India should also go in for dynamic and nuanced updates to get jobs and skills data frequently across sectors. And reveal these figures to future voters.