As the job situation in America stubbornly refuses to improve, people look for scapegoats. We in the outsourcing world have long been a prime suspect.
Now two professors at M.I.T have just published a book that serves as a beautiful rebuttal when people blame outsourcing for the lost jobs. In their eBook, “Race Against the Machine,” the professors predict more jobs for machines, not people. In other words, it’s automation, stupid!
Erik Brynjolfsson, an economist and director of the M.I.T. Center for Digital Business, and Andrew P. McAfee, associate director and principal research scientist at the center, are experts on productivity.
The economists argue that robotics, computerized inventory control, voice recognition and online commerce have accelerated this trend, especially during the current recession. They report one in 12 people in sales lost their jobs since the recession began. With money being so tight, the financial situation forced many businesses to look at options that substituted technology for people, something they really weren’t interested in doing before. Since June 2009 they report corporate spending on equipment and software has increased by 26 percent while payrolls have been flat. Ouch!
Another signal: productivity growth in the last decade was 2.5 percent. This is higher than the 1970s, 1980s, even the 1990s. Yet the nation’s payrolls are shrinking. They claim this is the first time this has happened since the Great Depression. Ouch!
At the same time, machines are only getting smarter and better. Increasingly sophisticated software is giving machines capabilities we once thought only belonged to Homo sapiens. Who thought machines could drive trucks? Yet Google reports its robot-driven cars logged thousands of miles with only occasional assistance from a human back seat driver. Ouch! Ouch!
Then there’s IBM’s Jeopardy-playing computer and Apple’s new personal assistance software, Siri, which responds to voice commands. Many smart phones now come equipped with voice-activated software that you don’t even have to touch the phone to make commands if you don’t want to. (Great while driving!)
The professors’ take on job creation is to focus on assignments that require intuition and creativity, things literal-minded machines are not good at. “In medicine, law, finance, retailing, manufacturing and even scientific discovery, the key to winning the race is not to compete against machines but to compete with machines,” they write.
Finally, something outsourcing service providers are really good at!
Question: How do you think service providers can create jobs that machines can’t do?
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Everything in life has pros and cons. While technology is great and provided us many great things, it is also costing us our jobs. I believe it’s like you said. We need to use our creativity to compete with technology and not against it.
Hi, I’m here for the first time and I’d say “Thank you” for this article.
At last someone launched a text declining the importance of outsourcing considering U.S. employment reduction.
I should note, that myself being a CEO at an outsourcing company I was really worried about the trend to blame us (all the industry, I mean) for job losses.
Anyhow, now the situation should change somehow. I hope so, at least.
Cheers,
I’m sorry, I have to disagree with the assumption that automation has caused the employment downturn in the economy.
Much of the phenomenal economic growth we had seen in the 80’s and early 90’s was due to technology and automation, employees had the opportunity to move from simple hand manufacturing to more important roles in an organization that required training. During that time, we also saw a large increase of foreign governments investing in their own businesses and technology. If fact a survey from 2008 estimated that approximately 275,000 telecommunications jobs would leave the US that year alone. Titled Survey: “The move toward offshore outsourcing could save telecoms $14B annually” from http://www.computerworld.com/s/article/91599/Survey_275_000_telecom_jobs_to_go_offshore_by_2008
This is only telecommunications jobs; this number does not include software development, technical support groups, and manufacturing. With the above savings listed above; other than moving the salaries from the US workforce, we also lose approximately 4.3 billion dollars in tax revenue.
Many people will contend that we are developing new markets. Sadly enough though, it’s easy to see that an individual making $3000 dollar a month in salary can afford to purchase more product than $1000 a month wage earner.
We have to agree that individuals in the US have a higher standard of living, but should developing a global economy mean that we have to sacrifice that standard.
This is false. If it were automation, we still would need people to repair those machines, build those machines, fix the machines that build the machines, etc. Eventually there would be a whole new job market opened.
It’s no coincidence that while the US is going down, China and India are going up. China with all the manufacturing outsourced and India with all the IT.
When are we going to start seeing Finance outsourced? I think pretty soon. Maybe to Russia?