The Impact Of Automation On Infosys India: Understanding Technological Unemployment

Infosys Technologies Limited: An Overview

Analyze the impact of computerization on employment in Infosys.

Technological unemployment is the new concept that has come up in today’s organization. It has become a blessing for some portion of the organization, while it has proved to be a curse for another section of the society. This is because automation is slowly making its place in the work environment. Mainly the concept of technological unemployment is considered as a job loss due to automation of business processes. However, the change has taken place slowly in today’s world affecting various parts of the business and causing various effects(Infosys laid off 2018). The paper discusses about the impacts of automation on Infosys India as the organization has recently experienced huge rate of unemployment due to technological advancement. Further it focuses on the impacts computerization of business processes has on business.

Infosys is also known as Infosys Technologies Limited is an Indian based multinational company. The company is mainly engaged in providing information technology services and information technology consulting. The company is also engaged in offering business consulting and outsourcing services. The company is known as the second largest information technology company of Indian origin with the market capitalization of $34.33 billion. The company has 84 sales and marketing offices presently and 116 development centers. The product of the company mainly includes services to most of the US companies. It also offers services to various domains such as the insurance, finance, manufacturing and others (Infosys 2018). However, the service that it provides to these companies and domains are mainly software development, independent validation and maintenance services. One of the most known product that is provided by this company is Finacle which is widely used in today’s banking and financial corporations. Other than this its main services and products include Next Generation Integrated Al Platform (NGI), Infosys Consulting, Infosys Information Platform, EdgeVerve Systems and Panaya (Yourstory 2018). The main customers of the company are the IT sectors that uses software services and the financial institutions.

It has been stated by (Nica 2016) that automation is a process that takes place in a work and makes production and other operations easy. It helps in generating demand for the company and modify the production that is being manufactured by labor.

Technological unemployment is the most talked topic recently due to its growing importance in most of the industries especially the Information Technology companies which forms a greater part of business of most of the economies (Danaher 2017). With the invention of automation and computerization of processes things has become more challenging for these companies. However, the most adversely impacted people from such automation are the employees of such business. On the other hand the business has gained much from such a technological change with faster and much better way of handling things. According to (David 2015), it has been a recently debated topic that most of the joblessness that is happening in the society is due to the computerization and technologically controlled services. The impact of automation and computerization of services has been a debated topic in the literature as it has caused a decline in the employment rate in the economy. The pace at which technology is improving and computerization is making its place in almost all kinds of services and production is making labors redundant. This adds to the cost of the company that is maintaining high percentage of labor (Frey and Osborne 2017). Even though such technological progress is causing job loss, yet there is not quantified evidence available about the future of employment due to such change.

Classifier model	AUC	Log-likelihood
Exponentiated quadratic	0.894	-163.3
Rational quadratic	0.893	-163.7
Linear (logit regression	0.827	-205.0

Automation and Technological Unemployment

Performance of Various Classifiers

Source: (Frey and Osborne 2017)

Frey and Osborne (2017), presented in their paper the historical impact of computerization and the impact it has on recent day occupations and the labor market. Technology improvement is not a recent change that is taking place. It has been highly visible from decades when change took place. Technological innovation has helped the economy to create wealth from decades. Since then people are suffering from joblessness and deprived of work. The technological innovation also led to the division of two classes in the time of parliamentary supremacy. One class of people were the property owning classes became rich and superior as they were not affected by the technological progress and the other is the labor class that suffered from unemployment during the industrial revolution (David 2015). Thus from decades such innovation and its impact is taking place. In the twentieth century also such innovation in computerization has caused incentives among the businesses and thus they are substituting labors for computer capital.

           

Title: Probability of Computerization

Source: (Frey and Osborne 2017)

It has been successfully pointed out by (Bessen 2016) that technological unemployment is increasing the disparities and gap between the labor earnings and earnings of capital. This has been the main result that has reduced the loss of jobs for most of the employees. This is because automation of process in the organization is more trustworthy, less costly, faster and swifter compared to labors. Moreover, by adjusting the worker and technological balance can help the companies attain wage gain. This will not be possible in case they keep both labor and hire new technology. Thus, with advancement of technology and improvement in artificial intelligence there has been large substitute in both cognitive and emotional work. However, it has also been successfully argued by (Arntz, Gregory and Zierahn 2016) that technological unemployment has various negative consequences as well such as distributional issues, issues of personal time management, unanticipated impacts on the sentiments of the labor, lowering of hand operated occupations and others.

The thinking and findings of Frey and Osborne (2017) was visible in the operations and working environment of Infosys with the rise of computerization. With the advancement of technology and increasing rate of automation, it was visible that Infosys took a step to cut off their employees on a large scale. Thus the finding from the literature about the impact of computerization was visible in the company (Acemoglu and Restrepo 2016). Due to such affect and advancement, company sort to lay off 11,000 workers. This led to huge increase in unemployment in the economy. The steps was taken by the industry because the rapid increase in digitalization was impacting the industry in many ways. This was making it difficult for the company to maintain the cost of the service along with the labor cost. Moreover, being a software company, it was always aiming to achieve automation at its core and develop all its services with high end technologies. This is the strategy the company wanted to follow in order to hold back their clients. Moreover, the cutting off of workers by the company gave the clear signal that the IT sector has to play a crucial role in such a growing environment. Thus rising automation has created many disruptions in the Indian IT sector (Edmonds and Bradley 2015). Although the company was receiving a good growth rate of 7 to 8 percent, yet the pressure of automation from other sectors had forced the company to groom the employees and take up new technologies in their operations. However, improving the employees was not that easy and it was much costlier. Thus, the company had to choose to cut down workers so that it can keep only those employees that can effectively add to their productivity and are skilled. The company had to adopt automation because software export is the main earning of the company and thus it has to develop services with advanced technologies (Metz 2015). The company aimed to take up automation in its software development department more because it is the most risky departments of the company. Thus it will change only those department that will be more affected by the invention of automation. After automation, revenue per employee increased by 1.2 percent which forced the company to lay off employees. The cash balance of the company also reduced to rupees 12,222 in 2017 compared to rupees 24,276 crore in 2016. Thus the scenario that was faced by Infosys in their organization was similar to that which has been pointed out in the literature (Acemoglu and Restrepo 2015). Thus, the company has to handle its change in the operations by taking up new technologies and getting rid of the employees so that in the competitive environment they stick to their place.

Conclusion

From the above analysis it can be deduced that automation has both negative and positive impact on the organization and the employees. The employees are the one that has been badly affected by the growing digitalization and technological advancement in the company. The processes became much easier and less labor intensive, negatively affecting the labor. This is because with automation the processes became much faster, less costly and much easier. However, it became difficult for the company to take up both labor cost as well as technological cost. Thus, they decided to cut down workers and retain only highly efficient ones. Similar problem was faced in India’s biggest IT sector which laid to the layoff of 11,000 employees.

References

Acemoglu, D. and Restrepo, P., 2016. The race between machine and man: Implications of technology for growth, factor shares and employment (No. w22252). National Bureau of Economic Research.

Arntz, M., Gregory, T. and Zierahn, U., 2016. The risk of automation for jobs in OECD countries: A comparative analysis. OECD Social, Employment, and Migration Working Papers, (189), p.0_1.

Bessen, J.E., 2016. How computer automation affects occupations: Technology, jobs, and skills.

Danaher, J., 2017. Will life be worth living in a world without work? Technological Unemployment and the Meaning of Life. Science and engineering ethics, 23(1), pp.41-64.

David, H., 2015. Why are there still so many jobs? The history and future of workplace automation. The Journal of Economic Perspectives, 29(3), pp.3-30.

Edmonds, D. and Bradley, T., 2015. Mechanical boon: will automation advance Australia?. Research Paper, 7, p.2015.Edmonds, D. and Bradley, T., 2015. Mechanical boon: will automation advance Australia?. Research Paper, 7, p.2015.

Frey, C.B. and Osborne, M.A., 2017. The future of employment: how susceptible are jobs to computerisation?. Technological Forecasting and Social Change, 114, pp.254-280.

Yourstory 2018. Infosys says it has released 11,000 jobs due to automation. [online] YourStory.com. Available at: https://yourstory.com/2017/06/infosys-job-releases-automation/ [Accessed 29 Jan. 2018].

Infosys 2018. Infosys. Be More. Do More.. [online] Infosys.com. Available at: https://www.infosys.com/ [Accessed 29 Jan. 2018]

Metz, B., 2015. Ex Machina: The effects of automation on employment and skills (Master’s thesis).

Nica, E., 2016. Will technological unemployment and workplace automation generate greater capital-labor income imbalances?. Economics, Management and Financial Markets, 11(4), p.68.

The Economic Times. 2018. Infosys releases 11,000 employees due to automation: Key takeaways from board meet. [online] Available at: https://economictimes.indiatimes.com/markets/stocks/news/infy-lost-11000-jobs-due-to-automation-key-takeaways-from-board-meet/articleshow/59298660.cms [Accessed 26 Jan. 2018].