Death of the Staffing Industry: The Rise of AI and Robotics
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1 Death of the Staffing Industry: The Rise of AI and Robotics March 19, 2015 John Nurthen Executive Director, Global Research, Staffing Industry Analysts
2 Welcome to The Henn na Hotel, Nagasaki 72 room Hotel opening in July 2015 Rooms will be $65 per night Company plans to have 90% of hotel services delivered by multilingual Actroid robots Robots will staff the front desk, act as porters, and do cleaning duties Other high tech features include facial recognition software allowing guests to enter locked rooms without a key, and room temperature controls that can detect a guest's body heat
3 Robot Olympics 2020 "In 2020 I would like to gather all of the world's robots and aim to hold an Olympics where they compete in technical skills." Japanese Prime Minister Shinzo Abe, July 2014
4 Software substitution, whether it s for drivers or waiters or nurses it s progressing. Technology over time will reduce demand for jobs, particularly at the lower end of skill set. 20 years from now, labor demand for lots of skill sets will be substantially lower. I don t think people have that in their mental model. Bill Gates, March 2014
5 What Do We Mean by AI and Robotics? Robots Drones Software substitution through cognitive computing applications Bots
6 1750: First Industrial Revolution 1870: Second Industrial Revolution 1970: Third Industrial Revolution
7 1750: First Industrial Revolution 1870: Second Industrial Revolution 1970: Third Industrial Revolution Personal Computers Internet Big Data AI & Robotics 3D Printing
8
9
10 IBM Watson November 2013, IBM announced it would make Watson's API available to software application providers, enabling them to build apps and services embedded with Watson's capabilities Goal is to have computers interacting in natural human terms across a range of applications and processes So far, over 800 organizations and individuals have signed up for Watson s ecosystem January 2014, IBM announced it is investing $1 billion in a Watson business unit that will employ 2,000 people Watson predicted to create $10 billion in revenue over next ten years Numerous and diverse projects currently in development are applications for education, retail, procurement, telemarketing and healthcare June 2014, Watson created its own original BBQ sauce in collaboration with New York s Institute of Culinary Creation
11 Enter Frey & Osborne In September 2013, two Academics from Oxford University, Dr Carl Frey and Dr Michael Osborne, publish The Future of Employment: How Susceptible are Jobs to Computerisation? Analyzed 702 US occupations and ranked them according to their risk of computerization The_Future_of_Employment.pdf
12 Three Key Skill Attributes Perception and manipulation Finger dexterity Manual dexterity Ability to work in cramped workspace/awkward positions Social intelligence Social perceptiveness Negotiation Persuasion Assisting and caring for others Creative intelligence Originality Fine arts
13 Can Computers Create? Source: AARON
14 Frey & Osborne Conclusions The secular price decline in the real cost of computing has created vast economic incentives for employers to substitute labour for computer capital. Carl Frey and Michael Osborne 47% of total US employment is at risk over next 10 to 20 years Predictions are based on current and near term technological breakthroughs and did not consider the impact of any future technology inventions Given more recent advances in machine learning (data mining, machine vision, computational statistics, etc) and mobile robotics, the next technological wave will increasingly hit higher skilled white collar jobs
15 Likely Economic Impact According to Classical Economic Theory An increase in the efficiency of production A reduction in the price of goods An increase in real income and thus an increase in demand for other goods A destruction effect on labor and the reallocation of labor supply A capitalization effect as more companies enter industries where productivity is relatively high, leading to increased employment in those expanding industries
16 Productivity and Employment Decoupled Source: The Second Machine Age Brynjolfsson & McAfee
17 IT and Automation Impact on Wages Information technology and automation are a likely reason why median wages have been stagnant in the US over the past decade, despite rising productivity Responses weighted by each expert s confidence Source: University of Chicago IGM Economic Experts Panel
18 .it is a safe bet that the human labor market will center on three kinds of work: solving unstructured problems, working with new information, and carrying out non routine manual tasks. The rest will be done by computers and low wage workers abroad. It is also a safe bet that most Americans will need to acquire new knowledge and skills over their work lives in order to earn a good living in a changing work world. Dancing with Robots Frank Levy and Richard J. Murnane
19 Employment Share: Routine v Non Routine Jobs Source: US Census Bureau, Current Population Survey (bands indicate recessions)
20 Probability of Computerization Over Next Two Decades +0.7 = High Risk Job Probability of Computerization Recreational Therapists Dentists Athletic Trainers Clergy Chemical Engineers 0.02 Firefighters 0.17 Actors 0.37 Health Technologists 0.40 Economists 0.43 Commercial Pilots 0.55 Machinists 0.65 Word Processors & Typists 0.81 Real estate sales agents 0.86 Technical writers 0.89 Retail Salespersons 0.92 Accountants & Auditors 0.94 Telemarketers 0.99 Source: Frey &Osborne
21 Worker Perceptions Within the next decade, my current job will be automated Source: Randstad, March 2015
22 Machines as Talent: Capability Gap by Region Source: Deloitte Global Human Capital Trends, April 2015
23 A Video by C.G.P. Grey S557XQU
24 63% of all temporary agency jobs susceptible to replacement over the next 10 to 20 years
25 Impact of Automation on the US Staffing Industry Staffing Segment Probability of Computerization Office/Clerical Industrial Commercial Finance & Accounting Clinical/Scientific Marketing/Creative Other Professional IT Legal Education Healthcare Engineering/Design Professional/Specialty TOTAL TEMPORARY STAFFING Source: Staffing Industry Analysts
26 Highest Risk Job Roles by Staffing Sector Industrial Highest Risk Jobs Probability of Computerization Photographic Process Workers and Processing 0.99 Machine Operators Sewers, Hand 0.99 Driver/Sales Workers 0.98 Etchers and Engravers 0.98 Packaging and Filling Machine Operators and 0.98 Tenders Office/Clerical Highest Risk Jobs Probability of Computerization Cargo and Freight Agents 0.99 Data Entry Keyers 0.99 Telemarketers 0.99 Brokerage Clerks 0.98 Order Clerks 0.98 Finance & Accounting Highest Top Risk 50 firms Jobs Probability of Computerization Insurance Underwriters 0.99 Tax Preparers 0.99 Bookkeeping, 0.98 Accounting, and Auditing Clerks Claims Adjusters, Examiners, and Investigators 0.98 Credit Analysts 0.98 Healthcare Engineering/Design Legal Highest Risk Jobs Probability of Computerization Dental Laboratory 0.97 Technicians Ophthalmic Laboratory 0.97 Technicians Pharmacy Technicians 0.92 Medical Records and 0.91 Health Information Technicians Medical and Clinical Laboratory Technologists Source: Staffing Industry Analysts 0.90 Highest Risk Jobs Surveying and Mapping Technicians Excavating and Loading Machine and Dragline Operators Service Unit Operators, Oil, Gas, and Mining Geological and Petroleum Technicians Pump Operators, except Wellhead Pumpers Probability of Computerization Highest Risk Jobs Title Examiners, Abstractors, and Searchers Paralegals and Legal Assistants Probability of Computerization
27 Highest Risk Job Roles by Staffing Sector Education/Library Highest Risk Jobs Probability of Computerization Library Technicians 0.99 Librarians 0.65 Teacher Assistants 0.56 IT Highest Risk Jobs Probability of Computerization Computer Support Specialists 0.65 Clinical/Scientific Highest Risk Jobs Environmental Science and Protection Technicians, including Health Social Science Research Assistants Geoscientist, Except Hydrologists and Geographers Life, Physical, and Social Science Technicians, All Other Probability of Computerization Chemical Technicians 0.57 Marketing/Creative Highest Top Risk 50 firms Jobs Probability of Computerization Broadcast Technicians 0.74 Market Research 0.61 Analysts and Marketing Specialists Camera Operators, Television, Video, and Motion Picture Audio and Video Equipment Technicians Demonstrators and Product Promoters Source: Staffing Industry Analysts
28 Work Currently Performed by a Variety of Non Employed Resources Based on what you know, which of the following TYPES of workers did work on behalf of your company/organization during 2014? (Non Employed responses) 70% 60% 50% 40% 30% 20% 10% 0% Source: Staffing Industry Analysts, Total Talent Management Survey, March 2015
29 Temporary Robots The Wakamaru robot was first made available to clients as a temporary receptionist in 2007 by Japanese staffing firm, People Staff Skills include facial recognition, basic manual tasks, good listening skills (voice recognition capabilities), verbal skills with customers (vocabulary of 10,000 words), singing cheerful songs and escorting visitors to different destinations. At $1,000 per day, the Wakamaru is less cost effective for short term engagements. However, annual contracts run for as little as $25,000 dollars, comparable to the annual cost of a human receptionist.
30 Competing Against the Machines or Running With Them? Can AI and automation be harnessed to develop broader and better staffing services? Workfusion sources, trains and manages a hybrid workforce of machines and people to undertake repetitive data driven tasks Leveraging three key resources: automation tools, crowdsourced workers, and so called employee experts Is the human machine hybrid the staffing model of the future where machine algorithms perform high volume repetitive tasks and freelance or temporary workers perform tasks that require more judgment and analysis? Source:
31 Impact on the Role of the Agency Recruiter Frey and Osborne suggest that occupations that require subtle judgment are also increasingly susceptible to computerization. To many such tasks, the unbiased decision making of an algorithm represents a comparative advantage over human Job Title Probability of Computerization HR Manager Real Estate Sales Agents HR Assistants Interviewers Top 50 firms Top 50 firms Source: The Future 10.9 of billion Employment: How Susceptible are Jobs to Computerisation? by Carl Frey and Michael Osborne operators. In the most challenging or critical applications, as in ICUs, algorithmic recommendations may serve as inputs to human operators; in other circumstances, algorithms will themselves be responsible for appropriate decision making.
32 Impact on the Role of the Agency Recruiter Social intelligence aspects of the recruitment role is its strongest defense against the onwards march of technology the ability to interact with and understand clients and temporary workers in order to make the right match While we might judge that agency recruiters may not be completely at risk from software substitution, it is easy to see how parts of their role may well be replaced and/or enhanced by software In future, staffing firms will need fewer recruiters or, at the very least, recruiters with a different mix of skill sets from those they employ today
33 An Optimistic Outlook Historically, technology has been a net creator of jobs so we should expect new jobs to be created to replace those that are lost Education will keep pace with the rate of change Machines improve productivity, lowering costs and providing more leisure time for the workforce with massive improvements in entertainment, education, communication, and health Demand for contingent work will increase in the short to medium term due to business disruption/uncertainty Staffing firms will evolve and harness technology to develop human machine hybrid delivery models
34 A Pessimistic Outlook History isn t always the best guide to the future this is the first time technology will impact professional jobs in the service sector Spiral towards a zero labor economy where whole swathes of the population lose their jobs Gap widens between winners and losers with a small core elite controlling both technology and capital Education will not keep pace with the rate of change Structural demand for contingent work will decrease Many staffing firms will fail to react to the new business environment and go out of business
35 A Very Pessimistic Outlook
36 Any Questions?
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