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The breakneck progress in AI in the past few months has sent shockwaves throughout the world. While some are ecstatic about the possibilities that this cutting-edge technology holds, others are sounding the alarm bells, calling for greater scrutiny and restraint.
Amidst this, a report – with estimates based on an analysis of the US and European data – finds that while the technology will boost the global GDP by 7%, it will affect about 300 million jobs across major economies. But, when it comes to India, the report only tells half the story.
What does the report say?
The report is focused on estimating the proportion of total work that is susceptible to automation by AI across various occupations and industries. It is able to measure this by taking in data from the O*NET database, which provides a detailed information on the task content of more than 900 occupations in the United States and over 2,000 occupations in the European ESCO database.
Results showed that about two-thirds of current occupations can be partially automated by AI, with particularly high exposures in administrative (46%) and legal (44%) professions and low exposures in physically-intensive professions. These professions will be less automated by AI, for eg., construction (6%) and maintenance (4%). This is because the report assumes that automation in physical workloads will require significant advancements in the integration of AI and robotics, which will not happen in the near future.
Extending the US and European estimates globally, the report makes an interesting remark. “Our estimates,” the report says, “intuitively suggest that fewer jobs in EMs (emergent markets) are exposed to automation than in DMs (developed markets), but that 18% of work globally could be automated by AI on an employment-weighted basis.”
India least impacted by AI?
It is interesting to note that of all the countries considered, India supposedly ranks the lowest (with just over 10%) when it comes to the share of full-time equivalent employment exposed to automation by AI. This is surprising considering the seriousness with which companies in India are approaching the development of AI. Moreover, the report doesn’t give away much about the grounds on which the conclusion was made.
One way to interpret these numbers is to see the workforce demographics of India. The report assumes that AI will not impact the agriculture sector in emerging economies; India has over 45.6% of the workforce constituting this sector.
However, if we were to only look at the trend observed in the workforce distribution, a Statista analysis shows that year-on-year the participation in the industry and service sector is only growing. And in these sectors, the reality is not as grim as the Goldman Sachs data shows. In fact, a Stanford AI report released recently argues that the relative AI skill penetration rate is the highest in India among all the countries.
Only last month, Infosys’ Gary Bhattacharjee told AIM that Infosys is focusing on transforming its workforce’s skill sets from coding to algorithms, emphasising higher-end mathematical understanding, such as developing algorithms for complex quant models. The company is partnering with premier institutions, to build a strong tech funnel for talent, while also transforming its fresher program to focus more on developing skills and less on writing code.
Meanwhile Praful Krishna, chief product officer at Jio Haptik, also told AIM that the new AI technology or feature has sparked a surge in sales conversations. Saying that they have received noticeable interest from potential customers, Krishna went on to estimate the rise in sales numbers, pegging them at an approximate 40% increase as a direct result of this new development.
Hence, the industry is seeing a growing demand in India ever since ChatGPT and GPT-like technologies have become prominent.
Reality is grey
There is a reshuffle happening within organisations, where instead of hiring AI-specific roles, existing employees are trained on this new technology. What we are seeing is almost all roles – be it sales, marketing, and others – are being upgraded to tech roles. Like all other technological changes in the past, we are seeing the beginning of what will displace workers and create new employment opportunities.
The graph above illustrates that a surge in labour productivity can occur when there is a combination of significant savings in labour costs, job creation, and increased productivity for non-displaced workers. However, the graph also depicts a concerning trend: Prior to 1990, the elimination of jobs through automation was balanced by the creation of new roles and tasks. Since then, however, technology-driven disruption has actually reduced the demand for labour.
Considering the rapid execution of tasks made possible by generative AI, it appears increasingly probable that the trend of reduced labour demand will worsen. Therefore, the assertion that GDP growth will be seen or new roles will come about proportionately due to these technologies requires closer scrutiny, as it is possible that the employment rate will simultaneously decrease.
