Artificial Intelligence may only replace 19% of the jobs it takes

31 July 2017 Consultancy.uk

Artificial Intelligence is often forecast to create more jobs than it replaces, however a new analysis suggests that at current growth rates, AI will only cover 19% of the jobs lost after its implementation. The realignment of labour may not be confined to blue-collar work meanwhile, with AI increasingly being leveraged by consulting firms and companies to find solutions without less need for costly human input.

The continued march of innovative new Artificial Intelligence (AI) has brought with it the potential for improved efficiency of resources, heightened productivity in manufacturing, and even the potential for low-cost medical care in the developing world. However, not all the effects of the new AI revolution are thought of in positive lights.

The rise of global hacking phenomena such as the WannaCry ransomware event have undoubtedly led some to question whether entrusting machinery with large levels of control in human life is especially sensible, however far more commonly, the chief concern is that the role out of AI in workplaces will mean mass job losses.

The Office of National Statistics’ (ONS) Annual Population Survey recently estimated the UK has seen the number of manufacturing jobs nosedive by 17% over the past decade. The possible loss of 620,000 jobs was attributed by some to the advancement of cheap machinery, which enabled employers to cut costs by laying off large numbers of staff, something recent research from McKinsey & Company further supported, forecasting that even white-collar industries such as finance, insurance and information and communications, which rely on rigid systems of routine, could easily be replicated by digital technology. The consulting firm projected that while less than 5% of jobs could be entirely replaced by technology, over 60% of all work activities could be in some manner automated by 2055.

This was something also suggested by a recent report by Big Four consultancy PwC, who calculated that as many as 30% of jobs in Britain and 38% in America could be automated by 2030. However, in line with projections from top professional services rival Deloitte, which stated as of 2016 automation had created more jobs than it ended, PwC’s estimations went on to suggest that automation would continue to create work elsewhere, as the economy goes through a realignment, rather than a reduction of employment.

AI Job Analysis

However, according to new analysis from Joblift, into the UK's artificial intelligence job market, the jobs created by artificial intelligence will fall drastically short of the level required to fulfil the needs of a growing labour market adequately. The web-based providers of a meta search-engine for job-seekers used PwC’s data as a base-line for their estimations, expanding them with data gathered from their global data-base of vacancies to analyse the potential impact of AI on employment.

The analysis showed that 136,939 jobs dealing directly with AI and automation had been posted in the last 12 months, a median increase of 0.06% each month. Working on the assumption that this remains consistent with the current period of uncertainty regarding investment, particularly in manufacturing, Joblift calculated that over the next 15 years the field of AI, automation and robotics would likely create 2,535,009 new jobs in total.

With 30% of existing roles in the UK projected by PwC as being at risk of being replaced by robotics in the next 15 years. If the UK labour market continues its median rate of increase of 1.49%, until 2031, that means 13,375,363 jobs will at risk from automation. Therefore, the forecast 2.5+ million newly created roles would most likely only replace 19% of the jobs lost to automation and robotics.

Of the positions created by AI to date meanwhile, Information and Communication Technology (ICT) is perhaps predictably the most active job category, with 47% of all positions posted on Joblift in the last 12 months (64,495 vacancies) being in the sector. While ICT roles dominated, the Engineering category also understandably ranked in second place with 17,843 roles in the last year, followed by Installation, Repair and Maintenance with 5,965 positions, as manufacturing companies employed large numbers of staff to operate and maintain their new robotic workforce.

Job categories

While the most in-demand specific positions were meanwhile System Developers and Analysts (30,087 roles) which account for 22% of all vacancies advertised since July 2016, the consulting industry also saw a spike in AI-related positions being created, with Consultants and Specialists seeing 6,799 new job postings on the platform. While according to PwC’s analysis, the categories which will be most at risk to replacement by automation are Transportation and Storage, Manufacturing, and, Wholesale and Retail, there is also increasing potential for an increasing encroachment of digital disruption into more white-collar work however.

Robo-Consultancy

Consulting firms themselves have increasingly been leveraging AI themselves meanwhile, as the new technology presents the industry with the potential for low-cost, rapid and reliable analytics to better meet client demand. Most top firms have taken to investing heavily in the technology, with Accenture, among others, working with start-ups to bring cutting edge technology to clients. The consultancy aim to develop more intelligent tools while to integrating innovative technology into their pre-existing offerings, including the recent acquisition of IDefense cybersecurity platform from Verisign, part of a $1.8 billion M&A plan for the firm to boost its digital services. Accenture have already put AI to use to help their clients to improving insurance claims processing, enhanced pharmacovigilance for a pharmaceutical company and helping clients with more powerful fraud detection.

Likewise, KPMG launched Solution 49 initiative in 2016, which sees about 1,000 experts with expertise in fields as varied as cognitive artificial intelligence and robotics within the United States, Germany and the United Kingdom working to bring the advanced technology of cognitive computing to their clients to enable them to find new ways of making profit.

Most posted job roles

However, according to recent reports, Swiss global financial services company, UBS Group AG, have partnered with Amazon to leverage their innovative Alexa AI interface in a new manner that may give a few consultants cause for concern. In addition to the synthetic intelligence’s other 15,000 skills, Alexa has now been developed to the point of being able to answer economic questions for UBS clients.

While the partnership is in its early stages, the alliance between Amazon and UBS currently allows a selection of UBS’s European wealth-management clients to ask Alexa certain financial and economic questions, which the AI then answers with information provided by UBS’s chief investment office automatically. While Alexa is currently utilised to parrot advice from human beings however, AI and machine learning applications already analyse massive amounts of structured and unstructured data, before producing insights in a fraction of the time and at a fraction of the cost of consultants in the financial markets.

The worldwide market for management consulting services is estimated to be worth more than $130 billion. In the past years, expenditures on management consultancy grew on average with more than 4% per year, with the percentages picking up further have in line with the economic recovery of mature markets worldwide, meaning premiums for CEOs seeking external advice have continuously ramped up contrary to their common aim, to maximise profit by finding ways of cutting expenditure.

Corporations and governments coming under increasing scrutiny for their average consulting spend meanwhile, with the UK’s executive alone coming under fire for spending up to £600 million since 2013 on external advisory services. The development of AI in this area meanwhile could hypothetically see the consulting industry the victim of the same realignment that is already displacing manual labourers from their old jobs.

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Four ways digitalisation is transforming car brands and dealers

16 April 2019 Consultancy.uk

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”