Digital Technology
Nov 12, 2015

Can technology really automate 45 percent of work? Three reasons why it cannot happen

A recent McKinsey Research Institute article on automation, estimates that today’s technology will automate up to 45 percent of work functions, and the forecast talks to more than just simple routine tasks. This provocative prediction may not prove true; however, McKinsey rightfully gets to the core of the debate these days: 45 percent of activities doesn’t mean 45 percent of current jobs. This is where the realization automation’s power (or digital tech in general) gets tricky. I believe three things still hold back the digital revolution.

First, to harness this automation power, jobs and processes must be redefined, as often it isn’t viable to fully automate certain roles. This is a challenge, and it has been historically. If the percentage of activity that can be automated is small, companies will absorb that as productivity and use yearly natural attrition and/or growth to adjust. Employees will simply take that in stride as long as the technology is easy to adopt. The automation will just translate to broader work scope. If automation’s impact, however, is very material, like it has been in the case of outsourcing, the change management must be deliberate and substantial, and require specialized skills and decision making. Otherwise, the enterprise won't move forward or realize a positive business case.

For instance, mass transformation of human resources (HR) through outsourcing was significantly blunted by fractional full-time employee (FTE) issues, meaning that companies often could only outsource part of jobs, and the necessary redesign that would have made that economically viable to outsource the full job was either cost prohibitive or simply beyond the capability of many HR organizations. This example is also applicable to transformation through automation.

Second, disruptive tech adoption struggles when it is pushed totally by product people in product companies - and why virtually all large enterprise product companies need a big partner ecosystem to "finish the job." This is why a Lean DigitalSM approach resonates in the market. However, most technologists, pundits, analysts, consultants, and executives today remain focused on the shiny object du jour, and not on the necessary recombination of mostly legacy operations, processes, and technologies that must happen for new technologies to generative disruptive impact.

Third, another good factoid in the McKinsey research cites that automation’s overall benefit is more than three times the impact on cost alone. The challenge is that most executives aren't able to build business cases, or even willing to take on decisions, when the main driver is a non-cost factor. Cost based return-on-investment is typically considered as a harder and more reliable fact than other potential benefits. Genpact has previously made the case that enterprises need to adopt a much better approach to building business cases industrializing (including automation) business processes. Unless executives can build better business cases that include non-cost benefits, and act on them, the investment in digital technologies will be held back.

Net - those robots coming after everyone's jobs still need to get past the first hurdle: management.

About the author

Gianni Giacomelli

Gianni Giacomelli

Chief Innovation Leader

Gianni serves as Chief Innovation Leader where he drives and sponsors Genpact’s strategic initiatives aimed at sustaining clients’ transformation into digitally-enabled companies. He also co-leads the Massachusetts Institute of Technology (MIT) efforts to set up a Collective Intelligence Design Lab.