With GenAI, India can not only optimise its competitive advantage when it comes to its workforce but also improve the overall productivity and wellbeing of the Indian economy through its workforce
The dawn of any new innovation is followed by debates around its impact on jobs. The same pattern has repeated itself with the dawn of AI. In the past six months multiple high-profile reports have been launched by the likes of Goldman Sachs, IPSOS, OECD and the likes talking about the adverse impacts of the AI revolution on jobs. On the other hand, we have commentaries which say that AI would have no impact on jobs. With this confusion, how must policymakers, enterprises and HR professionals decode the impact of AI on employment?
To help answer this question, I have attempted to decode the relationship between AI and employment at a macro level, enterprise level, and micro level to help each of the stakeholders in their journey to find some answers.
The Macro Implications of AI on Employment
The debates around AI and employment at a macro level are being played out at two levels. At one level reports suggest that the AI revolution will lead to mass job losses as they will now be replaced by AI. On another level, reports suggest that the AI revolution will result in productivity gains, possibly adding 7% to the global GDP.
However, what policymakers need to look at is how AI will impact labor intensive sectors in the country since these sectors employ a large number and mostly vulnerable sections of the population who have huge implications on the economy. In the Indian context, the most labor intensive sector are industries which are manufacturing, construction, etc. According to World Bank data, the share of industrial jobs has increased from 15% to 25% between 1991 to 2021. Hence, it becomes imperative to see how AI would impact these jobs. According to a study done by OpenAI and University of Pennsylvania, jobs in agriculture, mining and manufacturing are the least exposed to generative AI and would have the least impact.
However, the same study also said that most of the job impact of GenAI would be in the services sector like IT. In the context of India, since this sector is not workforce intensive but has a significant impact on the GDP, GenAI would prove to be a net benefit for us since services are a crucial complementary sector for workforce intensive industries and AI here would lead to optimisation of how we manage large workforces.
The Enterprise Implications of AI on Employment
The macro implications of AI have a direct impact on the enterprises as well. Enterprises in worker intensive sectors have traditionally used manual processes to manage their workforce. However, with rising demand for optimisation, many enterprises have started using digital services to optimise their operations and cut costs. The net benefit of Gen AI would prove beneficial for enterprises now. Since AI would optimise IT services, enterprises will now get very robust digital solutions for significantly lower costs. Moreover, there will be huge innovations in the digital solutions sector which will provide services to enterprises which will help them optimise their workforce further.
For example, with the entry of GenAI, workforce management solutions are not only automatically analysing how each worker is performing but it is also self-generating upskilling content for these workers to help them develop in areas which is contributing to the largest loss in their productivity. Solutions like these, at its current stage of innovation, already have the potential to cut down costs by 50% and increase productivity by over 70%.
Micro-Implications of AI on HR Professionals
It is clear from the previous two sections that, at least for frontline workers, AI will not impact the jobs or employability of these workers. However, what will definitely happen is that management of these workers will become a lot more optimised which means that the HR professionals who manage them will see the most changes.
The micro-implications of AI on HR Professionals are where things get a bit tricky. HR Professionals of enterprises that work with frontline workers now need to go through a major rethink. HR Professionals in these industries were mostly hired for operations, which means that they were hired to maintain the manual systems put in place by enterprises.
However, with AI, some of these processes are now going to become redundant. However, this is not all that bad. HR Professionals in frontline workforce management industries now have the opportunity to rethink the way they manage their workforce. do the same work their counterparts in white collar workforce management industries do.
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With manual processes being taken care of, HR Professionals now have the opportunity to not only focus on larger initiatives but also optimise core aspects of their workforce management.
AI can now help them come up with more effective initiatives to help enterprises address major issues like workforce shortage, retention, equitable workforce structures, and workforce productivity and set in place automated processes to make sure an enterprise achieve these goals with minimal human intervention.
With bright HR minds focusing on these larger critical tasks, the frontline economy will go through the same benefits and wellbeing revolution that the white-collar economy went through in the last decade.
The relationship between AI and employment is not linear as we have now seen. But, for the bottom line, this is a revolution worth adopting. With GenAI, India can not only optimise its competitive advantage when it comes to its workforce but also improve the overall productivity and wellbeing of the Indian economy through its workforce.
