Over the Memorial Day weekend, Phil Fersht pinged me with an unashamed and mostly unvarnished rant on the state of the IT services economy. Fersht says:
I was interviewing with the Delhi branch of NPR the other day on the layoff paranoia engulfing the Indian IT industry, and it dawned on me just how inhuman our business has become. These are normal people who still view the world as one where employers have responsibilities to their employees, where people still care about the welfare of others, when you got up in the morning and went to a job that had a purpose and a future.
The poor interviewers simply couldn’t comprehend why major employers enjoying ~20% profit margins and continual 5-10% growth were so focused on making massive staff reductions. “Don’t these firms have a responsibility to their employees, Phil?” was the question. “Of course they don’t, it’s all about their shareholders” was my immediate hair-trigger response. Ugh – I suddenly felt ashamed of the business of which I was part.
The corrosive profit motive
Fersht is correct. The business climate has changed dramatically the last 30 years as the (failed) dogma of trickle down economics has given way to the notion that the corporation has in some way same or similar rights to people such that the absolute pursuit of profit at all costs is both legitimate and a societal good.
Couple that with the proliferation of leadership incentive schemes that focus wholly upon growth in shareholder value and it is easy to understand how Fersht arrives at his conclusion.
Then the horror of what this means sets in:
Stop this inane drivel about digital, automation and machine learning and start focusing on proper business solutions. There, I said it. Sorry to be blunt, but why is almost every service provider and consultant subjecting us to the same sales pitch about how amazing they are at automating, digitizing the machine-learning the crap out of everything. I have found myself imprisoned at conferences with legacy outsourcing advisors, analysts and service providers – many of whom can barely spell “algorithm” – suddenly pretending they have been lifelong evangelists of these areas… And all these enterprise practitioners who subtly sneaked “RPA” into their job titles. Have we really become an industry of bullsh*tters and callous labor eliminators promoting this new wave of technology-driven human greed?
Well yeah. I’ve just come off a (mercifully) short events tour where the buzzword bingo game has shifted effortlessly to many of the topics which Fersht bemoans. Prior to one conference, we vigorously counselled a vendor to tune out as much of the buzzwords as possible, albeit on the grounds of bullshit fatigue among buyers.
But to Fersht’s main point about job elimination, globally, we are at a very dangerous point in both societal and economic development. Consider the following:
- Short term-ism is endemic, even among those companies you normally associate with taking the long view.
- Companies of all sizes and in all geographies are looking at how Amazon, Apple, Google and Facebook are eating up markets and wondering how they respond. Many I’ve listened to consider a reductio in unit labor costs as a primary way to buy time.
- Report after report states that the primary purpose of adding more robotic processes and machines, whether real or virtual into business processes is to improve profit at the cost of an implied reduction in human labor requirements for the long haul.
- What was once seen as ‘men’s labor’ is the primary target for jobs reduction. Work most often associated with women is on the rise but at lower cost per hour meaning that at best, the majority of families’ income will remain stalled or in decline for years to come.
- The notion of jobs for life through the acquisition of skills that can be honed and developed over many years has been systematically eroded, especially in manufacturing for the last 30 years.
- The safety nets which used to protect the most vulnerable are under attack.
- No major government has put forward a coherent set of policies that would go towards creating an equitable partnership between the state and business such that the hopes and dreams of those who want to build a better life can be realistically achieved in anyone’s lifetime.
In part, Fersht argues that it is industry’s responsibility to take the lead in making corporate social responsibility (CSR) a differentiator. That only works when business sees profit in CSR. Good examples are emerging which, if played out well, could achieve some of what Fersht argues.
Train and hire
For example, at last week’s Infosys Confluence, the company made a massive play of its work to establish 10,000 jobs inside America. Headline grabbing? For sure. Good PR? Absolutely. More than that? Oh yes but to understand how this works you have to scratch the Infosys surface and get inside the minds of both Infosys Foundation USA and Vishal Sikka, Infosys CEO.
Those who have read my profiles on Sikka will know that he places heavy value on education, frequently referring to his alma mater and the pride he takes in putting all staff through design thinking workshops. Prior to taking the CEO job he told me that an important attraction was the company’s commitment to continuing education. More than a year ago, Sikka told me that he saw no future in growth coming out of the existing business model which he is convinced has to be changed by tie-ing local need to local skills and skills development.
At Confluence, Infosys pulled off a subtle but clever trick in carefully joining the objectives of an emphasis on computer science education that are front and center for the Foundation with job creation. The Foundation and its supporters reeled off a slew of numbers such as the fact it is reaching about 20% of the K-12 schools in offering some kind of introduction to STEM related skills.
Vandana Sikka, who heads Infosys Foundation USA told me that some of the sessions had as many as 200 CIOs booked to hear about the work being done by Code.org and the like.
Eric Holcomb, governor of Indiana was on stage, making clear the case for Indiana as a good place to set up for tech businesses. Earlier, Indiana and Infosys announced the creation of 2,000 tech related jobs in a deal that sees Infosys benefit from a variety of tax related incentives.
Listen to the language used (emphasis added):
Sikka said the state’s business climate, strong university and community college system and access to manufacturing, insurance and health care clients made the Indianapolis area an ideal location for the company’s Midwest hub.
But it was after the main stage session that I got a glimpse of the passion and commitment that Infosys has for its education and jobs related initiative. Back stage I saw Holcomb and the two Sikka’s in animated conversation that clearly reflected the excitement all parties in the Indiana deal feel for this initiative that is already seeing the company rent space and hire in local talent.
Tax and train
Fersht also argues for tax incentives at the federal level in both India and the U.S. I only see this working one way and that is through long term incentives that link skills based job creation to tax breaks.
The problem is it won’t happen except at the state level where local leaders can legitimately make claim to revitalizing or creating new local skills.
Like business, federal politicians are playing with short time lines. Like it or not, the creation of new classes of job takes a lot more than a 4-5 year term. It is a generational thing. And again, like it or not, the ability of some global leaders to grasp the value of developing a generational program is – how can I say…beyond their wit. There are other possibilities.
Mine the social graph
My colleague Derek duPreez reports that Aneesh Chopra, the former U.S. CTO, makes the case for opening up state databases to better match skills to vacancies. This idea has much to commend it, especially as it draws upon the detailed social graph that LinkedIn owns and which we have long argued is wildly under used.
Chopra makes an important observation that references work he undertook when Obama was looking to bring back veterans from the Middle East and put them to work in the civilian population:
I took a snapshot of data in 2014, where I hoovered up every job posting in Virginia from an employer that made a veteran hiring commitment. I then said to LinkedIn can you open up your skills taxonomy, read all of these job postings and tell me the strength of skill associated.
Then I went to the employment commission (every time you file for employment benefits you’re supposed to list the skills that you’ve got) – let’s see if we can open up the data to economists. Here are the skills of unemployed veterans, here are the job postings and the skills that they’re looking for – 23% of all job postings were entry level tech jobs.
Every single one of them could have been filled by an unemployed veteran that was tech trainable within 6 months, in those communities. I was talking to a recruiter at one of the big telecom companies, where he said, “our software screens them out, they wouldn’t even make it through the first round.”
The implications of what Chopra discovered have been long known in the sense that current job screening systems are woefully inadequate for workforce optimization. If Chopra’s ideas could be percolated up to the Federal level then there is every chance that fresh opportunities could be found among many industry segments.
Fersht is right to rip the Band-Aid off the sugar coated world of relentless automation and ask the question – what next? Progress absolutely requires the partnership between business and central governments but on a footing of co-existence for the benefit of all.
However, for that to work, there needs to be something of a reset in understanding how economies operate, the responsibilities of mega wealthy businesses and the families that control them and a setting aside of the ‘left-right/socialist-capitalist’ labeling that stifles otherwise useful debate.
To that extent, I would prefer to see business get behind Mark Zuckerberg’s invocation to ‘purpose,’ something to which Fersht alludes. It’s easy to snicker at someone who has made it and has the luxury of being able to say whatever he wants, but then that is to deny or denigrate a question that many business leaders are starting to ask themselves, absent solid cues from their respective governments – just how ARE we going to leave the world a better place?
Image credit - via the author, DiE and stock images
Disclosure - Infosys covered some of the author's travel and expense for attending Confluence.