By Satya Ramaswamy / The New York Times
Every few months it seems another study warns that a big slice of the work force is about to lose their jobs because of artificial intelligence (AI).
Four years ago an Oxford University study predicted that 47 percent of jobs could be automated by 2033. Even the near-term outlook has been quite negative: A 2016 report by the Organisation for Economic Co-operation and Development said 9 percent of jobs in the 21 countries that make up its membership could be automated. My own firm released a survey recently of 835 large companies (with an average revenue of $20 billion) that predicts a net job loss of between 4 percent and 7 percent in key business functions by the year 2020 due to AI.
Yet, our research also found that, in the shorter term, these fears may be overblown. The companies we surveyed—in 13 manufacturing and service industries in North America, Europe, Asia Pacific and Latin America—are using AI much more frequently in computer-to-computer activities and much less often to automate human activities.
Our survey asked managers of 13 functions, from sales and marketing to procurement and finance, to indicate whether their departments were using AI in 63 core areas. It found that AI was used most frequently in detecting and fending off computer-security intrusions in the information-technology (IT) department. This task was mentioned by 44 percent of our respondents. Yet, even in this case, we doubt AI is automating the jobs of IT security staff out of existence. In fact, we find that it’s helping severely overloaded IT professionals to deal with an increase in hacking attempts. AI is making IT security professionals more valuable to their employers, not less.
In fact, we saw that IT was one of the largest adopters of artificial intelligence. IT is using AI to resolve employees’ tech-support problems, to automate the work of putting new systems into production and to make sure employees use technology from approved vendors. Between 34 percent and 44 percent of global companies surveyed are using AI in their IT departments in these ways.
In stark contrast, very few of the companies we surveyed were using AI to eliminate jobs altogether. For example, only 2 percent are using artificial intelligence to monitor internal legal compliance and only 3 percent to detect procurement fraud.
What about the automation of the production line? Whether assembling automobiles or insurance policies, only 7 percent of manufacturing and service companies are using AI to automate production activities. Similarly, only 8 percent are using AI to allocate budgets across the company. Just 6 percent are using AI in pricing.
So where should your company look to find AI applications that can bestow big benefits without killing jobs? From our survey and best-practice research on companies that have already generated significant returns on their AI investments, we’ve identified three patterns that separate the best from the rest when it comes to AI. All three are about using AI first to improve computer-to-computer activities before using it to eliminate jobs:
■ Put AI to work on activities that have an immediate impact on revenue and cost. When Joseph Sirosh joined Amazon.com in 2004, he began seeing the value of AI to reduce fraud, bad debt and the number of customers who don’t receive their goods and suppliers who don’t receive their money. By the time he left Amazon in 2013, his group had grown from 35 to more than 1,000 people—all of whom used machine learning to make Amazon more operationally efficient and effective. Over the same time period, the company saw a tenfold increase in revenue.
■ Look for opportunities in which AI can help you produce more products with the same number of people you have today. The AI experience of 170-year-old news service The Associated Press (AP) is a great case in point. AP found in 2013 an insatiable demand for quarterly earnings stories, but their staff of 65 business reporters could write only 6 percent of the earnings stories possible, given America’s 5,300 publicly held companies. The earnings news of many small companies thus went unreported on AP’s wire services. So that year, AP began working with an AI firm to train software to automatically write short news stories about earnings. By 2015, AP’s AI system was writing 3,700 quarterly earnings stories—12 times the number written by its business reporters. This is a machine-to-machine application of AI. The AI software is one machine; the other is the digital data feed that AP gets from a financial information provider (Zacks Investment Research). No AP business journalist lost a job. In fact, AI has freed up its staff to write more in-depth stories on business trends.
■ Start in the back office, not the front office. You might think companies will get the greatest returns on AI in business functions that touch customers every day or by embedding it in the products they sell to customers. Our research says otherwise. We asked survey participants to estimate their returns on AI in revenue and cost improvements, and then we compared the survey answers of the companies with the greatest improvements (the “AI leaders”) to the answers of the companies with the smallest improvements (the “AI followers”). Some 51 percent of our AI leaders predicted that by 2020 AI will have its biggest internal impact on their back-office functions of IT and finance/accounting; only 34 percent of AI followers said the same thing. We believe the leaders are right: Focus your AI initiatives on the back office, particularly where there are lots of computer-to-computer interactions in IT and finance/accounting.
Computers today are far better at managing other computers and, in general, inanimate objects or digital information than they are at managing human interactions.
When companies use AI in this sphere, they don’t have to eliminate jobs. Yet, the job-destroying applications of AI are what command the headlines: driverless cars and
trucks, robotic restaurant order-takers and food preparers and more.
Make no mistake: Automation and artificial intelligence will eliminate some jobs. But we believe companies would be wise to use AI first where their computers already interact. There’s plenty of low-hanging fruit there to keep them busy for years.
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Satya Ramaswamy is vice president and global head of Tata Consultancy Services’ Digital Enterprise group.
Image credits: Mopic | Dreamstime.com