Death of the Staffing Industry: The Rise of AI and Robotics...March 16‐19, 2015 Orlando, FL IBM Watson November 2013, IBM announced it would make Watson's API available to software

March 16‐19, 2015Orlando, FL

Death of the Staffing Industry: The Rise of AI and Robotics

March 19, 2015

John NurthenExecutive Director, Global Research, Staffing Industry Analysts


Welcome to The Henn‐na Hotel, Nagasaki

72‐room Hotel opening in July 2015– Rooms will be $65 per night

Company plans to have 90% of hotel services delivered by multilingual ‘Actroid’ robots– Robots will staff the front desk, act as porters, and do cleaning duties– Other high‐tech features include facial recognition software allowing guests to

enter locked rooms without a key, and room temperature controls that can detect a guest's body heat


Robot Olympics 2020

"In 2020 I would like to gather all of the world's robots and aim to hold an Olympics where they compete in technical skills."

Japanese Prime Minister Shinzo Abe, July 2014


Bill Gates, March 2014

“Software substitution, whether it’s for drivers or waiters or nurses … it’s progressing. … Technology over time will reduce demand for jobs, particularly at the lower end of skill set. … 20 years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model.”


What Do We Mean by AI and Robotics?

Software substitution through cognitive computing applications

Drones

Bots

Robots


1750: First Industrial Revolution

1870: Second Industrial Revolution

1970: Third Industrial Revolution


1750: First Industrial Revolution

1870: Second Industrial Revolution

1970: Third Industrial Revolution– Personal Computers– Internet– Big Data– AI & Robotics– 3D Printing




IBM Watson

November 2013, IBM announced it would make Watson's API available to software application providers, enabling them to build apps and services embedded with Watson's capabilities– Goal is to have computers interacting in natural human terms across a range of

applications and processes– So far, over 800 organizations and individuals have signed up for Watson’s

“ecosystem”

January 2014, IBM announced it is investing $1 billion in a Watson business unit that will employ 2,000 people

– Watson predicted to create $10 billion in revenue over next ten years– Numerous and diverse projects currently in development are applications for education, retail, procurement, telemarketing and healthcare

– June 2014, Watson created its own original BBQ sauce in collaboration with New York’s Institute of Culinary Creation


In September 2013, two Academics from Oxford University, Dr Carl Frey and Dr Michael Osborne, publish The Future of Employment: How Susceptible are Jobs to Computerisation?

Analyzed 702 US occupations and ranked them according to their risk of computerization

www.oxfordmartin.ox.ac.uk/downloads/academic/ The_Future_of_Employment.pdf

Enter Frey & Osborne


Three Key Skill Attributes

• Perception and manipulation– Finger dexterity– Manual dexterity– Ability to work in cramped workspace/awkward positions

• Social intelligence– Social perceptiveness– Negotiation– Persuasion– Assisting and caring for others

–Creative intelligence– Originality– Fine arts


Can Computers Create?

Source: AARON


“The secular price decline in the real cost of computing has created vast economic incentives for employers to substitute labour for computer capital.”Carl Frey and Michael Osborne

Frey & Osborne Conclusions

47% of total US employment is at risk over next 10 to 20 years– Predictions are based on current and near‐term technological

breakthroughs and did not consider the impact of any future technology inventions

Given more recent advances in machine learning (data mining, machine vision, computational statistics, etc) and mobile robotics, the next technological wave will increasingly hit higher‐skilled white‐collar jobs


Likely Economic Impact According to Classical Economic Theory

An increase in the efficiency of production

A reduction in the price of goods

An increase in real income and thus an increase in demand for other goods

A destruction effect on labor and the reallocation of labor supply

A capitalization effect as more companies enter industries where productivity is relatively high, leading to increased employment in those expanding industries


Productivity and Employment Decoupled

Source: The Second Machine Age – Brynjolfsson & McAfee


IT and Automation Impact on Wages Information technology and automation are a likely reason

why median wages have been stagnant in the US over the past decade, despite rising productivity

Responses weighted by each expert’s confidence

Source: University of Chicago – IGM Economic Experts Panel


“….it is a safe bet that the human labor market will center on three kinds of work: solving unstructured problems, working with new information, and carrying out non‐routine manual tasks. The rest will be done by computers and low wage workers abroad. It is also a safe bet that most Americans will need to acquire new knowledge and skills over their work lives in order to earn a good living in a changing work world.”

Dancing with Robots ‐ Frank Levy and Richard J. Murnane


Employment Share: Routine v Non‐Routine Jobs

Source: US Census Bureau, Current Population Survey (bands indicate recessions)


Probability of Computerization Over Next Two Decades

Job Probability of Computerization

Recreational Therapists 0.003Dentists 0.004Athletic Trainers 0.007Clergy 0.008Chemical Engineers 0.02Firefighters 0.17Actors 0.37Health Technologists 0.40Economists 0.43Commercial Pilots 0.55Machinists 0.65Word Processors & Typists 0.81Real estate sales agents 0.86Technical writers 0.89Retail Salespersons 0.92Accountants & Auditors 0.94Telemarketers 0.99

Source: Frey &Osborne

+0.7 = High Risk


Worker Perceptions

Within the next decade, my current job will be automated

Source: Randstad, March 2015


Machines as Talent: Capability Gap by Region

Source: Deloitte Global Human Capital Trends, April 2015


A Video by C.G.P. Grey

https://www.youtube.com/watch?v=7Pq‐S557XQU


63% of all temporary agency jobs susceptible to replacement over the next 10 to 20 years


Impact of Automation on the US Staffing Industry

Staffing Segment Probability of Computerization

Office/Clerical 0.814Industrial 0.796Commercial 0.802Finance & Accounting 0.845Clinical/Scientific 0.413Marketing/Creative 0.364Other Professional 0.346IT 0.278Legal 0.275Education 0.252Healthcare 0.242Engineering/Design 0.233Professional/Specialty 0.327TOTAL TEMPORARY STAFFING 0.719

Source: Staffing Industry Analysts


Top 50 firms€

Highest Risk Job Roles by Staffing Sector

Highest Risk Jobs Probability of Computerization

Photographic Process Workers and Processing Machine Operators

0.99

Sewers, Hand 0.99Driver/Sales Workers 0.98Etchers and Engravers 0.98Packaging and Filling Machine Operators and Tenders

0.98

Industrial


Cargo and Freight Agents 0.99

Data Entry Keyers 0.99Telemarketers 0.99Brokerage Clerks 0.98Order Clerks 0.98

Office/Clerical


Title Examiners, Abstractors, and Searchers

0.99

Paralegals and Legal Assistants

0.94

Legal


Surveying and Mapping Technicians

0.96

Excavating and Loading Machine and Dragline Operators

0.94

Service Unit Operators,Oil, Gas, and Mining

0.93

Geological and Petroleum Technicians

0.91

Pump Operators, except Wellhead Pumpers

0.90

Engineering/Design


Insurance Underwriters 0.99Tax Preparers 0.99Bookkeeping,Accounting, and Auditing Clerks

0.98

Claims Adjusters, Examiners, and Investigators

0.98

Credit Analysts 0.98

Finance & Accounting


Dental Laboratory Technicians

0.97

Ophthalmic Laboratory Technicians

0.97

Pharmacy Technicians 0.92Medical Records and Health Information Technicians

0.91

Medical and Clinical Laboratory Technologists

0.90

Healthcare



Highest Risk Job Roles by Staffing Sector

IT

Top 50 firms€


Environmental Science and Protection Technicians, including Health

0.77

Social Science Research Assistants

0.65

Geoscientist, Except Hydrologists and Geographers

0.63

Life, Physical, and Social Science Technicians, All Other

0.61

Chemical Technicians 0.57

Clinical/Scientific


Library Technicians 0.99Librarians 0.65Teacher Assistants 0.56

Education/Library


Computer Support Specialists 0.65


Broadcast Technicians 0.74Market Research Analysts and Marketing Specialists

0.61

Camera Operators, Television, Video, and Motion Picture

0.60

Audio and Video Equipment Technicians

0.55

Demonstrators and Product Promoters

0.51

Marketing/Creative



0%

10%

20%

30%

40%

50%

60%

70%

Based on what you know, which of the following TYPES of workers did work on behalf of your company/organization during 2014? (Non‐Employed responses)

Work Currently Performed by a Variety of Non‐Employed Resources

Source: Staffing Industry Analysts, Total Talent Management Survey, March 2015


Temporary Robots

• The Wakamaru robot was first made available to clients as a temporary receptionist in 2007 by Japanese staffing firm, People Staff

• Skills include facial recognition, basic manual tasks, good listening skills (voice recognition capabilities), verbal skills with customers (vocabulary of 10,000 words), singing cheerful songs and escorting visitors to different destinations.

• At $1,000 per day, the Wakamaru is less cost‐effective for short‐term engagements. However, annual contracts run for as little as $25,000 dollars, comparable to the annual cost of a human receptionist.


Competing Against the Machines or Running With Them?

Can AI and automation be harnessed to develop broader and better staffing services?

Source: www.workfusion.com

– Workfusion sources, trains and manages a hybrid workforce of machines and people to undertake repetitive data‐driven tasks Leveraging three key resources:

automation tools, crowdsourced workers, and so‐called “employee experts”

– Is the human‐machine hybrid the staffing model of the future where machine algorithms perform high‐volume repetitive tasks and freelance or temporary workers perform tasks that require more judgment and analysis?


Top 50 firms€ Top 50 firms

€10.9 billion

Frey and Osborne suggest that “occupations that require subtle judgment are also increasingly susceptible to computerization. To many such tasks, the unbiased decision making of an algorithm represents a comparative advantage over human operators. In the most challenging or critical applications, as in ICUs, algorithmic recommendations may serve as inputs to human operators; in other circumstances, algorithms will themselves be responsible for appropriate decision‐making.”

Impact on the Role of the Agency Recruiter

Job Title Probability of Computerization

HR Manager 0.0055Real Estate Sales Agents 0.8600HR Assistants 0.9000Interviewers 0.9400

Source: ‘The Future of Employment: How Susceptible are Jobs to Computerisation’? by Carl Frey and Michael Osborne


Social intelligence aspects of the recruitment role is its strongest defense against the onwards march of technology – the ability to interact with and understand clients and temporary workers in order to make the right match– While we might judge that agency recruiters may not be completely at risk

from software substitution, it is easy to see how parts of their role may well be replaced and/or enhanced by software

In future, staffing firms will need fewer recruiters or, at the very least, recruiters with a different mix of skill sets from those they employ today

Impact on the Role of the Agency Recruiter


An Optimistic Outlook

Historically, technology has been a net creator of jobs so we should expect new jobs to be created to replace those that are lost

Education will keep pace with the rate of change

Machines improve productivity, lowering costs and providing more leisure time for the workforce with massive improvements in entertainment, education, communication, and health

Demand for contingent work will increase in the short to medium term due to business disruption/uncertainty

Staffing firms will evolve and harness technology to develop human‐machine hybrid delivery models


A Pessimistic Outlook

History isn’t always the best guide to the future ‐ this is the first time technology will impact professional jobs in the service sector

Spiral towards a zero‐labor economy where whole swathes of the population lose their jobs

Gap widens between winners and losers with a small core elite controlling both technology and capital

Education will not keep pace with the rate of change

Structural demand for contingent work will decrease

Many staffing firms will fail to react to the new business environment and go out of business


A Very Pessimistic Outlook


Any Questions?

Documents

Death of the Staffing Industry: The Rise of AI and Robotics...March 16‐19, 2015 Orlando, FL IBM Watson November 2013, IBM announced it would make Watson's API available to software