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October 5, 2018

Automation Is The Answer To Our Changing Demographics

Harel Tayeb

(Have a nice day Photo/Shutterstock)

“Automation can be the ally of our prosperity if we will just look ahead, if we will understand what is to come, and if we will set our course wisely after proper planning for the future” – these words were spoken not by a tech CEO or even in recent history, but by U.S. President Lyndon B. Johnson in 1964. The possibility – and fear – of robots rendering human work unneeded has riveted us from almost the moment of their creation.

In fact, such concerns have seemingly accelerated as tangible progress is made in building learning machines. Artificial intelligence is being realized not on a chalkboard but in very familiar, everyday things, such as our (driver-less) cars, (cashier-less) grocery stores, and potentially, our paychecks. But here’s the rub: while automation at home is viewed as a positive progression, automation in the workplace is often viewed with apprehension.

By 2021, Forrester estimates there will be more than 4 million robots doing office and administrative work as well as sales and related tasks. From functions as varied as finance to human resources, working alongside virtual counterparts will become the norm, and not a moment too soon in my opinion. Human minds are not designed for rote, repetitive tasks, and through virtual assistants can be freed to focus on more creative pursuits.

My segment, robotic process automation (RPA), has grown by leaps and bounds thanks to the introduction of machine learning, which allows RPA solutions to scale despite the infinite differences between enterprises’ internal business processes. Plainly speaking, it’s not just that “structured” data can be inputted quicker, but the raw, unstructured information you or I would consider before even opening the spreadsheet makes sense to machines now, too.

(Vasilyev Alexandr/Shutterstock)

On an aggregate level, the productivity gains enabled by smart bots are staggering. PwC estimates that AI technologies could increase global GDP $15.7 trillion, or 14%, by 2030. Yet despite such unprecedented productivity growth, I feel that concerns about automation supplanting – and not supplementing – human work are misplaced, and the reason is demographics. Human society is not static but has rather changed quite dramatically since LBJ’s time, as proven by even a cursory glance at the news.

In particular, worldwide demographics are weakening, which at first thought seems patently false, given that it took 200,000 years for the world population to reach 1 billion people, and just 200 more years to reach 7 billion. The industrial revolution jump started advances that allowed humans to live longer, easier lives, and our population swelled as a result. We apparently expect this trend to continue indefinitely as depicted in the mega-cities of science fiction, but the reality is quite different. In about half the world, the total fertility rate is below 2.1, which means the population is shrinking (stripping out immigration); this is called sub-replacement fertility.

But it’s no coincidence the country that has grappled with this issue the longest, Japan, is also a global leader in robotics, as automation is a natural solution to demographics trends like these. To quote McKinsey: “half of the sources of economic growth from the past half century (employment growth) will evaporate as populations age … Automation could compensate for at least some of these demographic trends. We estimate the productivity injection it could give to the global economy as being between 0.8 and 1.4 percent of global GDP annually.”

I think that instead of being the enemy, automation in the workplace will save us from productivity declines attributable to changing demographics globally. We’re already seeing proof of this in RPA, as the use of offshore outsourcing has steadily dwindled due to a one-two punch of rising workforce costs and RPA getting better, faster and cheaper thanks to A.I. We might not need to employ as many people in the future, but that’s not such a bad thing in a future with fewer people.

Even the word ‘robot,’ which is derived from the Czech word ‘robota,’ meaning ‘forced labor,’ portends humanity’s innate fear of being replaced, but LBJ’s prescient view of automation is the right one. In a somewhat miraculous turn of events, we are creating smart machines at the very moment in our history when we will need their help the most; it’s just understandably hard for people to envision because two things are changing: the robots, and us. 

About the author: Harel Tayeb is the CEO of Kryon Systems, a provider of robotic process automation solutions. Harel is a serial entrepreneur with more than 15 years of experience in the tech ecosystem, most recently as an investor and adviser for startups and venture capital firms. 

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