The concerns we hear most often from our clients tend to revolve around job satisfaction and job security. In a survey late last year, 51% of US employees earning over $75K said they are worried about losing their job. Pretty much everyone we work with realises that the concept of job security has changed significantly in recent years, but it still warrants closer investigation. Beyond the usual restructures and the business cycle, there are three longer-term trends that potentially impact job security for many professionals:

  1. Outsourcing
  2. Offshoring
  3. Computerisation

Outsourcing is the least contentious of the three, it largely appears to be employment neutral – individual terms and conditions may change, but the overall level of employment remains unaffected. Only in the first phase of outsourcing did the process go hand-in-hand with significant reductions in staff, but today it is just as likely that outsourcing will lead to increases in overall employment (because the outsourcing provider creates new overheads in backend functions such as management, finance, HR/payroll etc.). In addition, there is no fundamental change to the work itself.

Offshoring is more of a problem, as jobs leave the national economy and migrate to countries with cheaper labour. Whilst this initially only affected manufacturing and other process work, today the trend is increasingly prevalent in routine cognitive tasks that don’t require face-to-face interactions – such as payroll, accounts payable, call centres and IT support. The scope of what sort of jobs can be offshored will increase steadily in the next decade, as education levels continue to increase in prime offshoring destinations and task standardisation and simplification allows more jobs to be broken up into components that don’t require face-to-face dealings. A study done in 2009 estimated that ~25% of jobs will be offshorable within the next decade. When considering the potential impact, bear in mind that supervisory and management roles migrate as well when a whole function is offshored.

Yet by all accounts the elephant in the room of future job security is computerisation. A recent McKinsey survey found that 44% of firms which reduced their headcount since the financial crisis in 2008 had done so by means of automation. But what about the future? In a fascinating paper Carl Frey and Michael Osborne from Oxford University have tried to predict the impact of computerisation on employment over the next two decades. They have taken into account recent engineering breakthroughs (such as ‘big data’) and polled the engineering department at Oxford to predict which computer and robotics engineering challenges will most likely be overcome in the next two decades. Based on this they estimated the probability of computerisation for 700 detailed occupations. The result is that they can forecast that legal writing, bookkeeping, telemarketing, insurance underwriting and truck driving will all be automated, while most jobs in healthcare, aged care and disability care will not.

They concluded that (pending unforeseen breakthroughs in machine learning and robotics) only occupations involving complex perception and manipulation, creative intelligence and social intelligence are safe from automation over the next two decades. You can see a summary of their findings in this graph:

employment-automation

The interesting insight from this research is that jobs either can and will be automated (probability > 80%) or they can’t (probability <10%). There really isn’t much of a middle ground compared to the two peaks at either side of the graph. It is also noteworthy that service and sales sit squarely in the high probability category, they predict that the recent trend towards low-paid service jobs will be reversed as these jobs get automated. In total, nearly half of US employment (47%) is in the high risk category of being computerised.

These trends are going to affect the business models of whole industries, the partnership structures of legal firms being the prime example in the immediate future. The work of legal secretaries, paralegals and (junior) lawyers involved in case analysis, research and discovery can and are being automated. But the generous salaries of the partners at the top rely on the pyramid of lawyers underneath, the model is not sustainable without being able to maintain the lower layers of the pyramid and charge them out at rates that significantly exceed their salaries.

If you would like to get some deeper understanding of these trends, I can recommend the book by Erik Brynjolfsson and Andrew McAfee – Race Against the Machine (2011) and the book by Martin Ford – The Lights in the Tunnel (2009).