A new trend is developing in the tech and business world and the speed at which it is happening is alarming. The need for people is waning as companies seek to scale themselves profitably on a digital backbone – and it’s having a serious impact on our career paths.
When companies historically did layoffs, it was because they were in financial peril and had no choice but to saw off costs to stay solvent on the balance sheet. It was always painful, because you needed people to grow your business. Sacking people was not a good thing to do.
Suddenly it’s in vogue to shed people
However, if you were unfortunate enough to get caught in a layoff, you dusted off your CV, went out on the job market and (usually) found yourself something pretty quickly. Companies needed people – whether they were superstars, or solid foot soldiers; when you needed an employer, you would always find something.
Now something different is happening in the mindsets of business leaders – companies which are doing really well are in the process of proactively removing staff – both at junior and senior levels. You really don’t want to get caught up in one of today’s layoffs if you’re eager to stay in a similar job in future, because the modern business is adopting a new mentality – cut costs and scale profitably with a digital backbone. Adding armies of people is no longer the order of the day when you peer into an uncertain future, and many savvy businesses are eagerly looking to get ahead of making savage future labor reductions by making them now, in a more incremental fashion.
Case in point, Cognizant has been the golden child of IT services growth over the past decade, the firm ballooning from $2bn in 2007 to $13.5bn exactly a decade later, and yesterday announced 11% year-on-year revenue growth and a 26% increase in year-on-year net profits to $557m. The company continues to outperform the market with relentless growth. Meanwhile, the same firm has recently (reportedly) laid off ~6,000 staff in India and has just offered voluntary redundancy to 1,000 director-and-above US staff – a sizeable chunk of its US workforce.
Meanwhile, we witness firms merging together, such as CSC and HP, with the prime goal to rationalise their armies of people, while IBM’s US marketing employees were recently instructed that they must report to and work at one of these main offices in America: New York, San Francisco, Austin, Cambridge, Atlanta, or Raleigh – and offering redundancy options to those unwilling to make the move (who have renamed their firm “I’ve Been Moved”). And expect similar activities involving many of today’s IT juggernauts, such as Accenture, Capgemini, Deloitte, Infosys, TCS, Wipro, etc – all these firms are looking to deliver more “digital” services for clients with less people, as part of their “digital automation” drives. We’ve also been hearing about leading BPO providers bragging about delivering their traditional services on 10-20% less people, because they have figured out how to automate their services using RPA software and are making progress adopting machine learning techniques to speed up data driven work.
This isn’t just about corporate greed anymore – firms just don’t need people like they used to
One constant between now and the Great Recession of almost a decade ago is the insatiable greed of corporations and their shareholders to maximize quarterly profits at whatever cost to society and long-term planning. However, the rapidly emerging trend that is really causing alarm, is this determination to grow businesses while reducing their workforces, because the majority of people are now very replaceable with technology. We’ve never seen a situation where firms are growing their revenues, maintaining (and often growing) fat profit margins, but eagerly looking to trim whatever “fat” they can find.
New data from our 2017 State of Operations and Outsourcing Study, covering the dynamics of 454 global enterprises, highlights the emerging dynamics of C-Suites seeking both to slash costs (85%) but also to digitize their operations by breaking down the barriers between front and back offices and driving real-time data to support decisions (four-fifths see this as mission critical / increasingly important). Most alarmingly, only 26% of C-Suites now view developing talent quality as mission critical, while only 12% have not yet embarked on investments in automation and machine learning to reduce reliance on both low-end and mid/high-level labor:
The skills that were in demand, even 5 years ago, are now almost defunct, as marketing, programming, accounting, administration skills that were reliant on people, now being significantly enhanced by software, analytics and algorithms. What required 50 programmers, analysts or accountants 5 years ago, can be done by a handful of smart thinkers and much smarter systems. If you are in a profession like HR or procurement, the chances are your firm gave up on scaling up your division a decade+ ago and the emergence of affordable technology suites that do the job has already left these functions operating with as lot less people. Now this is happening right across the board, as the value or programming is diminishing (the future of IT is about smart logic and smart algorithmic thinking, not programming), the need for data analysts is shifting to simplicity as opposed to complexity, marketing is more about data science than content creation and finance is more about predicting data than archiving it.
So how do we survive? Here are seven tips to seriously save you
Before we embark on steps we can take to save ourselves, I would love to recommend a host of courses you can take to sustain your relevance in the modern workplace. However, there really isn’t a defined curriculum for this stuff – you need to develop a strong “unlearning” appetite to develop yourself on the job to get better at communicating and articulating your ideas, understanding how to manage data sets with greater logic and focus, and become a better collaborator, team player and driver of initiatives, with really visible impact on the business.
Firstly, you need to Unlearn – and fast. The first thing we all need to do is unlearn the work habits we picked up over the last decade or two. What was considered sufficient to check the boxes 5 years ago is now already in the legacy box (or, as I hate to call it, the “voluntary redundancy” box). The good news if your company probably still turns in a lovely fat profit, so they can still afford you. The bad news if you need to adopt a mindset of helping them grow profitably if you want to keep your job long term.
Secondly, crank up the urgency. You must focus on speed and urgency with short-terms plans to realize your long-term vision. Really look to deliver results in weeks not months and keep delivering robust outcomes as you go to enhance your credibility . Think of each individual project as a milestone achieved on a longer journey.
Thirdly, you must leave your comfort zone. Everyone in our industry needs to get out of our comfort zones, being bold, and smart about trying new ways of thinking, interacting, collaborating and driving positive energy. You have to venture outside of your comfort zone and take your colleagues and partners with you. You have to believe in what you’re doing and make smart, pragmatic – and sometimes bold decisions along the way.
Fourthly, focus on “quick wins”. Get stakeholders onside by demonstrating meaningful, impactful outcomes without major resource investments. Find a broken process that you can quickly fix with RPA or a SaaS/mobile app, or simply by converging data. Then find another… self-contained projects where you can prove your value quickly are the way forward, not hiding behind big projects that are hard to prove the ROI and seemigly never-ending.
Fifthly, focus on much more dynamic reporting relationships. The need for dynamic management is desperate in so many firms today: managers and staff must constantly interact to fine-tune performance against evolving outcomes. You need to manage up and down in the same constant manner, where relationships are fluid and dynamic – where you are constantly challenging each other with new ideas and ways of doing things . The days of the old “weekly box checking meeting” is over..
Sixthly, be smart about data and how it drives value to your job. Whether you like it or not, data is at the core of every modern enterprise – and you need to get with the program. If you can’t automate and digitize your rudimentary processes, you will quickly run out or value to any organization in today’s era. Being smart about data is no longer geeky, its career-critical.
Seventhly, put your ego aside and get used to flatter org structures. Companies need to kill the hierarchies and most emerging digital business have already adopted a flat structured approach to team building. People naturally collaborate in cross-functional teams motivated by shared outcomes. So put aside your old mentality of climbing the greasy corporate pole and get used to a whole new wave of politics – that of collaborating in flatter, autonomous teams where egos are driven by collective success, not just individual achievement.
Posted in : 2017 State of Industry Study, Cognitive Computing, Robotic Process Automation, Talent and Workforce
Good Article Phil though the rationale for workforce reduction can also be redundancy and middle layer buildup in fast growing firms
Phil .. it’s a good read. 7 steps to survive should be the starting point for everyone..
Rajesh
Typically brutal and all-to accurate assessment Phil
Seven great recommendations. Excellent article.
Brutal and a must read, Phil!
Strong stuff Phil – and very good advice. I’ll be sending this around my team to read,
Sheila
Thanks Phil,
A true reflection of what is seen around today…and a very powerful ‘call for action’
Yatish
In a rapidly maturing outsourcing industry, some very good advice that many should have been following at least two years ago.
Phil,
Not only is this a very informed description of what is happening today, you deliver some very strong action points for us all to follow. Excellent article.
Alan
Phil
Great insight into hiw digital change is impacting us all now. The actions suggested are a great starting point for us all to think about.
It does seem more likely that jobs that could be outsourced are now the same that can first be automated?
@Tom – indeed. The onus today is very much “automate first” before considering labor arbitrage. However, that doesn’t mean labor arbitrage goes away – if anything, it’s blending the two together – automate and outsource at the same time. That’s the new model, and service providers are getting smart at delivering outsourced services on diminishing numbers of staff…
PF
Yet Facebook just recruited 3000. Agree long term AI will take over manual work and some technical stuff like legal and medical diagnosis, but remains to be seen how soon, where and what the impact will be.
@Phil Durrant — The ray of hope for the world is in the hitech sector, which still respects the differentiation of talent – we did an analysis by industry of the same data in the blog post. In the software and hi-tech sector, the C-suites are as keen as anyone to cut costs, but they also are the least focused on restricting talent investments (only 11% view restricting people investments as mission critical), close to half (44%) are very concerned about aligning the back office with the customer (OneOffice), while two-thirds are hell-bent on getting new products to market as quickly as possible (compared with only 18% of financial services firms):
[http://www.horsesforsources.com/storage/app/media/Phil/IT%20sector%20most%20active%20.jpg](http://)
Digital business models are what drives growth from the vast majority of today’s customers who want to buy from digital businesses. This is where so much creative talent is heading / developing – people who are figuring out how to develop business models designed for digital environments, where purchases are made over apps, customers are targeted using intelligent cognitive tools and serviced by people who can understand their needs on a much more individualized basis. The new world is getting smarter, while the old one, sadly, just continues to get dumber.
PF
Very good article – fear stops collaboration but it’s crucial to change mentality and move on the new age of leadership
Phil – great article. We’ll continue to see more pressure from larger firms to centralize their staff in hubs to foster much greater collaboration. IBM and Yahoo have started that trend and I can see more of the larger IT firms move towards that model.
David
@David McWilliam – this “hubbing up” is definitely a major shift. While it’s all the rage to hire smart millennials and put them in design labs together – whether you’re a start up or an established enterprise – this move away from having large amounts of remote staff is definitely something we’ll see more of. Yes, in many cases, it’s a simple strategy to lose a few staff, but increasingly, with many skills becoming easier to source / replace with software, the ROI of paying large salaries for remote workers is diminishing in certain areas. The value of putting knowledge workers together in autonomous teams – regardless of age / experience – is increasing in today’s environment where we need to constantly challenge each other, learn new skills, venture into areas outside of our comfort zone we’d previously never entertained going… While we can laud today’s gig economy and ease of accessing new talent – the downside for many is the demise of the comfortable full time job where you work towards metrics set years ago and can survive purely on the existing set of skills thathave served you to well for the last several years…
PF
Phil, great article. certainly makes stakeholder/ business owners to realize they need to optimize their Digital Data via RPA or AI or any other Automated Business process to optimize digital investments & Big Data thus at same time leveraging their resources / people
Old jobs (skills) have always been replaced by new ones…just that the time taken is much shorter…therefore nothing to worry if one is alert and can move faster!
Prasant
I know of one individual that has been laid off from three different organizations in a row. Each time he received a lucrative severance package and was able to in essence collect two salaries for an extended period of time…
@James – nice short term $$ strategy… but doesn’t sound like much of a long term career trajectory =)
PF
I am glad I opened this article, I could resonate every statement since I have been through that phase in spite of being a star performer. I moved on quickly, I have a new job and the lessons learnt are far better anyone could tell me. You can add another point, you have to have a back plan, anything can happen.
Didn’t these companies have 10 to 15 percent annual attrition rates? Why is a 2 to 3 percent retrenchment a major deviation then? Ofcourse the people leaving now are the comfortably reluctant ones, all the more reason to push them out of the comfort zone,for their own good.
I fully agree with you @Phil, only those with special talents will be able to work in the future (staying as they are right now). The rest of us must recycle ourselves to find new niches where we can keep on working otherwise we will be swallowed and spat out by the system.
Excellent article..Final nail on the coffin for all the technology folks.Adopt quickly or else be ready to become orphan!!
Straight hitting the nail as usual, and the real danger in 74% i.e. 3/4 th of CXO’s seeing new talent scouting needs NOT as an emergency!!
Keep improving yourself, so you don’t have to stay behind or be one of those in a dead end job.
Agree with Prasad BR . A quick note – There is nothing to be ashamed of – if you lose job / get Fired
Nothing new!This happened earlier too in a different context and now happening under different dynamics. People need to plan and be relevant in today’s time.
Nice article. I feel #3 would be the most important one. Most of the people don’t like the CHANGE until that comes to us. So we all should come out from COMOFT ZONE and move on for new challenges in life.
.. just reiterates the old saying – “Change is the only constant”
Phil gets it. Read The second Machine Age… we really need the next big thing
Where have you been Phil. It’s great to see honest conversation here but I think it is missing something which is this is exactly what has been happening in the sectors which Enterprise IT Services/Consulting serves due to the same factors. In order to maintain the illusion that everything is ok some are conducting covert layoffs, this has been going on for quite some time, nothing new for us who work in these environments, especially in the large traditional/legacy established providers. Thus being, human assets are seen as financial assets which are ruled by depreciation, skills are the medium of value – unless you invest in them they wear out or become outdated. This is purely lack of clear alignment between strategy and the importance and responsibility of training your people. We are seen as cogs, not pawns; replaceable parts rather than a piece that plays a strategic and crucial role in a bigger game. Companies are also making growing mistake in that technology is becoming the backbone of the company rather than humans. Business is a human endeavor it would be wise to learn from an environment that business tends to reflect – war. I do not say this lightly, war is the most extreme of all human endeavors but both seem to be influenced in the current era by what HR McMaster refers to the Four Fallacies of War:
Vampire Fallacy, Zero-Dark-30 Fallacy, Mutual of Omaha Wild Kingdom Fallacy, and the RSVP Fallacy.
What all of the fallacies have in common is the underlying principle that all neglect the commercial (in war it is political) and human dimensions of business, just as you described.
THere is lack of presence of employees on boards, and I am not talking about unionizing as unions have become what they despised and are now in collusion with and driven by the same as boards, c-suite and shareholders – the incentive of driving stock price. If we’re going to be honest yes there are steps that we can take which you outlined, however until incentives/motivations change the environment will remain the same. Even though the business is running well, if it is not reflected in the stock market, meeting unsustainable expectations of continuous growth, they will continue to do the things that they are doing and prevent from learning from our most recent experiences.
Thx for the response Phil. Yes I read to the bottom. I agree with the 7 steps to improve yourself but disagree with them being the answer, seem to be more addressing the symptoms rather than the problem. As long as the human dimension continues to be ignored this will keep revisiting us – as HR McMaster points out in his Four Fallacies of Future War this is a Vampire Fallacy, it’s hard to kill. Companies see tech (the latest hype of ecosystems & networks, platforms, Big Data Analytics, Automation & AI, etc) as the solution to performance, hell we in the industry even present it as much, albeit it is coming back to bite us in the ass. But the activity of business, of commerce is a uniquely human endeavor. If the human dimension is ignored then be prepared to suffer disappointment. The flatter org structures you talk about is happening but not in action, they might be flatter as you move out to the extreme end of entry level and remains flat through the “hierarchy” but it ramps up rather exponentially as you get to the L1 & L2 positions. If those below the C-Suite do not take an active leadership role (and I do not mean by title but by action) in determining the future of these companies prepare to be at the whims of those whose incentives are based on stock price rather than actual business performance because sometimes it will take strength, courage, mastery and honor to do the right thing rather than the most incentivized thing.
@Simon – I’ve been right here discussing this issue for many years. The issue I make is the fact that many people are hitting the end of their job line, as you rightly point out their skills are depreciating in value and their asset value diminishing. People are coming onto the job market, and this time there is literally nowhere left to turn… it’s reached an all-time low for “established” talent IMO.
We can bemoan this corporate culture where technology is the new enterprise backbone – not people – or take real steps as individuals to seize back control by following the seven steps I mention to save ourselves (did you read that far?)
Cheers
PF
Insightful article. Very relevant. Thank you!