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Cognitive robotic process automation poised to disrupt knowledge worker market

KPMG’s Cliff Justice lays out a vision for the future with the work of 110M to 140M knowledge workers handled by cognitive robotics technology.

Over the next 10 years, the work of 110 million to 140 million knowledge workers around the globe may be handled...

by cognitive robotic process automation systems. That's according to KPMG's Cliff Justice, citing research from McKinsey Global Institute last week at the World BPO/ITO Forum's Global Sourcing & Cloud Summit in New York.

This shift to robotic process automation -- which digitizes labor through the use of advanced machine intelligence, engagement, analytics, big data, social media, mobile technologies and cloud computing -- will change the knowledge worker labor market as we know it, according to Justice, who characterized robotic process automation (RPA) as a double-edged sword. While RPA is expected to ultimately expand the job market according to some economists and researchers, the latest wave of automation in its early stages will disenfranchise many workers, exacerbating the income inequality seen today.

Justice cautioned that the RPA systems won’t necessarily cause 110 million to 140 million knowledge workers to lose their jobs, assuming that “the economy and demand for knowledge workers continues to grow at projected rates,” he said in an email exchange. New RPA technology will fill some of the future demand for knowledge workers, he said.

A portion of the displaced workforce will be freed up from doing repetitive clerical and administrative tasks to focus on innovating and generating revenue, but others will be automated out of a job.

There are three classes of RPA technology, said Justice, who is partner and U.S. leader for shared services and outsourcing advisory at KPMG. The first class is basic process automation, which includes sophisticated macros, screen scraping and business workflow technologies that sit at the OSI presentation layer and are not integrated into the IT system. Class 2 -- enhanced process automation -- are technologies that use natural language processing and can, for instance, understand unstructured data and apply that understanding to the process automation. The third and most transformative class is autonomic/cognitive platforms.

The Class 3, cognitive platforms "have the ability to parse context and understand meaning like [IBM's] Watson [supercomputer] did in Jeopardy," Justice said. "As that technology merges with robotic task automation, you have a whole different class of digital labor. You have technology that can understand your customers [and] run queries against rules engines. [If the response] falls within parameters, [the technology] can inform the robot to carry out a transaction and actually do things that in the past required decisions."

For queries that produce results outside a given set of parameters, the system can route the request as an exception to a human employee, who can review it and answer it.

Cognitive robotics advancements will have a major impact on the labor market, Justice said, shifting the knowledge worker framework from one of labor arbitrage, which reduces costs for relevant functions by anywhere from 15% to 30%, to one of labor automation, which reduces costs by 40% to 75%, he said. "In the very near future labor arbitrage is not really part of the conversation. … The concept of outsourcing, which has been sort of perversed into a vehicle to move things to low-cost areas, [is] a dead concept today," Justice said.

Justice likened the shift to robotic process automation to the Industrial Revolution. It will transform "the whole idea of how you operate your business," he said, suggesting that rather than looking to untapped geographic regions -- "the next India" -- to drive greater profitability, the new untapped potential will be found through digitization and automation. "If you think it's … going to be about low-cost labor, you're dead wrong."

One key element of RPA, Justice said, is that labor automation is scalable. "[With labor arbitrage], if you're going to scale the business, your cost moves up as you do it," Justice said. Labor automation, on the other hand, "follows the price/performance curve, not a labor curve. Technology is faster and cheaper, whereas labor doesn't scale that way."

Rather than looking to untapped geographic regions -- 'the next India' -- to drive greater profitability, the new untapped potential will be found through digitization and automation.

What about the impact of the shift to cognitive robotic process automation on the economy?

Justice pointed to work by MIT researchers Andrew McAfee and Erik Brynjolfsson, which he said concluded that robots will eventually create "more jobs than we could ever have imagined." But he also cautioned that before this job growth, there's likely to be a lot of social unrest as income inequality increases.

Justice also cited Thomas Piketty's 2014 book, "Capital in the Twenty-First Century." Piketty "talked about how when return on capital is the predominant measure of domestic income and it exceeds labor, income inequality accelerates and you have social unrest," Justice said. "That's what we're seeing now. Capital is exceeding labor in the western world and in the developing countries."

The good news in this massive disruption, he said, is that cognitive robotics applied to the knowledge worker space opens doors for innovators. "And you open the door for massive amounts of opportunity. This is an entrepreneur's dream."

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Can -- or should -- businesses do anything to stave off the social unrest predicted by economists as a result of robotic process automation?
The problem with trying to stave off social unrest is that we don't know where it will come from and from what areas. Automation of jobs alone may not be the catalyst. It may be the overall market conditions and the way we handle the way economies work. The biggest challenge I see is what will happen when we have many people who are now not able to get employed at jobs that have been historically focused on first steps in a career.

Good point, Michael. Automation of jobs would be one factor in
social unrest. The challenge that you see -- greater pressure on less skilled workers -- is exactly the dynamic that points toward increased social unrest, assuming robotic technology increases the divide between those at the high end and those at the ow end of the economic scale. 

With all due respect Michael and Sue, the coming 'exponential disruption' of increasing advanced technologies may have you both a bit less secure that what your reactions would indicate.  What makes these technologies different than those of the past is accumulative capture and adaption.  This is similar to how all of us developed in our professional careers (including you!).  If you’re less subject to these trends now, you won’t be in 5-7 years.

However the market is and has always been like water when it comes to prospective cost-cutting technologies.  No one can really stem the tide.  The best thing to do... embrace the risk and  increase the rate of internal organization change, move from employees as asset to employees as us,  invest in your people's rapid skills adaption, abandon market-accepted products long before their peak market penetration  in favor of those new products that address tomorrow problems, move from social media marketing to boarder-less social operation, and more as some possible starting points.  The future holds risk, so find the opportunity is in the risk.  

The best thing about this is that most established corporate entities; the multinationals and  conglomerates will suck at this!  Those SMBs that make these adjustments will flourish, grow and replace there larger, slower opponents.  And perhaps, the societal lessons taken away in the aftermath will be that the corrupt corporate behaviors that established those too large to fail dinosaurs will not be repeated.  So, SMBs should definitely embrace the risk. 
It seems pretty clear we lose jobs in this process.  there can be only so many people involved in the automation programming and maintenance itself.  And, after all, that's the point (reducing human effort needed).
Thanks, knowledgeer. I do expect this will impact even my own field of journalism. In fact, there are automation systems today that can generate news stories very quickly and at a huge volume. Though the company I heard speak about this talked about its tech being aimed at producing lots of stories personalized for many individuals, rather than writing a single story for a very broad audience. So, they're presenting it as non-competitive to those of us in the field. We'll see. There's so much happening in this space. Intriguing and scary at the same time.   

I don't consider automation as a risk, in fact there is a lot of opportunity in this for people who are willing to adapt, evolve and refresh their skills.

The job markets have been evolving forever and will continue to do so. Automation will still require constant human intervention and monitoring  to keep it running and this will be an added expense for corporations and governments which are already  trying to cut costs in the first place.

I still see cheap labour, offshoring jobs to low cost countries, offshoring manufacturing and skills to low cost countries, tax havens, corporate greed, crony capitalism as the biggest social threat of our times and the future too.

While some jobs may become automated new occupations will be created. And this is why people must be learners and adopters - to be able to transition.
this is an intriguing argument. Do we actually lose jobs to automation, or does automation allow more cognitively interesting jobs to develop? I'd be curious to see what the next ten years have in store. I'm not sure I agree that it will be a simple transition, I think there may well be a lot of pain and displacement, but I hope to be proved wrong on that front ;).
Based on the presentation by Cliff Justice and an email exchange with him, I believe the answers to your two questions are yes (we actually lose jobs to automation) and yes (automation will allow more cognitively interesting jobs to develop). What will the mix of the two be? Read this take on what MIT's Andrew McAfee and Erik Brynjolfsson think will happen:
Rather than lose jobs, they will be transformed into new ones. There will forever be a human element to robotics. Automation is not the end of the world or jobs but a catalyst to change and transformation.

Change is the one constant in the world. Those that thrive at it, strive at it.

Thankfully there are three topics that will never be automated = sex, politics and religion.

Automation is not about turning the world into "Surrogates" (the Bruce Willis film) or I-Robot (the Will Smith film).

Let's not forget that automation kills innovation and creative thinking, so in essence automation intends to assist humans in becoming more productive. Embrace it, don't resist it.
A real disruption would come from solving the energy problem, as well as planetary transportation. It's ridiculous how people are staying in a little box worry about limited jobs and resources. Expansion would enable all kinds of jobs without a limit.