Preparing for the digitisation of the workforce An everis report, written by The Economist Intelligence Unit Written by: Executive summary About this research Foreword Introduction The background to workforce digitisation Putting strategy into practice 12 Robots on the payroll 16 Machine intelligence at work 21 The on-demand workforce 25 Conclusion 31 Executive summary Executive summary The world of work is changing, fast and fundamentally Against a backdrop of difficult-to-solve staffing and employment issues, companies are increasingly turning to technology to help them get work done For many, automation provides an answer Advances in robotics and artificial intelligence mean that machines are increasingly capable of taking over work that was previously performed by human employees In many cases, they are proving a great deal faster, more efficient and more accurate, thereby making it possible to perform certain tasks that were previously impossible to carry out At the same time, senior executives are looking beyond their own workforces for the skills and labour they need, searching Internet-based jobs marketplaces that connect them with a seemingly limitless pool of on-demand workers In this report we explore how these trends—collectively termed “workforce digitisation”—are changing the nature of work and how organisations are preparing for this revolution Written by the Economist Intelligence Unit (EIU) and sponsored by everis, it is based on a survey of over 220 C-level and other senior executives, desk research and interviews with companies and thought-leaders who have considered the likely implications of new ways of working The key findings are: Workforce digitisation is taking place against a backdrop of high demand for talent The most common labour and employment challenge among respondents to the EIU survey is limited local supply of skilled labour Technology offers a number of solutions to this issue: three examples examined in this report are robotics, artificial intelligence (AI), and on-demand, crowdsourced labour Executives certainly see technology as part of the solution: 82% of those surveyed for this report agree that their organisation needs to transform the way it sources and manages labour using digital technology, and 80% believe that an organisation’s ability to use digital sources of labour will be a key factor in its future success More than half of companies have devised a strategy to address workforce digitisation, but fewer than one-quarter have deployed it The impact of the digitisation of work is certainly on the corporate agenda Only 7% of respondents say their organisation has not discussed it at all But while a total of 58% of respondents have devised a strategy that covers the digitisation of labour, only 23% have implemented that strategy Common barriers to taking action on workforce digitisation include an absence of technical knowledge, business processes that are too hard to change, and a lack of desire to innovate This does not mean workforce digitisation technologies are not being used—quite the opposite—but they are not being deployed strategically This may prove problematic, as the technologies raise a number of strategic questions Robotics technology is being used to free highly skilled physical workers to focus their talents on where they are needed Robotics is the least adopted of the three technologies examined in this report It is commonly adopted among companies which report high-demand for high-skilled labour, and the most popular application is in manufacturing, although adoption in warehouse or stock management may grow faster in future, the survey suggests Concerns have been raised about the impact of robots on human employment Companies interviewed for this study which use robots claim they allow skilled employees to focus their talent where they are needed most, and permit new capabilities and company growth that would otherwise not be possible AI has the potential to displace mid-ranking clerical workers AI is already fairly widespread in business, the EIU survey reveals: 43% of respondents say their organisation is making some use of the technology By far the most common application today is in data analysis—recent innovations Executive summary are helping companies extract insight and learn from the growing volume of data they collect Proponents see AI as a tool to help expert knowledge workers to become more productive However, they concede that clerical staff whose job is to process, compile and integrate information sources could well be displaced On-demand, crowdsourced labour offers scalability but raises strategic issues Digital technology is allowing businesses to recruit on-demand workers on a larger scale and at greater speed than ever before Survey respondents acknowledge that using temporary workers has its drawbacks: 74% believe that using contract or short-term labour prevents organisations from building knowledge, and the same proportion say that offering employees job security is important to attract top talent Nevertheless, 44% use the on-demand, crowdsource labour model to some extent, most often to access creative talent such as graphic designers or copywriters The ongoing public debate about Uber, the taxi-booking app, may dissuade companies from making strategic commitments to this kind of service, but integrating them into the overall employment strategy will require executive oversight, sooner or later Business leaders who wish to benefit from workforce digitisation can expect to face tough questions from employees Each of the three technologies discussed in this report can be seen, not without reason, as a threat to current employees While they are eager to benefit from the workforce digitisation, few executives surveyed for this report want to see jobs cut from their organisation Many of the experts interviewed for this report argue that automation can help to make people’s working lives safer and allow them to focus on higher-value work And survey respondents value the engagement, loyalty and accumulated knowledge of employees As they begin to apply workforce digitisation more strategically, executives must ensure that these values are protected —for the benefit of the organisations, of their employees, and perhaps even society About this research About this research Preparing for the digitisation of the workforce is a report by The Economist Intelligence Unit, sponsored by everis The report investigates the groundwork that companies are laying as they consider the role that robotics, artificial intelligence and the ready availability of on-demand, crowdsourced labour will play in their employment and workforce strategies The research draws on a survey of 228 senior-level and C-level executives from companies in the US, Europe, Latin America and Asia-Pacific It incorporates interviews with the following executives: Alex Allen, vice president of marketing, Spring Venture Group Robbie Allen, founder and CEO, Automated Insights Hal Blenkhorn, director of engineering, Tegra Medical Rodney Brooks, founder, chairman and chief technology officer, Rethink Robotics Paul Clarke, chief technology officer, Ocado Ian Davies, head of engineering and technical director, Easyjet Lou Ferrara, vice president and managing editor, Associated Press Jennifer Griffin, vice president of content integrity and insights, Bazaarvoice David Hale, CEO, Gigwalk Daniel Nadler, CEO, Kensho Technologies Tanya Perry, vice president of US sales and operations, Shopguard David Plouffe, senior vice president of policy and strategy, Uber Brad Schneider, director of applications development, The Container Store Mark Skilton, professor of practice, Warwick Business School The report was written by Jessica Twentyman and edited by Pete Swabey Foreword Foreword By Marc Alba, Chief Innovation Officer Head of NextGen Consulting everis An NTT DATA company Recently the chairman of a major corporation, told me he was fed up with all the “digital blah-blah” (as he called it), convinced this was just another hype fostered by analysts, consultants and vendors Asked about my opinion, I first thought about highlighting the amazing new possibilities of digital and how they are transforming one sector after another Instead, I invited him to one of the sessions we regularly hold at everis to unleash, through the power of digital, the innate creativity of our employees’ children After he experienced how kids produce their own astonishing movies, videogames, music, robots, apps or fashion designs within a couple of hours, just by being exposed to coding tools, makers toolkits or 3D printing, he started to understand what digital transformation really means Digital natives such as these children will be—and often already are—our future clients and employees The corporate chairman, and the rest of us, would rather be prepared for the digital natives, as they represent something close to a new civilisation Hype? For sure, as with any other next “big thing”, workforce digitisation is subject to occasional exaggeration However, well beyond “blah-blah”, a digital tsunami full of stories of disruptions is already putting many industries under siege Moreover, it is transforming the nature and definition of the workforce This leads us to where the story of this report begins In 2014, we in everis, after joining the NTT DATA family and becoming part of the NTT Group, defined our new collective goal/dream: becoming the number one business and IT services company in the world Those who not know us enough usually laugh when we share this dream But, those who know how we created this company from scratch to become a business with nearly 15,000 employees and sustained double-digit organic growth, know this is possible, and smile when they think how much fun this new journey will bring (again!) In the thorough transformation of our business that we are undertaking to achieve this global leadership, digital is not a nice-to-have: it is our new oxygen, a key ingredient for survival, the cornerstone to become an exponential organization As part of our transformation journey, we decided to sponsor this report, written independently by The Economist Intelligence Unit Firms throughout the world have been aiming to excel in the first waves of digital, focusing on digitising processes and channels But two new disruptive waves are now emerging: digitised workforces and digital habitats Digital habitats heavily rely on the Internet of Everything and Ambient Intelligence The digitisation of workforces—the focus of this report—consists of many components This report, however, focuses on three key disruptive technologies: crowdsourcing, artificial intelligence (AI) and robotics This report aims to provide real-world learnings and insights on the digital workforce in general, and on these three technology trends in particular When commissioning this report, we decided not to focus on assessing digital workforce technologies from the viewpoint of the “supply-side”, as other reports We have seen and experienced enough of crowdsourcing, AI and robotics, to conclude that they are real game-changers Rather, we decided to focus the research on the “demand-side”, understanding how big corporations and key decision makers assess the impact of the digitisation of the workforce Workforce digitisation involves complex hard and soft issues One of the main general concerns is jobs losses, which applies to both jobs virtualisation through crowdsourcing and jobs computerisation through AI (software bots) and robotics (hardware robots) For us at everis, this is the key challenge post by workforce digitisation; job creation and talent development have always been our motto with 15,000 jobs in everis, 80,000 in NTT DATA and close to 250,000 in NTT For us, the tricky new equation to solve is how to continue creating jobs and developing talent while leveraging a hybrid workforce that combines human and machine “talent” This led us to create a new concept we call the Augmented Workforce, to harmoniously and sustainably combine human and machine intelligence Here again, this report provides valuable insights on both the bright and dark side of the digital workforce The real game-changers across industries are striving to lead this emerging digital workforce revolution Similarly, in order to become the global number one consulting company, last year we created a new strategic initiative called NextGen Consulting Our goal is to disrupt and reinvent consulting through the creation of one-of-a-kind assets that enable us to truly go digital, open and exponential, leveraging the huge potential of crowdsourcing, AI and robotics The results have been amazing so far, so I really hope this report helps you to embrace workforce digitisation, as we have Introduction Introduction Faster, more efficient robots Intelligent computers capable of learning new tasks A vast pool of freelance human talent, accessible to employers on demand, over the Internet The future of work is already here Are company leaders ready to embrace it? Many are, according to a new worldwide survey of 228 C-level and senior executives, conducted by The Economist Intelligence Unit (EIU) and sponsored by everis Eight out of ten (80%) agree that the future success of their organisation will depend on their ability to harness new digital technologies and techniques to solve their skills and labour challenges Achieving that success, however, will depend on their ability to understand and exploit the new technologies The biggest barrier to embracing the digitisation for 45% of respondents is a lack of understanding This report focuses on three technology-driven trends that are changing the dynamics of work in the 21st century The first is robotics, which has spread beyond its early use on car manufacturing production lines to other sectors such as healthcare and farming According to the industry trade body, the International Federation of Robotics (IFR), robot sales reached 178,132 units in 2013—by far the highest level ever recorded in one year In 2014 they rose by a further 27% to an estimated 225,000 The second is artificial intelligence (AI) This is a field that has progressed significantly in recent years thanks to the increased and more widespread availability of computing power and new programming techniques that approximate “intelligence” in software, enabling computers to tackle tasks that were previously thought to be solvable only by the human brain Thanks to such emerging techniques, computers can now handle some of these tasks faster and more accurately than human beings Finally, there is on-demand, crowdsourced labour A number of Internet-based marketplaces have emerged in recent years that connect companies or individuals who have a task they need performing or a problem to be solved with independent, on-demand workers who have the time and skills to that work The veteran in this market is Elance, which was launched back in 1999 and is now part of Upwork, but more recent entrants include Work Market, Gigwalk and TaskRabbit Employers like this style of sourcing skills and labour, because it offers the chance to offload work that is repetitive or short-term or seasonal onto a seemingly limitless pool of outside providers, without overburdening the company payroll or benefits programme It also allows employers to keep fixed costs lower, paying only for labour as needed Many workers like it too, because life as an independent contractor allows them to balance work with the other demands on their time (the care of children, for example) and to retain control over the type of tasks they take on, the nature of the teams with which they work, as well as their working hours and locations In many cases, on-demand workers can work from home, while at the same time interacting with other team members across the world to solve complex problems This report examines these trends in depth, but first it explores the business trends that are creating demand for new approaches to labour and investigates the extent to which these trends are on the corporate agenda Robots on the payroll Tegra Medical reduces rejects with new robot arms Faced with rising manufacturing costs and a customer base that increasingly expects generous discounts, executives at Tegra Medical, a Boston, Massachusetts-based contract manufacturer of medical devices, recently invested in three robot arms from Universal Robots (UR) Today, these robots tend machining cells that produce artery closure and meniscal repair devices implanted into cardiac patients Two are responsible for picking up blanks, moving them between a lathe, a grinder and a conveyer in a cycle that now takes only ten seconds, compared with 22 seconds using manual labour The third feeds three different part numbers simultaneously into the same machining cycle, in a mixed-model manufacturing cell “Being in the medical industry, we can’t change our process without notifying our customers and going through validation activity,” says Hal Blenkhorn, Tegra Medical’s director of engineering “But by simply replacing the operator with the robot, we just changed the handling of components in between the processes That was a huge win for us.” Using the robots has freed up the time of 11 full-time workers, who are now handling more complex tasks and ensure improved product quality, he adds “With the UR robots, we only get a few rejects per day Before, that number was significantly higher.” In under a year, one machining cell equipped with a UR robotic arm recently produced its one-millionth part, according to Mr Blenkhorn “Accuracy and repeatability over time was a big concern for us,” he says “We were questioning whether we could put the robot through this kind of duty cycle in a high-volume cell and get year-after-year repeatability—but it is as good today as a year ago, when we turned the cell on.” 20 Machine intelligence at work Machine intelligence at work At Spring Venture Group, a Missouri-based company that sells health insurance policies to US seniors, employees like to joke: “One of these days, Mary’s going to take over all of our jobs.” “Mary” is a virtual persona, based on software from sales conversion management specialist Conversica “She” follows up leads from which sales executives have failed to get a response and engages with them via email Once “she” gets confirmation from prospects of their intent to buy, Mary alerts a human colleague to follow up by telephone and close the deal “I was sceptical at first about the results we’d get, but I had one of those moments where I didn’t want to be the guy who said no to a technology that could transform the way we work,” explains Alex Allen, vice president of marketing at Spring Venture Group “We had Conversica run a test on 10,000 leads that we’d considered ‘dead’ and stopped calling, and the results we got were shocking,” Mr Allen recalls “The cost per acquisition was about 25% lower than using our sales executives to keep calling clients until they got a response.” Today, Mary works through between 15,000 and 20,000 leads per quarter, Mr Allen says, enabling sales agents to spend their time more productively, following up leads that have a better chance of a sale at the end of the process Spring Venture Group is far from alone in its use of artificial intelligence or machine learning In the EIU survey, 43% of respondents say their organisation makes use of AI today Only 13% say they use it extensively, however; the remaining 30% use it only in a limited capacity Meanwhile, more than one-quarter of respondents (26%) plan to use AI in future Driving this adoption is a surfeit of clerical work that would otherwise require human intervention, the survey suggests: 62% of respondents who identify high demand for low-skilled clerical workers as one of their key staffing challenges have adopted AI, a greater proportion than any other group By far the most common application of the technology is data analysis Of those respondents who make use of AI, almost two-thirds (65%) so in order to support data analytics CHART 7: Data analysis is the most common application of artificial intelligence In which of the following functions you use or plan to use artificial intelligence/machine learning over the next 3-5 years? % of respondents who are using or plan to use AI/machine learning Data analysis 65% 37% Customer service 34% Financial analysis and planning Sales and marketing 30% Internal admin/business processes 18% E-commerce 17% Other (please specify) 4% 0% 10% 20% Source: The Economist Intelligence Unit survey, August 2015 30% 40% 50% 60% 70% 21 Machine intelligence at work As digital technology has hugely expanded the volume of data that companies can collect, it stands to reason that they have recruited machine intelligence to help make sense of it One of the areas in which AI has made particular progress in recent years is pattern recognition, which has a number of applications in business For example, online media companies such as Amazon, Spotify and Netflix apply AI techniques to their customer data to understand variations in personal taste and use that understanding to make recommendations for books, music or movies The other most common drivers, albeit significantly less popular, are customer service (37%), financial analysis and planning (34%) and sales and marketing (30%) The fact that companies would choose to interact with customers and prospects via automated means is a reflection of how data-intensive many client relationships have become Australia-based bank ANZ, for example, has used IBM’s “cognitive computing” platform Watson, which employs a number of AI techniques to help financial advisers provide wealth-management strategies The tool rapidly analyses information about the client’s own account as well as market trends and assists the advisers as they compile a personalised report According to IBM executives, the aim is to reduce the time it takes to create these reports from weeks to a single session Robbie Allen, CEO of AI-driven analytics company Automated Insights, believes that this combination of automated number-crunching and human analysis characterises the work of the future “I see a real future for computers being used to extract insight from data, but with humans then analysing those insights, using the strengths of interpretation that they can bring to the equation in order to create strategy,” he says Nevertheless, just as robotics can be seen as a threat to physical workers, so too can AI be perceived as competition for clerical staff Again, executives who wish to introduce software-based automation may face opposition from workers Daniel Nadler is CEO of Kensho Technologies, a company specialising in AI for the financial services industry with the goal of training computers to perform analytical tasks for which many banks currently employ expensive white-collar workers or, as he puts it, “automating human-intensive knowledge work” Kensho’s technology uses AI to take natural-language queries posed by bank employees and respond to them in the form of quantitative, numerical answers Today, this work that is mostly performed by human employees, which Mr Nadler considers suboptimal “The banking system has possibly the worst ratio of all industries of highly paid people performing tasks that little to add value,” he says “For many of them, their jobs revolve around moving columns of data between spreadsheets in preparation for analysis by other employees higher up the chain.” AI certainly jeopardises these jobs, Mr Nadler believes “If you’re one of these tens of thousands of mid-level people, then yes, you should be worried about your job,” he says “There’s no point in being overly delicate about that issue: you’re performing work that can be done faster and more accurately today by AI, and that can be a major boost to efficiency in many financial services companies.” “But for higher, cognitive analytic functions you still need humans—you need really smart humans, in fact And if as a bank you’ve got those rote, mechanical tasks covered by automation, then you can have more smart humans doing more smart things I see AI as a ‘force multiplier’ that dramatically increases the efficiency of a small group of people performing highly specialised work.” 22 Machine intelligence at work As well as increasing their efficiency, he adds, it also allows these “smart people” to turn their minds to innovation: identifying new markets to target, new assets to explore, and new products and services to launch everis view At everis, we deeply believe that machine intelligence represents the dawn of a new type of industrial revolution In the first industrial revolution, the introduction of the steam engine expanded the range of work beyond what could be done by animals, humans or natural phenomena in a sustainable way This allowed humans to things they had never been able to before, such as flying, We think the current advances in machine intelligence (neural network models and the computing power to process them) will similarly enable humans to perform unprecedented cognitive tasks This expanded ability will have a tremendous impact on organisations, well beyond the simple automation of many current tasks It will augment peoples’ ability to accomplish more complex tasks in a more productive way An early but very illustrative example could be Waze, the community-based traffic and navigation app acquired by Google, which helps individuals make decisions based on a dynamic set of variables We expect that machine intelligence will move soon from back-end operations to the front-end of organisations and will become instrumental in tasks such as customer acquisition It is, however, also important to consider the implications and consequences of these new capabilities 23 Machine intelligence at work Associated Press puts AI on the earnings beat “I could see that automation was going to have a place in journalism somehow, and I wanted Associated Press to be ahead of that curve, not behind it—or a victim of it.” This is how Lou Ferrara, vice president and managing editor at Associated Press (AP), the global news service, describes his decision to use AI software from Automated Insights to digitise the process of reporting on the financial results of US-listed companies Earnings reports had become the bane of many AP journalists’ lives, he says The stories had a relatively low value to readers compared with the more in-depth analysis and reportage that its staffers were able to offer Worse, some earnings releases were going unreported owing to the constraints on their time In mid-2014 AP began automating earnings reports using Automated Insights’ software, but with an editor comparing the stories produced in that way with the press releases issued by the companies involved “We did that for a whole financial quarter, not publishing them until we’d checked them The following quarter we took automated reporting live Now the story goes straight to the wire without any human intervention.” In 2015 the process has been live throughout Now Mr Ferrara is testing automated story production with lower-audience sports results—college-level baseball, for example, and lower-division football and basketball “I have demand for these stories, but not the staff to produce them,” he says It is in more data-driven stories that Mr Ferrara sees the most value for automated reporting “There will always be story-creation and news-gathering and analysis tasks that need to be provided by an experienced reporter—our audience expects that from us,” he explains “But stories that are based on pure data—earnings or game scores—that’s not the place where you need to deploy that reporter.” According to Mr Ferrara, the driving force behind AP’s use of automated reporting is not to reduce headcount “My stated goal has never been about jobs,” he insists “It’s about how we spend our time Whether I have 100 staff or 20 staff, it’s about how much time I have to produce the content we need to provide with the staff I have Automation is part of the solution to that.” In other words, he is not looking to put journalists out of work He is looking to extend the range of coverage that the company can provide to its readers In the case of corporate financial results, for example, the use of AI has increased the number of companies covered by AP by a factor of over ten—from around 300 to 4,000 24 The on-demand workforce The on-demand workforce When Shopguard, a Hungary-based supplier of shop fittings for displaying and securing consumer electronic devices, expanded into the US a few years ago, it needed a way to install and maintain its products at retail outlets across the country At first, the company’s vice president of US sales and operations, Tanya Perry, tried working with third-party providers of technicians, or “site representation firms”, but quickly found that response times were too slow and that pockets of the country remained uncovered She then turned to Work Market, an on-demand, crowdsourced labour platform, in order to identify and manage qualified freelance technicians to cover the work required instead “At first I was really, really nervous,” she recalls “My main concern was there’d be a lack of human contact between ourselves and the technicians representing us in the field We’d used third-party rep firms in the past, because they offer the promise of a single point of contact and someone else to manage technicians on your behalf But that simply hadn’t worked out for us In fact, it had become the biggest thorn in my side “I knew I was taking a risk by using Work Market, but I also knew I had to try another way.” Ms Perry says she has been “incredibly impressed” by the work ethic and quality of service provided by the people that she accesses on Work Market “These people are self-employed technicians who have a very clear understanding that, in order to be successful, they have to perform well They have to turn up on time, the job well, trouble-shoot where needed They make their living on being able to figure stuff out, on being resourceful, good communicators, and they’re far more experienced and dedicated as a result.” This, she adds, has allowed Shopguard US to see a dramatic uptick in the percentage of installations that are completed successfully on the first visit, allowing it to reduce the cost of service visits by 10% And that, in turn, has led to better customer satisfaction—and the time saved by working in this way has meant that Ms Perry and her internal team have more time to focus on business development work to grow the company’s customer base Work Market is one example of a new breed of labour-sourcing service, in which businesses or individuals use the reach of the Internet to find freelance workers, often at very late notice, to perform certain tasks Other freelancing and staff augmentation platforms include Elance, TaskRabbit and Gigwalk The range of skills accessible to employers in this way is seemingly limitless Amazon’s Mechanical Turk marketplace, for example, posts jobs that range from transcription work to filling out an online survey Workers (or “Turkers”) can then browse for available jobs and perform them for money Another approach is to set a competition: Kaggle, for example, is an online service through which organisations can offer prizes for solving data analytics problems One of the defining characteristics of the crowdsourced model, as distinct from conventional outsourcing, is that it operates in a similar manner to cloud computing: companies can achieve considerable scale but on a temporary basis, only paying for that scale when it is need Indeed, it has been referred to as “the cloud of jobs” It’s a model that has worked well for US-based domestic appliance manufacturer Whirlpool In 2014, when the company launched its Express Clothing Care System, a steamer/iron hybrid, it wanted to ensure that it was getting the best from its merchandising and promotional spend It used the Gigwalk service to recruit people to visit retailers and check whether the products were 25 The on-demand workforce positioned prominently and demonstrated correctly Users of Gigwalk’s app were able to quickly spot a fee-paying opportunity at a store in their vicinity, record their observations and send their feedback to the company This demonstrates how the model allows companies to rapidly scale labour up and down according to demand The model has already been widely adopted, with some 44% of respondents saying their organisations use on-demand, crowdsourced labour today Just 12% say they use it extensively, however, while 32% say their use is limited A further 20% plan to use the model in future The approach is most common in the US: 58% of US survey respondents say their organisation makes some use of on-demand, crowdsourced labour By comparison, 44% of respondents in Latin America make some use of such services, 39% in Asia-Pacific and 35% in Europe CHART 8: 44% of respondents say their organisation makes some use of on-demand, crowdsourced labour today To your knowledge, to what extent does your organisation currently use on-demand, crowdsourced labour? 6% 12% 30% No use today and no plans to use in future No use today but we plan to use in future Limited use today Extensive use today 32% 20% Source: The Economist Intelligence Unit survey, August 2015 26 Don´t know The on-demand workforce CHART 9: Hiring creative talent is the most common application of on-demand, crowdsourced labour In which, of the following functions you use or plan to use on-demand, crowdsourced labour through sites such as eLance etc? % of respondents who are using or plan to use on-demand, crowdsourced labour Creative work, eg, graphic design/copy writing 55% 42% Software development IT support 41% 22% Finance and accounting Sales and marketing 19% Transportation 19% Legal and compliance work 17% Office administration 16% Other (please specify) 2% 0% 10% 20% 30% 40% 50% 60% Source: The Economist Intelligence Unit survey, August 2015 The use of on-demand labour presents its own challenges, and executives acknowledge these For example, 74% of respondents to the EIU survey believe that using contract or short-term labour prevents organisations from building knowledge The same proportion say that offering employees job security is important to attract top talent Clearly, though, few organisations are about to switch their entire workforce to the on-demand model Today, companies are most likely to use the model to hire workers whose talents are not core to the proposition of the business, the survey suggests The most common application of the on-demand model is to recruit for creative work, such as graphic design or copywriting, cited by 55% of respondents who are using or plan to use on-demand, crowdsourced labour This is followed by software development (42%), IT support (41%) and finance and accounting (22%) Nevertheless, executives may feel uneasy about relying on a remote and transient workforce to conduct their business One way to combat this unease is to achieve data-driven visibility in the freelance workforce Bazaarvoice is a US-based marketing services company that moderates online customer reviews for clients including Intercontinental Hotels Group, automotive maker Lexus and retailers such as Debenhams, Argos and Crate & Barrel To so, it relies on a worldwide team of some 330 remote freelance workers The cost is not inconsiderable: the freelance workforce costs the company some US$3m per year, around 2% of annual revenue According to Jennifer Griffin, vice president of content integrity and insights at Bazaarvoice, this expense is justified by analysing the performance of the freelance workforce in detail 27 The on-demand workforce “We’re lucky in that we’re drowning in data,” she explains “We can look at how fast a freelancer works, how many reviews they get through per hour, what their accuracy and quality is like That’s key for any management team contemplating using a remote workforce—the more quantitative [you can be], the better.” But some questions cannot be answered by data analysis Thanks to Uber, the legal status of temporary workers sourced through digital means is currently the subject of high-profile debate in many countries The “ride-sharing” company’s business model is entirely reliant on on-demand, crowdsourced labour—independent drivers looking to make some money by using their own vehicles to transport customers who book a ride on the service It has been dogged by controversy at every stage in its evolution In several jurisdictions, Uber is waging battles with authorities over whether or not its drivers are full employees (and therefore entitled to certain rights and benefits) or simple contractors (as the company argues) Most notably, the California Labour Commission ruled in June 2015 that they fell into the former category, a decision against which Uber has appealed According to David Plouffe, senior vice president of policy and strategy at the company (and former campaign manager for Barack Obama’s 2008 successful presidential bid), Uber now provides work for some 20,000 drivers in London, 45,000 in Los Angeles and 25,000 in Chicago, among others “They’re teachers, retirees, students, parents—they may drive for a few months, make some money, then stop,” he explains “They may choose to vary their hours from week to week, working five hours one week and 15 the next, according to their other commitments For many people, it’s a good economic opportunity.” As governments the world over ponder the legal status of Uber drivers and whether to make some kind of regulatory intervention, executives could be forgiven for taking a wait-and-see attitude before making a strategic commitment to the on-demand, crowdsourced labour model However, given that the model is already widespread, they should make sure that they are aware of how their organisation is using it, how it fits within their overall staffing strategy, and consider the impact on the engagement and well-being of their existing workforce 28 The on-demand workforce everis view Digitisation of the workforce goes beyond introducing new technology; it affects relationships among colleagues and between employers and employees So when a workplace is digitised, employers have to rethink how they source talent and how they manage their employees’ relationship with the company Some guideposts are appearing already For example, we know from recent studies (such as the 2015 “Internet Trends” report of venture capital firm Kleiner Perkins Caufield & Byers) that more global talent is looking for jobs that are flexible in terms of career development, corporate structure, projects, schedules, culture etc With this in mind we should consider the on-demand workforce not just as a group to take on tasks that not add value to our core business, but also as a source of talent and skills that we don’t have inside our corporations, are hard to find, or would take months or years to develop in-house This is not a simple matter, since it implies that companies may increasingly count on external talent for core value operations, and not only for support tasks As Bill Joy, co-founder of Sun Microsystems, says: “No matter who you are, most of the smartest people work for someone else.” These platforms are therefore a new way to access a global, talented and highly specialised workforce To mention a few examples: incentive-based competitions such as Kaggle, XPRIZE, InnoCentive and OpenIDEO have helped companies find innovative solutions to hard questions 29 The on-demand workforce The Container Store hires the crowd to test its apps Like most retailers today, The Container Store is locked in a fierce battle to give customers a great online experience on their mobile phones and tablets One of the biggest challenges is making sure that their customer experience is the same, whether the customer uses an Apple, Android, Microsoft or other device, says Brad Schneider, the retailer’s director of applications development The breadth of devices available is already staggering, and we see no end to the fragmentation,” he says “This is not a space that’s consolidating, so the problem of multiple devices running multiple browsers that are all evolving rapidly is one that we know is here to stay.” For the past five years The Container Store has used Applause, a crowdsourced app-testing service, to relieve some of the strain on its nine-strong in-house quality assurance (QA) and testing team The work is passed to Applause’s large community of independent software developers This additional resource recently came in handy when the retailer launched new “Click and Pick-up” services on mobile, which allow customers to make a purchase online and then pick it up in-store or from the kerbside in front of the store In the run-up to collection, customers can use the mobile app to alert store employees that they are on their way, while the store can keep them updated on where to collect their item and which member of staff will hand it over “We had Applause testers doing physical tests: placing orders on mobile, going to the store and reporting back on how it all worked It wasn’t something we could ourselves, because we’re biased—we know how our systems work and what expectations there are So using outside testers meant we got some really good insights from a true outsider’s perspective.” 30 Conclusion Conclusion In the face of growing competition for talent, company executives are enthusiastic about the possibilities of workforce digitisation They acknowledge the need to digitise their labour practices and believe that their ability to so effectively will contribute to their future success As this study reveals, robotics, AI and on-demand, crowdsourced labour are by no means rare pursuits—around one in four companies makes some use of each of them Furthermore, they are on the corporate agenda, with over 50% of companies surveyed having drawn up a strategy related to their use Only a minority of companies have put that strategy into practice This is understandable, given that many of these techniques have only recently become possible or affordable When they are involved in their deployment, executives are most likely focused on practical considerations: what will this technology cost, and how much will it boost productivity? Going forward, that is unlikely to be sufficient Workforce digitisation has the potential to transform the working lives of millions of people, not necessarily for the better Executives owe it to their employees, their shareholders and society at large to be aware of the broader impact of their workforce digitisation strategies Above all, they must think creatively: what might workforce digitisation enable their business to achieve that seems difficult or even impossible today? In order to reap the real benefits of these trends, they need to consider how they might contribute to company-wide innovation, new strategies, new directions At any large organisation, this is a trend that is already under way Business leaders would be advised to investigate how automation and crowdsourced labour are being used within their organisation, what impact they are having on the workforce, and how they are affecting their company’s competitive positioning Only then will be they be able to answer the tough questions that a workforce digitisation strategy may well raise NEXT STEPS: Start investigating As we have seen in this report, many companies are already reaping the benefits of workplace digitisation To avoid being left behind, executives should be investing time and effort in exploring “the art of the possible” As cognitive technologies and advanced robotics become more accessible and less costly and freelance work pools grow, significant barriers to productivity and innovation are falling Consider the future workforce The types of work that businesses are able to offer human employees look likely to undergo a radical reinvention in the years ahead Executives need to consider what their workforces will look like five, ten or even 20 years from now What human skills will they need—and how might they set about recruiting, developing and retaining them? Above all, how might human strengths and talents be best aligned with future strategies for growth and expansion? Test the waters Consider small-scale pilots, where possible, of the types of technologies discussed in this report Evaluate their impact on productivity and employee engagement Analyse which different combinations of workplace digitisation and existing workforce strengths produce the best results, with input from a wide group of internal departments, including (but not limited to) R&D and human resources 31 Argentina Belgium Brazil Colombia Chile Italy Mexico Peru Portugal Spain UK USA everis.com Consulting, IT & Outsourcing Professional Services [...]... productivity? Going forward, that is unlikely to be sufficient Workforce digitisation has the potential to transform the working lives of millions of people, not necessarily for the better Executives owe it to their employees, their shareholders and society at large to be aware of the broader impact of their workforce digitisation strategies Above all, they must think creatively: what might workforce digitisation. .. journalists out of work He is looking to extend the range of coverage that the company can provide to its readers In the case of corporate financial results, for example, the use of AI has increased the number of companies covered by AP by a factor of over ten—from around 300 to 4,000 24 The on-demand workforce 5 The on-demand workforce When Shopguard, a Hungary-based supplier of shop fittings for displaying... be forgiven for taking a wait-and-see attitude before making a strategic commitment to the on-demand, crowdsourced labour model However, given that the model is already widespread, they should make sure that they are aware of how their organisation is using it, how it fits within their overall staffing strategy, and consider the impact on the engagement and well-being of their existing workforce 28 The. . .The background to workforce digitisation 1 The background to workforce digitisation It is a cruel contradiction of the modern age that while many people are unable to find work, especially among the under 25s, companies also struggle to find the talent they need to fill positions According to the Hays Global Skills Index 2015, a measure of labour supply and demand across the globe, “global... processes to allow for greater automation Third, 40% of respondents cite a lack of desire to innovate CHART 4: A lack of technical understanding is the most common challenge to workforce digitisation Which of the following are the main challenges to transforming the way your organisation sources and manages labour using digital technology? % of respondents A lack of understanding of new techniques and... to them in the form of quantitative, numerical answers Today, this work that is mostly performed by human employees, which Mr Nadler considers suboptimal The banking system has possibly the worst ratio of all industries of highly paid people performing tasks that do little to add value,” he says For many of them, their jobs revolve around moving columns of data between spreadsheets in preparation for. .. being used within their organisation, what impact they are having on the workforce, and how they are affecting their company’s competitive positioning Only then will be they be able to answer the tough questions that a workforce digitisation strategy may well raise NEXT STEPS: Start investigating As we have seen in this report, many companies are already reaping the benefits of workplace digitisation To... the possibilities of workforce digitisation They acknowledge the need to digitise their labour practices and believe that their ability to do so effectively will contribute to their future success As this study reveals, robotics, AI and on-demand, crowdsourced labour are by no means rare pursuits—around one in four companies makes some use of each of them Furthermore, they are on the corporate agenda,... employment” Nevertheless, workers will have heard the public debate and may have justifiable fears about the impact of automation and on-demand labour on their livelihoods If they are to maintain a loyal and engaged human workforce, executives will need to acknowledge these concerns and have a strong response to them Meanwhile, they must also consider how the digitisation of labour will impact their competitive... introduction of automation and crowdsourced labour will impact their existing workforce In 2013 a well-regarded and often-quoted study, The Future of Employment: How susceptible are jobs to computerisation? by Carl Benedikt Frey and Michael Osborne of Oxford University’s Martin Programme on the Impacts of Future Technology examined over 700 occupation types, noting the types of tasks that workers perform and the ... that these values are protected for the benefit of the organisations, of their employees, and perhaps even society About this research About this research Preparing for the digitisation of the workforce. .. allows them to balance work with the other demands on their time (the care of children, for example) and to retain control over the type of tasks they take on, the nature of the teams with which they... research on the “demand-side”, understanding how big corporations and key decision makers assess the impact of the digitisation of the workforce Workforce digitisation involves complex hard and soft