Why Automation May Not Mean Workforce Reductions
Tech leaders and business executives invest in process automation technologies because they expect that productivity gains will translate into cost savings through reduction in employees. But lessons drawn from Forrester’s 2015 forecast, Death Of A (B2B) Salesman, raise doubts on that theory. In that report, we projected that 1 million US B2B salespeople would lose their jobs by 2020 due to self-service e-commerce. In fact, as we show in our recently published report, The Benefits Of Automation May Not Lie In Workforce Reductions, there were 158,000 more B2B sales jobs in 2020 than in 2012, even with job losses during the 2020 pandemic recession.
The logic behind the 2015 forecast seemed compelling: E-commerce software made it easy for B2B buyers to research, evaluate, select, and purchase goods and services for their companies. But the failure of B2B e-commerce technologies and sales enablement technologies to deliver massive cuts in B2B sales jobs provides reasons to be skeptical about claims of massive job losses due to automation and artificial intelligence.
What lessons can we draw from automation’s impact related to our 2015 forecast to help shed new light on where automation will or won’t create job losses? Here are a few:
- Higher-salary jobs with complex skills are hard to replace. Most analyses of the impact of automation on jobs in the US operate at the occupation level, but the actual work involved can be more complex and varied than the job description. What happened: Managerial jobs grew; service-related sales jobs increased; and goods-related sales jobs fell slightly. The biggest decline in B2B sales jobs occurred in low-salary telemarketing jobs.
- Growing industries are less likely to lay off workers. Industries that are experiencing strong growth are less likely to lay off workers than industries facing revenue pressure. When we looked back at the industry mix for each sales occupation, we found that the wholesale industry had big losses in sales-rep job loss. That industry experienced almost no growth in jobs as a result of the rise of B2C e-commerce and the resulting disintermediation of wholesalers. But other industries did experience growth, and they expanded their B2B sales reps.
- Services industries are expanding their share of the economy and need to add jobs. Our forecast failed to account for the accelerating growth of business purchases of services. It also assumed that e-commerce sales applications would work as well for the selling of services as they did for the selling of goods. The US economy is shifting from goods to services; B2B sales of professional and outsourcing services differ from goods sales.
- Adoption of automation software technology is often uneven by industry. For any process-automation technology to have an impact of jobs, it has to be adopted and implemented. But different industries’ spending on technology varies widely, with some industries having large and growing software spending and others having small and flat or shrinking software spending. And spending on software turns out to have a very loose correlation with job gains or losses.
Moving forward, we should use caution in expecting newer process-automation technologies (AI, robotic process automation) to have bigger impacts on productivity, costs, and jobs than earlier technologies. To move in the right direction, companies should focus on effectiveness gains from data automation (providing the right data to the right people when they need it) rather than necessarily expecting efficiency or productivity gains from process automation.
(Kara Wilson helped prepare this blog.)