The number of industrial robots in operation around the world has grown rapidly in recent years, but nowhere more so than in China, where some 30% of the world’s robots are in operation.  This growth has prompted many to ponder whether humans are being pushed out of the workforce in favor of their robotic brethren.

This isn’t really born out by the evidence however.  For instance, a study from a few years ago suggests that such fears of widespread job displacement may be somewhat overblown.  The study saw over 300 occupations examined over a 33 year time-scale from 1980 to try and examine the impact of automation. To put it bluntly, it emerged that employment generally rose fastest in professions with the most automation.

“The idea that automation kills jobs isn’t true historically, and if you look at the last 30 years, it’s not true then either,” the author says. “Right now, the best thing that can happen to you is to get some automation to do your job better.”

A second paper, published in 2017, by the London School of Economics examined actual employment data from the last few decades.  It looked at the role technology plays in economic recoveries, both in terms of economic growth and the number of jobs.

They explored data across 28 different industries in 17 countries over a period spanning 1970 to 2011, during which 71 economic recoveries occurred. When the numbers were crunched, the researchers found no real difference in terms of the joblessness of recovery in industries prone to automation, and those that were not, and this was consistent across nations, with the notable exception of the United States.

This apparent American outlier was confirmed by a second paper published recently in the National Bureau of Economic Research.  The paper examined 19 industries over a similar timeframe to that explored by the LSE team, with all 19 of the industries having introduced industrial robots (as opposed to AI) over that timeframe.

The data comes to a similar conclusion to the LSE paper, in that those industries investing most in industrial robotics did indeed suffer lower employment levels, with each robot equating to around six human employees.

The dissemination of technology

These findings suggest that the main problem caused by industrial robotics is not their presence in our workplaces, but the lack of a presence.  Indeed, a recent German study found that the jobs landscape is harmed by the poor distribution of technologies such as robotics throughout the economy.

This need for greater dissemination of technology was recently promoted by a report from MIT’s task force on the work for the future, which argued that there are relatively few organizations that are fully utilizing the technologies of our age, and that productivity stats won’t really move until these technologies are utilized not by the 1% of organizations at the frontier of our economy, but the remainder who are thus far lagging far behind.

It’s into this domain that Israeli startup SixAI Robotics is attempting to make its mark by providing a ‘robotic recruitment agency’ to help firms access the kind of technologies they need to become more productive and keep pace with their larger rivals.

“In Japan, one shift by one employee checking parts is approximately $50,000 per year, and our business model is simple,” SixAI founder and chairman Ran Poliakine told me recently. “For $50,000 per year, you can have a robot that can work two shifts, and all of the servicing and maintenance of that robot is included.”

It’s part of a Robotics as a Service market that research from Allied Market Research estimated will be worth some $34.7 billion worldwide within three years as a result of 23% growth year on year.

The need for investment in technology

Data from the Centre for Economic and Business Research (CEBR) shows that investment in robotics is crucial to the economic health of the economy, and indeed has a greater impact than investments in any other technology.

The report finds that investment in technology such as robotics has a greater positive impact on the economy than almost any other form of technology.  Indeed, a 1% increase in investment correlates with a growth in GDP per capita of 0.03%.

Suffice to say, investment in robotics and automation has not been spread equally around the world.  The US leads the way, investing heavily in robotics and automation.  By contrast, the UK languishes behind peers such as Japan, Germany and the US.  In PPP terms, the US invested $86 billion in 2015, which is roughly 62 times the amount invested in the UK in the same period.

It’s a situation that Poliakine believes can only be improved by providing a more accessible way to introduce robotics into the workflow of businesses around the world.

“Our robot employment agency is a gamechanger. It will provide capacity in markets that struggle with labor capacity either through the difficulty of the work itself or the cost pressures they face. By offering hourly or task rates, our autonomous AI robots are easy to plan for and to integrate,”  he explains.

Making the most of automation

While costs and expertise are both elements that robotics as a service can help to address by making investments a matter of operational expenses rather than capital expenses, and the maintenance of the technology outsourced to the provider, there is still a strategic divide in many smaller businesses.

This was emphasized by a survey from McKinsey a few years ago which highlighted a 15% gap emerging between large and small companies in terms of the adoption of technologies such as industrial robotics.  They provided a number of strategic recommendations to help bridge that gap, including:

• Make automation a strategic priority – It perhaps goes without saying that when companies do this, it significantly increases the chance of success because it ensures the resources required are made available.
• Deploy technology systematically – Interestingly, the authors suggest that whether you use a traditional waterfall method or a more modern agile approach to deployment is largely irrelevant, with the key being to deploy the technology systematically rather than in an adhoc manner.
• Ensure governance is decentralized – Interestingly, whilst it seems to be crucial that automation is a strategic imperative, it’s also vital to success that governance be decentralized, with individual units or functions responsible for delivering automation.
• Internalize the costs of automation (and their benefits) – With a particular focus on the total cost of ownership (TCO). Most of those with successful deployments revealed that their leaders understood the TCO for automation projects very well.
• Prioritize workforce management – Skills has been a constant in most discussions around AI and automation, and there is a broad consensus now that companies need new skills to get the best out of these new technologies. At the most successful companies, addressing the skills-gap was rated a top five priority, whereas at less successful companies it fell much lower down the list.

The productivity gap between big and small enterprises is unquestionably a drain on the economic performance of economies across the western world and it remains to be seen whether changes such as robotics-as-a-service help to democratize technology more broadly.

While the financials of shifting expenditure to the opex budget rather than the capex budget do undoubtedly support adoption from smaller enterprises, the McKinsey findings remind us that there are a broader range of barriers to overcome if the benefits of the latest technologies are to be spread across society.