Knowledge centric jobs are the way ahead for the future

Large companies in North America and Europe are now losing over 250,000 jobs each year in IT, finance, and other key business services areas, due to the combined impact of offshoring, technology-driven productivity improvements, and the low-growth business environment, according to a new research update from The Hackett Group, Inc. (NASDAQ: HCKT). While the number of jobs being lost annually will decline over the next few years, The Hackett Group now estimates that by 2017 nearly half of all back office jobs at these companies that existed in North America and Europe in 2002 will have disappeared -- a total loss of 3.7 million jobs.


But even this assessment could be optimistic, as it factors in job creation due to economic growth. The IMF and others are now looking at shrinking short-term global growth projections, and more than half of the European Union countries have returned to recession in early 2013. So even the modest job creation assumptions in the Hackett model may prove to be overly optimistic.


While the total labor demand continues to shrink, The Hackett Group's research also sees the "war for talent" entering a new phase, driven in part by the further globalization of business. The need for transactional staff is decreasing dramatically, while the demand for knowledge-centric staff is increasing. The Hackett Group finds a critical talent shortage, most clearly for knowledge-centric staff with the skills to help enable global business operations.


"For many people in North America and Europe seeking jobs in corporate finance, IT, or other business services areas, our research offers a bleak picture to be sure," said The Hackett Group President of Advisory and Research Sean Kracklauer. "The evolving offshore job market and the maturing of Global Business Services operations has simply eliminated many of the jobs that used to exist in IT, finance, and other business services areas. But at the same time, new opportunities are presenting themselves. Staff that can develop the knowledge-centric skills that companies need to support their companies' shift to Global Business Services, and overall globalization goals, will find themselves in great demand."


The Hackett Group's research estimated that 265,000 business services jobs will disappear in North America and Europe in 2013, in the tail end of a spike in job losses which began with the recession in 2008. In 2009 alone nearly 750,000 jobs were lost, and an average of 365,000 jobs have been lost each year since 2008. In 2014 and moving forward, The Hackett Group estimates that job losses will continue, but will shrink each year, declining to 133,000 jobs lost in 2017.


Of the baseline of about 8 million business services jobs that existed in North America and Europe in 2002, The Hackett Group's research estimates that 46 percent, or 3.7 million jobs, will have disappeared by 2017, including 1.4 million jobs in corporate finance and 1.5 million jobs in corporate IT. All these estimates incorporate jobs lost due to offshoring and productivity improvements (which have remained stable at about 3 percent each year), offset by jobs created due to economic growth.


Even these job loss estimates could be conservative, The Hackett Group's research explained, given that economic uncertainty remains exceptionally high. European Union (EU) statistics published this past May indicated that nine out of the thirteen EU countries using the euro returned to recession in Q1 of 2013. The International Monetary Fund has also repeatedly made downward adjustments to its short-term growth projections, which have dropped by more than a third over the past two years. In addition, the main engine of growth has clearly shifted from developed markets to emerging markets in Brazil, Russia, India, China, and elsewhere. While corporate profitability is at historically high levels, companies are focused on reducing fixed costs, further impacting on job creation.


The Hackett Group's research details how a major factor in the offshoring of business services and the overall job losses is the expanded use of Global Business Services (GBS) organizations, an evolution of the shared services approach. Unlike most shared services operations, which focus on a single function, GBS organizations strive to support an array of business services, including finance, IT, procurement, and human resources, in an integrated fashion. As GBS organizations expand and mature, many companies have found they can dependably be used to drive both cost and productivity improvements year after year. Typical companies see an average of 20 percent cost savings in their first year of GBS operations, and 6 percent savings annually thereafter. They also see 7 percent improvements in quality and customer service, as well as a 9 percent improvement in productivity.


According to The Hackett Group, the employment numbers are also tied to a fundamental shift in the nature of business services work and skills. Over the past decade there has been a dramatic reduction in the need for transaction-oriented jobs in these areas, and a commensurate increase in demand for knowledge-centric positions. The Hackett Group sees a significant talent shortage emerging in specific classes of knowledge-centric roles, including those that: support the strategic transformation and globalization of business services; enable global business operations; and support the transition from a transactional business services model to one focusing more on partnership.


In finance, The Hackett Group's research finds that by 2017, half of all jobs will be knowledge-centric, an increase of over 40 percent since 2003. In procurement, the trend is even more pronounced, with over three quarters of all jobs classified as knowledge-centric by 2017, an increase of over 46 percent since 2003. The Hackett Group's research finds that acquiring, developing, and retaining talent in these areas will be a major challenge for many companies over the next few years.

How driverless cars could reshape cities

SAN FRANCISCO: By now, seeing one of Google's experimental, driverless cars zipping down Silicon Valley's Highway 101, or parking itself on a San Francisco street, is not all that unusual. Indeed, as automakers like Audi, Toyota and Mercedes-Benz make plans for self-driving vehicles, it is only a matter of time before such cars become a big part of the great American traffic jam.

While driverless cars might still seem like science fiction outside the Valley, the people working and thinking about these technologies are starting to ask what these autos could mean for the city of the future. The short answer is "a lot."

Imagine a city where you don't drive in loops looking for a parking spot because your car drops you off and scoots off to some location to wait, sort of like taxi holding pens at airports. Or maybe it's picked up by a robotic minder and carted off with other vehicles, like a row of shopping carts.

Inner-city parking lots could become parks. Traffic lights could be less common because hidden sensors in cars and streets coordinate traffic. And, yes, parking tickets could become a rarity since cars would be smart enough to know where they are not supposed to be.

As scientists and car companies forge ahead - many expect self-driving cars to become commonplace in the next decade - researchers, city planners and engineers are contemplating how city spaces could change if our cars start doing the driving for us. There are risks, of course: People might be more open to a longer daily commute, leading to even more urban sprawl.

That city of the future could have narrower streets because parking spots would no longer be necessary. And the air would be cleaner because people would drive less. According to the National Highway Traffic Safety Administration, 30 percent of driving in business districts is spent in a hunt for a parking spot, and the agency estimates that almost 1 billion miles of driving is wasted each year looking for parking.

"What automation is going to allow is repurposing, both of spaces in cities, and of the car itself," said Ryan Calo, an assistant professor at the University of Washington School of Law who specializes in robotics and drones.

Harvard University researchers note that as much as one-third of the land in some cities is devoted to parking spots. Some city planners expect that the cost of homes will fall as more space will become available in cities. If parking on city streets is reduced and other vehicles on roadways become smaller, homes and offices will take up that space. Today's big-box stores and shopping malls require immense areas for parking, but without those needs, they could move further into cities.

The Autonomous Intersection Management project, created by the Artificial Intelligence Laboratory at the University of Texas at Austin, imagines cities where traffic lights no longer exist but sensors direct the flow of traffic. Although a video showing off the automated traffic intersection looks like total chaos, the researchers insist that such intersections will reduce congestion and fuel costs and can allow cars to drive through cities without stopping.

Of course, getting to a utopian city will take a little longer than circling the block looking for a spot. A spokesman for Audi said a fully automated car would not be available until the end of the decade. And the regulatory issues to be addressed before much of this could come true are, to put it mildly, forbidding.

But the pieces are starting to fall into place, at least enough to excite future-minded thinkers. Last year, Jerry Brown, the governor of California, signed legislation paving the way for driverless cars in California, making it the third state to explicitly allow the cars on the road. And federal agencies are starting to consider their impact. In May, the Transportation Department made its first formal policy statement on autonomous vehicles, encouraging cities to allow testing of driverless cars.

But to some, this promise - or overpromise as the case may be - sounds familiar.

"The future city is not going to be a congestion-free environment. That same prediction was made that cars would free cities from the congestion of horses on the street," said Bryant Walker Smith, a fellow at the Center for Internet and Society at Stanford Law School and a member of the Center for Automotive Research at Stanford. "You have to build the sewer system to accommodate the breaks during the Super Bowl; it won't be as pretty as we're envisioning."

Smith has an alternative vision of the impact of automated cars, which he believes are inevitable. Never mind that nice city center. He says that driverless cars will allow people to live farther from their offices and that the car could become an extension of home.

"I could sleep in my driverless car, or have an exercise bike in the back of the car to work out on the way to work," he said. "My time spent in my car will essentially be very different."

"Driverless cars won't appear in a vacuum," Smith said. Other predictions for the future city imagine fewer traditional-looking cars. Taking their place will be drones and robots that deliver goods.

Oh, and that food-delivery car double-parked outside? That, Calo said, will be replaced by a delivery drone.

If you have found the above information useful, feel free to make a small payment of US$ 1 to my paypal account rmillwala@hotmail.com as a token of your appreciation and to enable me to devote more time to this blog.