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Robots are perfect villains. Mechanical, metallic and merciless. Now they’re getting a software upgrade. And they’re coming for your job.
Much like the Gilded Age – when industrialization in the late 1890s began to sweep family farmers off their land and into cities – today’s inevitable march of increased productivity is taking aim at white-collar workers.
Japanese life insurer Fukoku Mutual announced it will replace 34 insurance claim workers with IBM Watson Explorer software this month. Happy New Year!
These robots are not Hollywood chic. They are not even tangible. They’re just software powered by artificial intelligence. Bits of code, 1s and 0s structured specifically to interpret digitized data and to destroy jobs. In that order. Now they are ready to be deployed in large numbers.
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“No office job is safe. Lots of lawyers, accountants, |
“No office job is safe,” writes Sebastian Thrun, a professor of computer science at Stanford University. “Lots of lawyers, accountants, even surgeons will be automated away. Having spent my career watching the long, slow carnage of my own industry, I have some insight into how that will feel, and how to cope.”
Coping will not stop the software robots. Artificial intelligence is accelerating their learning. They are already good at repetitive, judgment tasks based on data analysis. They are deployed to perform in customer service, quality control, fraud analysis, diagnosis and recommending treatments. Every new data point makes them better, and cheaper.
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| Thanks to AI software, millions of white-collar office workers will eventually be left wondering how they will make a living. |
Fokoku will spend just $1.7 million to install Watson, and $128,000 per year on maintenance. According to reporting from Quartz, that’s a savings of $1.1 million per year over the human claim workers. Trading people for software will pay for itself in only two years. After that, all of the savings go straight to the bottom line. You can imagine how quickly financial officers are lining up for some AI business magic.
And that’s the kicker. Investing in AI makes good business sense.
Dai-ichi Life Insurance, Japan Post Insurance and Nippon Life Insurance are also trialing Watson and other AI systems to increase productivity.
IBM’s Watson is certainly not the only game in town. Research firm IDC predicts demand for cognitive systems will grow at an incredible rate – from just $8 billion in 2016 to $47 billion by 2020.
“Near-term opportunities for cognitive systems are in industries such as banking, securities and investments, and manufacturing,” said Jessica Goepfert, of IDC. “In these segments, we find a wealth of unstructured data, a desire to harness insights from this information, and an openness to innovative technologies.”
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Where Will YOU Be When the K Wave Crashes? When the K Wave crashes into the American economy … You’ll either be one of the lucky few who are rich and secure; or one of the millions who are hungry, desperate, and afraid. Now you might be tempted to say, “Dow 31,000 sounds pretty good to me, Larry, I’ll just hold onto my U.S. stocks and watch them double in value.” In other words, you might be tempted to sit tight and do nothing. But sitting tight is the worst thing you could do, for three reasons … to find out what those reasons are click here before it’s too late! |
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For investors, the best way to play this trend is still in the cloud. Amazon (AMZN, Alphabet (GOOGL) and Microsoft (MSFT) are ramping-up their public cloud platforms and fortifying services with open-source AI modules. And Splunk (SPLK) is building software to help developers work with very large data sets.
The outlook for human workers is perilous. There will be displacement. The outlook for investors in productivity-enhancing AI software remains bright. This trend is just getting started.
Best wishes,
Jon Markman
{ 27 comments }
Sirs, when all white and blue collars jobs will be eliminated, who is going to buy the goods and services they produce now, robots?
Dear Mr. Markman,
The calculations of additional profits being made by companies taking advantage of these robots is based upon present income. With so many being put out of work by these robots, there will be less customers able to buy these products and services, hence lower profits. Has anyone thought of this aspect.
Tom Parent
THANK YOU !! I’ve been saying that for years and wait…it gets better. Robots and software don’t pay taxes and neither do people without jobs.
It’s not just automation. It is the incredible stinginess of today’s “lean” corporations. I’m in IT, and ever since the Great Recession companies have been quietly downsizing by buying-out, or just plain getting rid of, high earning baby-boomers and others, and replacing them with cheaper foreign temps. In addition, if you look at the job openings for system administrators these days, companies want them to take on responsibility for not just the Operating Systems, but also Network Administration, Storage (SAN) administration, (cyber-) Security, and Enterprise Backup. Five distinct complex roles; not many would have all of the experience required. I bet these companies are not paying five times the salary. Most enterprises cannot function without these systems. Such a position would be so stressful that I’m looking at retiring early.
Your analysis of the situation in IT is spot on and consistent with my recent experience. I was an IT contractor (Network Engineer) at Kennametal for two years and with all the cost cutting there my contract wasn’t renewed at the end of 2016. A whole lot of the IT department there was also terminated; precisely the baby-boomers (like myself) you note above. Many of the people terminated had 30+ years at the company and were the ones that had made the IT there work for those years. With few exceptions those jobs were replaced with workers at Kennametal’s Bangalore operation. Until senior management finds a method to and starts actually equating the monetary costs/savings with results (value) I don’t see this changing. Unfortunately accounting for what are largely intangibles are not allotted for in our present methods of accounting in the US (GAAP etc). I suspect the same can be said of the use of AI automation. I am confident there will be places where it makes good sense to deploy AI tools but in the current rush to cost cut as opposed to “lead and grow” that has become so typical with US corporations the primary deciding factor is likely to be “savings.”
Yes, more workers will lose their jobs. Between robots and sending jobs overseas there will be lots of people out of work. Then we will have to retrain using our own money (or loans). Then there will still not be enough jobs and we will be saddled with debt. And then the “powers that be” will blame the unemployed for their laziness and lack of training. Starting in the 1970s we let jobs go overseas and did nothing to stop it. Now robots have been taking over factories for years and we did nothing to stop it. Now that robots may affect white collar jobs, just like computers have been doing, maybe this time someone will take notice……..?
The main reason that “Global Climate Change” is being blamed on human involvement, is to allow for the powerful at the top to have “legitimate” basis for exterminating those on the bottom is to protect the environment. But behind this clear agenda, is the awful truth of what do you do with all the people living in cities who have been automated out of a job. Right now, we are trying to teach people with no aptitude for the job to become programmers. Not everyone can be a programmer even if they try hard. The economic upheaval is coming fast. Hope you survive. Financial data is soon going to be easy to mine, and the reports will be generated on a 5th grade level.
People will only tolerate a certain level of automation and having to interact with computers & machines. At some point, people will say “ok, this has gone far enough”. If the companies employing AI software aren’t careful, they will find themselves on the wrong end of the human rebellion against the machines. Consider for example some of those wonderful “user-friendly” checkout machines at larger chain stores (you know, those ones to which you’d like to take a sledge hammer to sometimes). And then there’s the always wonderful experience of going through the “voice-mail maze” when you’re trying to get REAL help for a REAL problem and you have to end up going through “the system” two and three times to finally learn enough to chose the right option (or finally you said “the heck with this” and made a bee-line for the human customer service rep option anyway). Remember, the human brain is still the most complicated structure in the universe and “a mind is a terrible thing to waste”.
In order to schedule a medical test, I have just wasted an hour trying to persuade a pretty face that February 13, 2017, is a Monday. I welcome the replacement of distracted, inept humans by competent robots.
thomas, are you kidding? black friday was the 13th. even a robot will be no good if you argue like that. poor ‘pretty face’ must wonder about you lol anyway i would rather see a pretty face than a b. robot about my appointment :-)
What is ironic, or funny in a terrible way…is the more jobs you eliminate, the less customers you have to buy the crap you sell…so automation will eventually bite businesses in the a$$…
what happens in the near future when the loss of jobs begins to affect the economy? no one will have money to buy Life Insurance. robots don’t need life insurance. their premium base will shrink and they’ll be out of business. the executives will gut the company and no claims will be paid.
Jon,
Very informative piece. I am thinking that this push toward AI and related robotics applications will open up oportunities for new jobs related to the maintenance, design and implementation of these
systems across the spectrum of industries as they convert to more autonomous infrastructure.
That said I am really excited about the investment opportunities.
Jim
what all this fails to take into account is the fact that displaced people on welfare benefits do not have the capacity to buy the goods and services produced and therefore the AI just becomes an expensive pile of junk, the business has to ‘downsize’ itself or cease business (not a good or smart outcome for all those investors you encourage to invest in the companies displacing human workers) and raises taxes of the corporates so they do not save nearly as much as they thought. You are promoting short termism profit taking rather than long term sustainability not just of the corporations but of the ‘system’ itself.
As you say, Jota, or let us say as I understand it, is that AI creates such a good illusion of prosperity, with the promise of future – if not neverending – prosperity ; seen that way, I suppose it will even be conceived as being able to be ambitious, full of promises…What is funny is some may think human kind can be partly replaceable, but in what amplitude will human needs of any kind be replaced, and by what? How can a need be replaced by a gain? Also, who determines the nature of the gain? Is it possible to analyse well its perspectives in all affected fields…OK, I stop not to pretend it is bad we have cars instead of horses, etc. Also it is good to write on a screen to communicate…but the pc is an instrument that I use to say what my mental function or device produces, a robot has no cells of any kind, it is perfectly clean as it can neither live nor die…AI looks like an answer to madness, but the one that pilots AI is human, then can be mad.
This information is too vague. What are your recommendations if any?
Enjoy your articles and insight. This one AI enhanced learning is particularly interesting for opportunity and dread. I saw the Forbin Project and Terminator movies.
I believe that this is the time workers band togeather. WE the people can boycott these firms that believe ai is the way to go rather than a thinking employee? Stend ready
I have been thinking about all these robots replacing humans. In manufacturing, in office work, in industrial work, and so on. All that money saved, all those people out of work, with no money coming in, no money to spend. Got to wonder why nobody is buying stuff anymore? Does no one see this?
when there are no more jobs the govt can just send us welfare also!
There is a solution: Have the robots and AI software work for the People. The People are indeed stakeholders. Through our taxes we paid the universities to do the research and development training that made robots and AI possible. So we can learn how to spread the work so that everyone can work and everyone can get more leisure. Teachers in the past used to get a paid sabbatical leave every seven years to rest, recuperate, travel, or study. We can build on this: Work for seven years, then get a Sabbatical leave that lasts for some number of years. Perhaps, as an example, take off a couple years to study music while on full pay1 The possibilities are endless.
What will we do to live at that time if there are no more jobs?
Who’s going to build and maintain all these Al machines/software? Other Al robots? Man will introduce the “virus” when the time has come!
every time a robot replaces a worker then that company must pay social security not at 6.5% but 30% to make up for the missing SS that needs to be paid out in the future for new people filing.( Now that every worker that is replaced )
This is a bad article .It is Meaningless, who cares? “Research firm IDC predicts demand for cognitive systems will grow at an incredible rate – from just $8 billion in 2016 to $47 billion by 2020.”
The FED printed $80 Billion PER MONTH FOR YEARS , your tax money, Now that is really “AN INCREDIBLE RATE OF ABUSE OF THE AMERICAN PEOPLE”
Look up age of abundance. The loss of human employment is a widely known issue and one I feature in my upcoming novel, The Internet President: None of The Above.
The consensus is for a global basic income. No one has come up with a better idea in general. The tax structure will also need to change.
To my mind, you are right as even if it looks as a solution to material misery, it can also be seen as way to maintain it because it is only a temporary solution.