As India enters the era of robots and artificial intelligence, most companies plan to automate jobs to compete on cost. But will replacing humans with machines really turn India into a global economic powerhouse? A new report suggests that a more effective strategy could be to train its workers for the future, giving them the skills they need to work with sophisticated machines, data and algorithms. For businesses facing increasingly complex production processes and a tough global marketplace, cheap labour is no longer the main factor. Instead, the most successful employers are looking for talent and skills in new hires, using technology to enhance rather than automate existing jobs.

The World Economic Forum's Future of Jobs 2018 report shows that over half of India’s workers will need to be reskilled by 2022 to meet the demands of the Fourth Industrial Revolution, as the era of intelligent machines and increasing human-robot interaction is known.

Closing the skills gap would mean building on the existing strengths of India’s workforce, from analytical thinking and innovation, to technology design and programming. Indian engineers and computer scientists have thrived at multi-national companies from Google to Microsoft. In future, such local talent could power innovation at home as well as abroad. This would also tap the potential of India’s exceptionally young workforce: more than 50% of its population are under the age of 27.

Providing these new skills will require considerable investment. On average, Indian workers will require 100 days of additional training, according to the Forum’s Future of Jobs Report 2018, while 10% will need more than a year.

“With the world’s largest youth population and more than half of its population of working age, skills development will be critical to sustaining inclusive growth and development in India,” said Dharmendra Pradhan, Minister of Skill Development and Entrepreneurship of India.

Pradhan co-chairs a new national task force that seeks to close the skills gap by bringing together Indian leaders from business, government, civil society and education in collaboration with the World Economic Forum.

Image: World Economic Forum

Companies are clearly aware of the looming challenge. The report shows that 79% aim to retrain existing employees in order to work with new technology, and 78% plan to hire additional workers. But an even larger proportion want to fill the skills gap by choosing robots over humans, with 83% of firms looking to automate work processes. While this may cut costs in the short run, it could hurt India’s long-term prospects. Except for oil and gas, all industries currently operating in India prioritise skills and talent over labour cost when it comes to deciding where to invest next.

Advanced training opportunities would tie in with India’s ambitions to become a leader in artificial intelligence. Despite its reputation for supplying the world’s biggest companies with stellar tech talent, including some of most powerful innovators in Silicon Valley, India has been lagging in this field. Investing more in its workforce could boost research and support local tech companies, which have been struggling to find new talent.

Image: World Economic Forum

The task force, which is part of a network of 10 leading economies with similar initiatives, will initially focus on identifying India’s skills needs. It will encourage companies to invest in lifelong training programmes and improve ties with the education sector. In addition, companies in India have already committed to reach over 1 million workers as part of the Forum’s Closing the Skills Gap 2020 initiative.

“Preparing for the future of work requires proactive collaboration on the part of the public and the private sector,” said Saadia Zahidi, head of the Centre for the New Economy and Society at the World Economic Forum.

A similar public-private collaboration is already underway in South Africa. In India, public-private projects remain a hugely underused resource. About half of the companies currently active in India want to mainly use internal training to boost their talent pool, the report says. But despite the global success of India’s graduates, only 18% of companies expect to work with public educational institutions.