AI – Are companies in the IT sector changing?

Change driven by Artificial Intelligence (AI) is quickening and the number of words written about AI – what it is, the technology, impact on economies, politics, democracy, jobs, life etc – expands hour by hour. This piece contributes to the expansion!
A conversation with a neighbour while washing the car morphed into an interesting debate about the future. It touched on AI and its role in driving productivity improvement in companies, particularly large ones. The neighbour thinks AI is just as much a challenge for IT consultancies, systems integrators and outsourcers as it is for companies in other industries. He believes AI will drive significant IT job losses and perhaps an IT sector decline like that experienced in various manufacturing and heavy industries in developed countries in the last decades of the 20th century. The debate didn’t dwell on this, but the Badger has since pondered on a) whether companies in the IT sector are really changing because of AI, and b) if they are, then how can you tell? Today’s blog item was born!

General sentiment, after some research, seems to be that AI will impact many IT administrative jobs, jobs in company finance and legal functions, and front-line support, call centre and help-desk jobs. Some believe that IT infrastructure and application support jobs may ultimately be replaced by machine intelligence and the automatic identification and repair of problems before they occur. If you work in a large IT consultancy, SI or outsourcer in these roles then things look likely to change! Other IT roles appear less at risk provided skills are kept current and relevant. Small companies with good, modern architecture products who can adapt them quickly for AI will be exciting places to work, while bigger companies with legacy products who are not as fleet of foot need to work hard to avoid being left behind.

So, what did the Badger concluded regarding a) and b) above? Regarding a) IT companies often communicate their approach and offerings to meet market trends but say little about the adoption of AI for their own operations. On b), the Badger thinks a company’s profit per employee over time is a useful macro indicator. AI drives productivity improvement so this metric should rise over time. Exploring the metric on a sample of 2016 and 2017 company results implies broadly flat productivity to date, so let’s see what happens to it as AI bites over the next few years.

Are IT sector companies changing due to AI? Perhaps some, but very slowly. The Badger’s neighbour thinks Amazon and Google will ultimately dominate AI technology and the IT services sector with major acquisitions. The Badger hopes he’s wrong…but stranger things have happened.

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