Rise of the Machines: Robosourcing, Cloud, and the death of the New Zealand ICT Industry (Part I)

robo1-620x341In the next two years, Foxconn, one of the powerhouses of South East Asia and maker of the iPhone will replace their workers with two million robots. This is a trend that is seeing massive growth across the globe as the drive for profit by large corporations continues to dominate in a flat and unsettled market.

This is Robosourcing, and it’s being powered by the Cloud. It represents a reformation to the labour market on a global scale, particularly for manufacturing.

Cloud itself can be considered a form of Robosourcing in as much as it brings a high degree of automation to ICT and at the same time threatens the roles of ICT workers globally.

The rise of the labour market in developed countries proved a threat to the corporations that employed them. Basically, as workers saw the profits of the corporation growing, and due to rises in the cost of living, workers demanded more pay and better conditions.

The answer to this problem in the past two decades has been to outsource and offshore the work to developing countries where there is a mass labour market that could be exploited. The cost was significantly less, the conditions were anyone’s guess, and the work force could be driven hard to produce outputs.

However, as time has gone by, the labour market has risen in those third world countries and the costs have gone up significantly, leaving manufacturing companies with the same problem they had before.

The answer to this has been to automate the manufacturing process using intelligent machines so replacing humans from the equation pretty much altogether. Cloud has helped to power this solution as the cost of a standalone robot was high and required direct maintenance.

By hooking the robots directly to a Cloud based control system, tens of thousands of machines can be managed at once from a single “brain” as opposed to having an independent processing capability in each.

The figures are interesting. It’s estimated that the US itself has in excess of twenty million manufacturing robots and Japan is investing heavily in the same as their workforce ages.

As an aside, there is speculation that the reason that the world is seeing continued high unemployment rates is because those jobs are being replaced by robots. This in turn drives another statistic, which is soft retail. The robots may be turning out millions of cheap televisions, but no one can actually afford to buy them anymore because they don’t have a job.

Cloud Computing is very similar to Robosourcing in many respects. It replaces the ICT worker with a highly automated system which is sold “as a service.” This means that we are starting to see downward pressure on a number of the more traditional ICT roles.

Twenty years ago the ratio of Systems Administrator’s required to manage servers was 1:15. 1 worker for every 15 servers. October 2012 saw that ratio adjusted to 1:500. Figures from February 2013 show that ratio to now be close to 1:1000.

Cloud is changing the ICT landscape rapidly and all that is holding back a massive change to the ICT labour market is the fact that Cloud is, for most, still in its adoption phase. In the US we are starting to see wholesale adoption of Cloud services, in New Zealand, we are seeing it with the SME start-ups while larger customers are sweating assets and preparing to move in the next twenty four months.

To be forewarned is to be forearmed.

As well as the ICT administrators (Server, OS, Storage, Database, and Application) we will see a decline in the hardware salesmen, and possibly hardware companies in total, as customers no longer buy infrastructure but provision it from Cloud Service Providers who, at the very large end, are building their own infrastructure from servers to networking.

Couple that with large tenant software as a service offerings such as Salesforce and Oracle, and the small to medium software developers are going to suffer a steady decline as well. Why invest in developing your own bespoke software when you can buy it from the Cloud at a fraction of the cost?

The end user device support will become a thing of the past. With current and new tools, users will be able to manage their own profiles, their own services, and most likely via an automated service as opposed to a human.

We will see a dive in innovation as we move back to large scale centralised computing. Standardisation will become king across the entire technology stack from servers, to OS, through the database layer, across applications, and finally to the end user.

This is why Cloud, and its associated partner, Robosourcing, is such a disruptive technology for the industry.

As machines in the Cloud become even more automated, faster, learn, and self-heal, the need for human intervention continues to decline. Over the next ten years the ICT labour market will undergo a radical shift. Eventually, the ICT Organisation as we see it today, will simply not exist and the real danger for the 40,000 New Zealand ICT workers is that if we don’t accept that fact and start to adapt now, we may find that we are a lonely island on the end of a wire with all ICT delivered from the ubiquitous, international, Cloud.

Sticking our head in the sand as an industry is not an option. This trend of automation will continue and we need to take advantage of it now.

Which, will be the next blog topic…


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