AI and automation will only be a threat to employees if their employers fail to properly prepare them for the future, PwC partner Ciarán Kelly warns.
In recent weeks we reported how PwC’s annual CEO survey revealed that nearly half of Irish CEOs (46pc) believe that the dawn of artificial intelligence (AI) will have a larger impact on the world than the internet revolution has had so far.
This belief in AI is stronger, however, among 62pc of global CEOs.
‘Organisations need to prepare for the future of work where AI and data analytics are the norm, and create a compelling work experience for employees’
– CIARÁN KELLY
PwC Ireland partner Ciarán Kelly leads the advisory services team at the firm and is a member of its leadership team. He specialises in change and programme management, performance improvement, revenue growth, and information technology.
What do you think the impact of AI will be on Irish businesses and people’s careers? Is it fair to say Irish business leaders are more complacent than their international counterparts?
The PwC 2019 Irish CEO survey reveals that AI is the next game-changer for business. For example, the majority of Irish business leaders are of the view that AI will significantly change the way they do business in the next five years. Nearly half say that it will have a larger impact on the world than the internet revolution.
In terms of the financial impact on Ireland’s economy, PwC estimated in its report published in late 2017 – Economic Impact of AI on Ireland’s Economy – that Irish GDP could be 11.6pc higher in 2030 as a result of AI (the equivalent of an additional €48bn), making AI one of the biggest commercial opportunities for Ireland.
AI will have different impacts for businesses depending on the sector they are operating in. The impact on productivity could be competitively transformational and disruptive. For example, PwC’s research in 2017 identified that there will be significant but varied GDP gains by 2030 across all industry sectors in Ireland. The sectors most impacted by 2030, according to the research, will be transportation, manufacturing, construction, wholesale and retail trade, public sector, and financial services.
In insurance, and asset and wealth management, for example, there is great potential for AI, especially where automation of back offices is concerned and the use of machine learning. Technology, media and entertainment will be less impacted largely due to these sectors having already seen some AI gains. Businesses that fail to apply AI could quickly find themselves being undercut on price and turnaround times, and may lose significant market share as a result.
On people’s careers and jobs, Irish CEOs stated that AI will create as many jobs in the long run as it will disrupt and/or displace. This is not dissimilar to the change waves we have seen brought about by, for example, the industrial or internet revolution. Much of the focus of AI to date has been on the impact that increased automation will have on jobs. While we expect that the nature of jobs will change and that some will be susceptible to automation, our research also shows that AI adoption will result in new job creation and job enrichment.
It is fair to say that many of the jobs in existence today were not even thought of 20 years ago. We expect to see an ‘autonomy’ wave by the mid-2030s, when AI will increasingly be able to analyse data from multiple sources, make decisions and take physical actions with little or no human input. Interestingly, PwC research – Will robots really change our jobs?, published in 2018 – also reveals that more women could initially be impacted by the rise of automation, whereas men are more likely to feel the effects later, by the mid-2030s. This is due to the types of tasks that are more susceptible to automation and the current gender profiles of employment.
At the same time, people will need to be retrained. Organisations need to prepare for the future of work where AI and data analytics are the norm, and create a compelling work experience for employees. With much talk about AI, automation and robots taking jobs, organisations that take the lead by communicating what the future of work means for their people, and how they will be more transparent around their plans for the future of work, will be the winners. It is important that Ireland puts itself at the forefront of the AI revolution, investing in the skills and technology needed to successfully adopt AI into commercial business opportunities.
PwC’s Irish 2019 CEO survey reveals that global CEOs are preparing for the AI revolution more so than Irish CEOs. The survey also suggests that global CEOs are more advanced in their AI implementation plans compared to Irish CEOs.
Irish CEOs are not necessarily more complacent than their global counterparts, but may take longer to adapt, and rightly so, given we are a small, open economy. It is important, however, that Irish CEOs see how their global counterparts have dealt with new international trends, and learn from that experience. But our research suggests that Irish CEOs do need to invest more in AI to keep up with global competitors and to fully leverage competitive advantage. They need to understand how AI can be applied in their businesses, and ensure their organisations have the right talent, data and technology to fully exploit AI opportunities.
How big is the skills challenge facing Irish organisations and how geared up are they for the retention and attraction of talent?
The skills challenge has become even more acute in Ireland, and the PwC 2019 Irish CEO survey calls this out clearly. The lack of available skills is at an all-time high in the history of the survey and may be driving wage inflation. For example, nearly three-quarters of Irish CEO survey respondents stated that the deficit in supply of skilled workers is prompting higher people costs. At the same time, three out of four respondents confirmed that hiring people is becoming more difficult than ever before. Based on our experience, key skills gaps include technology, digital, AI, data analytics and those with STEM (science, technology, engineering and maths) qualifications.
But, when closing these skills gaps, there is no quick fix. Some see significant retraining and upskilling as the way to go; others are hiring from competitors and establishing a strong pipeline from education. PwC’s 2019 HR director survey also revealed that in order to alleviate the skills challenge, businesses need to focus on workforce planning, talent management and the employee experience. A clear message from the survey was that organisations need to build, develop, and enhance their capability and output with regard to workforce planning and HR analytics.
As technological changes continue to disrupt the business world, people with strong data and digital skills are in even higher demand and increasingly hard to find. Businesses, educational institutions and Government need to work hard together to address the demands of the evolving workforce.
In terms of the opportunities from technology, how much use are leaders making of data to garner insights and make critical business decisions?
The CEO survey highlights a significant gap between what business leaders across the board see as important for decision-making and the information which they receive to help inform those decisions. Despite significant investments in IT infrastructure in the last decade, global and Irish CEOs are seeing cracks in their own capabilities and are struggling to garner meaningful insights from the data they hold.
CEOs are unequivocal in their belief that data about a range of disciplines such as financial projections, customer and client preferences, business risks, brand and reputation, and employee needs is critical for long-term success. However, they are struggling with the adequacy of the data they receive. For example, on average, just one-fifth of Irish CEOs confirmed that the information they receive for business decision-making is adequate.