Automation is fast emerging as the new buzzword in the telecom industry. But whether it is a neat label for an array of groundbreaking technologies, or just a euphemism for job cuts, it will hold interest for company shareholders and C-suite executives for one reason alone: its potential to fatten profit margins. (See NFV, SDN, Big Data – It's All About Automation.)
Of course, profit margins could receive a boost from sales growth, if automation can unlock new revenue opportunities for operators or persuade customers to part with more of their hard-earned cash. Switching off older and less efficient systems should also help, as Deutsche Telekom AG (NYSE: DT) intends through its pan-European network overhaul. (See DT's Pan-Net Still at Start of the Marathon.)
But the real boost will probably come from headcount reductions as telcos replace humans with machines across various functions. And that means shareholders may start to assess telcos in entirely different ways.
Having once pored over key performance indicators (KPIs) such as average revenue per user, your typical investor seems bound to grow more interested in metrics such as sales per employee -- especially as telcos are increasingly measured against highly automated Internet players with lightly staffed operations. Most investors would be delighted to hear a company such as Orange (NYSE: FTE) say it could generate the same sales with a fraction of its workforce.
That automation could wreak havoc in the workplace is widely acknowledged but rarely discussed in any depth in the communications sector. No telco, and especially none that counts the state as a shareholder, wants employees and the general public to know it is plotting mass layoffs while sales and margins are holding up.
Instead, telco executives are trumpeting investments in technologies that will support automation while they downplay or remain tight-lipped about its impact on employees.
It seems inevitable that Vodafone UK's use of artificial intelligence (AI) for customer services will destroy jobs in contact centers, for example, and yet Vodafone UK prefers to focus attention on how AI will "change the nature of the advisor role" for those who survive a cull. Telefónica is similarly coy about the workforce implications of Unica, its network virtualization initiative, even though it brandishes a target of switching off 80% of its operational support systems in future. Deutsche Telekom expects to save €1.2 billion ($1.4 billion) by 2020 through its Pan-Net project, which will replace all country-based systems with a single European network. But it never mentions layoffs when discussing these savings. (See Chatbot Takes Charge: Vodafone's Customer Services Overhaul and Telefónica Plots Unica Expansion.)
Quite possibly, that is making it hard for pundits to estimate how many jobs could disappear. "Network automation is expected to displace jobs in the industry, particularly those of field workers engaged in maintenance and configuration of network systems," Accenture and the World Economic Forum say vaguely in a report on digital transformation published earlier this year.
A "fundamental shift away from large hardware deployments could impact thousands of jobs in the industry, particularly those related to network deployment and maintenance," add the report authors later. Nowhere do they attach a number to these conjectures. Yet they are happy to predict that Internet of Things services will create 400,000 new roles, and that new "open" approaches to innovation could generate another 90,000.
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