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The Job Skills of the Future, and of the Past

Sunday, March 25th, 2012

I have written much about the type of skills that 21st century knowledge workers will require in an era shaped by four forces:

  • Technology, which is eliminating growing number of traditional jobs and fundamentally changing the tools that will be available to (and the skills that will be required of) knowledge workers;
  • Globalization, where increasingly sophisticated knowledge-based jobs can be performed by increasingly highly-educated knowledge workers in lower-cost countries around the world;
  • The “New Normal” employment environment in which companies are reducing hiring and reducing benefits and job security by using contingent workforces—freelancers, contract workers and part-timers—to perform many functions that formerly were done in-house; and
  • Extreme volatility, where sudden, often unanticipated socio-political and economic events prompt rapid changes in our lives and work environments.

Knowledge workers who hope to thrive in this environment will require very different skills and a very different approach to and philosophy of work than their parents. They will, of course, continue to need deep functional skills in their chosen discipline, whether that be business, engineering, law or sociology. However, they’ll also require a broad range of complementary skills—what I call foundational skills—that will be required of people in all occupations. These skills which, as described in my October 30 article on Core Skills, include what I generally describe as high-level thinking, “Integrative imagination,” quantitative analytics, IT fluency and a range of soft skills, particularly around communications, teamwork and inter-personal sensitivity.

This month’s article draws on the work of three economists, MIT’s David Autor and Frank Levy, and Harvard’s Richard Murnane, who look at the role of two types of skills that will be particularly critical in helping knowledge workers protect themselves from, and capitalize on the effects of two of the most profound of the forces transforming the 21st century work environment—technology and globalization. These skills are:

  • Complex communication skills; and
  • High-level cognitive skills.

The Skills Matrix

Three primary articles by this trio of economists provide a framework for interpreting the very different ways in which the forces of technology and globalization will transform the U.S. Workforce. These articles are: Autor and Levy’s 2003 The Skill Content of Recent Technological Change; Levy and Murnane’s 2005/2006 How Computerized Work and Globalization Shape Human Skill Demands; and Autor’s 2010 The Polarization of Job Opportunities in the U.S. Labor Market.

 

The authors divide work tasks into five categories:

  • Routine Cognitive Tasks: Mental tasks that are well-defined by deductive or inductive rules. Examples include dealing with simple customer service questions, many kinds of administrative tasks and formulaic tasks such as evaluating applications for mortgages.
  • Non-Routine Cognitive Tasks (Expert Thinking): Solving problems for which there are no rule-based solutions. Examples include the practice of law and medicine, scientific research, architecting software, managing complex organizations, as well as some non-professional careers such as diagnosing tough auto repair problems.
  • Routine Manual Tasks: Physical tasks that can be described though the use of deductive or inductive rules. Examples include all types of assembly line jobs and the counting and packaging pills into containers.
  • Non-Routine Manual Tasks: Physical tasks that cannot be well described by a pre-defined set of If-Then-Do rules, or that require optical recognition and fine muscle control. Examples include driving a truck or taxi, cleaning a building, gardening and serving as a health care aide.
  • Complex Communication: Interacting with humans to acquire information, to explain it, or to persuade others of its implications for action. Examples include a manager motivating the people whose work she supervises, a salesperson gauging a customer’s reaction to a piece of clothing, a biology teacher explaining how cells divide and an engineer describing why a new design for a microprocessor is an advance over previous designs.

Routine cognitive tasks (which can be accomplished by applying defined rules) and routine manual tasks (that can be defined in terms of a specific set of movements) are most subject to computerization and, in many cases, outsourcing. Jobs based on these tasks, therefore, will increasingly disappear, at least in the U.S. and other high-wage countries. The vast majority of those that remain will provide little job security and will be subject to intense price pressures.

Non-routine manual tasks, meanwhile, are not generally subject to computerization. And since most of these services are site-specific, they cannot be readily outsourced. Most of these jobs, however, can be performed by people with relatively modest degrees of education and training and do not require particularly high levels of strength, stamina or hand-eye coordination. They, like those for routine tasks, will be subject to much competition and will provide low salaries and often, little job security.

Some of these jobs face an even greater threat in the future—information technology. Robots, for example, can already accomplish some basic non-routine tasks (such as vacuuming rooms while avoiding walls, furniture and pets). Google’s prototype self-driving car, meanwhile, has already driven several hundreds of thousands of miles with a driving record blemished only by a single minor accident (which was, reportedly, caused by human error). Although it will likely take years for future intelligent devices to achieve significant market presence, the future is already in the process of being outlined, if not actually written.

This being said, a few non-routine tasks do require special training and skills and produce particularly high-value results—think for example, of gem cutters and professional performers and athletes. The relative handful of people who qualify for such jobs will continue to enjoy high levels of differentiation and will often be able to command high salaries. Indeed, globalization and the rapid growth of middle classes in developing countries, has the potential of increasing the demand and compensation for such services and, in some cases, of creating globally-branded superstars.

The Job Opportunities of the Future

Although a tiny handful of non-routine physical workers have the potential of earning high incomes and gaining good job security, they will be the exception. For the vast majority of people, the higher-probability route to a rewarding career will come from the other two job categories:

  • Non-routine cognitive tasks; and
  • Complex communications.

Non-routine cognitive tasks go far beyond the type of problem-solving skills that are typically taught in middle- and high-school classes. Most such teaching involves problems with rules-based solutions, which, as the authors explain, are relatively easy to teach and to test. These are the types of cognitive skills that IT-based tools are most capable of addressing. The challenge is to teach the types of higher-order cognitive skills for which computers are less well-suited—those for addressing problems for which “the rules are not yet known”

These, as explained by Irving Wladawsky-Berger, include two types of problem. Those for which:

  • The information is hard to represent in a form that computers can use, such as feelings or impressions derived from viewing body language; and
  • Rules are difficult to articulate. This can include “complex processes” (such as those required to learn to ride a two-wheel bicycle), “pattern recognition” (the solving of problems that cannot be expressed in deductive or inductive rules), “divergent thinking” (as in starting from existing knowledge to develop new concepts and to ask new questions); and the ability to exercise “good judgment” in the face of uncertainty.

Complex communications also includes a broad range of capabilities. At the most basic, it entails the ability to describe (in speaking and/or writing) complex phenomena and patterns in ways in which people can understand, the ability to ask questions in ways that prompt people to think of issues in new ways, and the ability to listen to and/or read and comprehend concepts. At a higher level, it involves interaction (simultaneously communicating, receiving and processing), empathy (as in understanding and addressing the feelings and motivations of others) and persuasion (especially in selling your ideas and motivating others to action).

How will these skills be incorporated into, and in some cases, redefine tomorrow’s jobs? How do employers communicate the need for such skills? Most importantly, how will these high-level skills be taught (not to speak of measured) in a society that is finding it so hard to teach even basic skills?

Then there is the longer-term question. Will/when/how information technology is likely to impact, complement or transform these high-level conceptual and communications functions—and what will this mean for individuals’ ability to use these tools to differentiate themselves and deliver high-value services?

Up to a few years ago, such questions would appear to be little more than remote speculation. Then came IBM’s Watson—the computer system that handily beat the reigning Jeopardy champions.

Although it will take years for “intelligent” machines to effectively displace humans in non-routine cognitive tasks, Watson has already demonstrated its ability to work across both domains—complex communications and high-level conceptual analysis. It, for example, not only showed that it could recognize natural language, but also interpret idioms, parse puns and to do it all in fractions of a second.

As for its role in conceptual tasks, one of the first commercial implementations of the new system is likely to be as a diagnostic tool to help (although certainly not replace) doctors in the diagnoses of illnesses. Rather than displace doctors, however, the diagnostic system will initially be used to complement them—reducing their need to research obscure combinations of symptoms, prioritizing diagnostic options and presenting doctors with better information from which they can make their final decisions. The same is true in the second major commercialization initiative, in customer service for financial services companies where it will initially support human agents, helping them anticipate customer needs and ask more probing questions.

But, as explained in my February 20 article on Watson, the role of Watson and its successors will only grow, as they prove their capabilities, as software is tuned and as adoption spreads into additional fields, such as financial analysis, supply-chain management and technical support. Consider, for example, the number of customer support functions that are already handled without human intervention, even without the help of Watson.

I will examine these and many other questions surrounding the skills required for the high-value jobs of the future in subsequent articles.

Posted in Job and Career Opportunities, Skills Requirements, Workforce Trends | No Responses »
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Understanding Evalueserve’s KPO Business

Sunday, March 7th, 2010

My last two blogs defined and explained the nature and dynamics of the KPO industry and provided a relatively representative overview of range of services provided by profiling the offerings of the industry leader Evalueserve. But understanding the breadth of KPO offerings is one thing. Understanding the business models by which firms operate, the value they provide to clients and the implications for U.S. knowledge workers is something totally different.

Service and Employee Management

Evalueserve was founded in 2000 and now offers eight different KPO offerings (in addition to its Circle of Experts program. Although this type of growth is rapid and challenging, the company times its new offerings carefully (as by not launching a new offering until each current offering has a minimum staff of 100 analysts) to ensure that it maintains critical mass and quality of service in each of these offerings.

This growth has resulted in an employee base of 2,100 people, 1,750 of whom are billable to clients. These billable employees were initially based in India, where the vast majority of continue reside. However, the company has opened three additional delivery centers. Its Chinese and Chilean centers (established in 2005 and 2006) employ about 175 people each and its Romanian center (opened in 2008), an additional 40. Although many of these people have decent levels of domain knowledge and provide some substantive services (such as reviewing and analyzing financial reports), their primary role is to provide local language support and real-time communications with regional clients:

  • China supports clients in Japan, Korea, China and other East-Asian countries;
  • Chile supports Spanish-speaking clients worldwide, although primarily in the Americas; and
  • Romania supports those in Germany, Russia and Eastern Europe.

Who are these billable people? Most are research associates, analysts and managers/team leaders. They average 27 to 28 years old and have 3-to-5 years of post-high school education (at least a bachelors, and usually a masters degree). Although most are fresh out of school, Evalueserve does hire some people with 5 or more years experience as senior analysts or managers. Even though the company assigns each employee a “Career Manager”, many employees leave within 3 years. These employees tend to view Evalueserve not as a permanent home, but as a valuable stepping stone where they can develop the skills and experience that will be required for a career in a large global corporation. Many such employees leave the company to pursue higher education. On the other hand, those who remain after 3 years consider the KPO industry to be their “home” and tend to work in it for a much longer period of time.

Evalueserve has close to 60 professional employees in the U.S. and Western Europe, although they are primarily sales and client relationship managers. Most have consultative sales backgrounds in market research, IT consulting and related services. The company plans to open delivery centers in North America and Europe (see below).

Addressing Client Needs

Evalueserve’s 1,000+ clients range from the largest corporations to modest-size professional service firms and span virtually all industries, from consumer goods to life sciences and manufacturing to media. The vast majority of these clients are from Western Europe (40% of the company’s revenues) and North America (40%), with the remaining 20% spread across Asia and Latin America. While the breadth of its client base is large, 80% of its revenues come from only the top 50 clients and two-thirds is derived from only three industries—banking/financial services, technology and telecom, and healthcare. The vast majority of these clients originally came to Evalueserve for the expected reason—to reduce costs through labor arbitrage—and many of these companies subscribe to only a single service offering and view Evalueserve as a “mere vendor”.

This, however, is beginning to change. A few companies are leveraging existing relationships, such as for market research, into additional services (e.g., business research or marketing support). Meanwhile, some clients are beginning to view the provider as a true business partner, rather than as a vendor. Interestingly, this later trend appears to be determined primarily along departmental lines, rather than by industry or company size. Strategy and intellectual property departments and consulting firms are increasingly viewing Evalueserve as more of a partner whereas financial departments, banks and market research departments still tend to view it primarily as a vendor.

Most clients, however, are beginning to look to KPO for more than labor arbitrage. Some look to it as a vehicle for revenue enhancement, such as by using sales management services to improve sales productivity or by leveraging investment and legal research capabilities to enable banks to cover more companies and law firms to gradually expand into new specializations.

A growing number of U.S. and European clients are also leveraging Evalueserve’s global presence to facilitate expansion into higher growth emerging country markets in Asia, Latin America and Eastern Europe—using its services to research and evaluate new market opportunities, gain a better understanding of local customers, partners and legal/regulatory requirements and to insure protection of intellectual property. In fact, approximately 15% of Evalueserve’s revenue now comes from researching emerging countries (particularly China and India).

Evalueserve recruits the vast majority of its personnel with skills in providing broad, horizontal, cross-industry services—skills for which the vast majority of its clients retain the company. Having said this, analysts develop industry-specific knowledge through ongoing work with clients and the company now claims that a growing number of its people are developing demonstrable skills in its three core verticals: banking/financial services, technology and telecom, and healthcare. If a client requires particularly deep industry skills, the firm can tap its rapidly expanding Circle of Experts. Furthermore, using these three verticals as the springboard, it is now developing expertise in other verticals such as energy (oil, gas and, increasingly, renewables) and consumer packaged goods.

The recession took its toll on KPO, along with all other offshore and outsourcing services. The bad news is that after years of 70% annual growth, KPO revenue growth effectively ground to a halt from September 2008 to August 2009. The good news is that industry revenue did not actually fall. In fact, it still grew by 3%-5%! Even financial services revenues held steady for the entire industry.

Evalueserve even sees something of a silver lining in this no-growth year, both for itself and for the KPO industry at large. After years of growing at an unsustainable rate, the company finally had a chance to cut some fat from the organization and to shed the bottom 5% of its workforce. This thinning, combined with the growing availability (not to speak of slightly lower cost) of more senior people, also allowed the firm to hire more experienced talent.

In some ways, the recession has also improved Evalueserve’s competitive position. Its size and diverse line of services gave it an advantage over its legion of smaller, more specialized rivals. More importantly, the recession has slowed the KPO progress of the leading Indian IT service providers and prompted them to dedicate their efforts to retaining their core businesses rather than investing in the very different research and especially sales skills required for KPO.

Although Evaluserve, like many other firms, is seeing encouraging signs of growth, especially from companies looking to expand capabilities without taking on the commitment of hiring full-time employees. This being said, it does have one important concern—a growth in protectionism that is likely to grow as long as unemployment remains high. Although it will be tough to avoid this highly emotional issue, Evalueserve does at least have one other advantage over its larger offshore service rivals—its U.S. business is not dependent on H1B visas,  and when it does open its U.S. delivery center, it will staff it with Americans.

Opportunities for U.S. Knowledge Workers

Evalueserve, like many of the big Indian IT services companies before it, is now looking to complement its offshore and nearshore delivery facilities with onshore centers located near its largest clients. These centers, which are currently planned for the U.S. and Western Europe, will house more senior people than the company’s offshore and nearshore centers.

While offshore analysts typically have 3-5 years experience, onshore Research Architects and Solution Architects will be seasoned professionals. They will often have graduate degrees (MBAs, MS in engineering and even PhDs) and 10 or more years experience in their disciplines. They will also play very different roles. Rather than performing analysis, they will evaluate client needs, design research requirements, manage projects, present findings to clients and deliver additional levels of value, such as by interpreting research results within the context of market and industry realities and engaging in strategic dialogs with clients. They will also play demand creation roles, as by working with Account Executives to evaluate and promote additional opportunities within existing accounts.

The company plans to begin hiring these new onshore professionals (initially in financial services and heath care, with other disciplines following), when it becomes confident that the North American and Western European economies are truly on the mend.

What does all this mean for U.S. and European knowledge workers? At a very high level, offshore KPO services will pull growing numbers of service jobs—especially lower-skilled, more standardized and non-customer-facing jobs—out of the U.S. and other developed countries. It will, however, create smaller numbers of higher-skilled, more customer facing, and higher-paying jobs in these countries. This, however, is only the tip of a very large, very deep iceberg. I will examine the broader implications of the globalization of knowledge services in my March 14 blog, tentatively titled, “The Economic, Competitive, Social and Political Implications of KPO”.

Posted in 21st Century Careers, Business Trends, Creating the 21st Century Workforce, Economic and Political Forces, Economic Forces, Global Forces-General, Globalization, Immigration and Offshoring, IT Industry and Companies, IT Industry Trends, IT/Business Consulting/Outsourcing, IT/Software-as-a-Service, Job and Career Opportunities, STEM Careers, Workforce Trends | No Responses »
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Time for a New Job Search Strategy?

Sunday, October 25th, 2009

My Sept 27, 2009 blog, Leveraging University Education into Careers for the New Economy,  provided recommendations for students looking to structure their coursework in a way that would increase their odds for getting a job. But what about knowledge workers who have already graduated and now find themselves among the 9.7% of the workforce that is unemployed, or the 16.7% that is underemployed? What can these people do to maximize their prospects?

Some professionals, such as engineers, nurses, statisticians and, to a lesser extent, math and science teachers (to the extent they are out of work), generally have few problems in getting a new job. These and other specialty-skill job openings (including some high-skill blue collar jobs, such as for precision welders) are, in fact, going begging for qualified candidates. Similarly, some metropolitan markets, such as Washington D.C. and Baltimore (which employ large numbers of government, medical and defense workers), still have tight job markets. Unemployment remains at a relatively low 6.2% and, according to a Wall Street Journal article, there is one job opening for every unemployed person. Even this, however, doesn’t help those that don’t have sought-after skills.

For the most part, jobs are tough and they are going to remain that way. The Labor Department, for example, calculates fewer job openings in July than any time since it started tracking these numbers in 2000. In fact, the current level of 2.4 million job openings are half of the number from the mid-2007 peak.

Some metro areas–especially Detroit—are in particularly tough shape, with unemployment rates of up to 17.7% and as many as 18 unemployed people chasing every opening. And to make matters worse, the combination of factors such as plummeting home values, a dearth of home buyers, diminished savings accounts and limited availability of credit, make it difficult for people to move to locations with better (or at least less worse) job prospects.

As bad as things are now, few economists expect things to get much better any time soon. Speculation and growing evidence suggests a jobless recovery in which companies will rebuilt inventory and address initial demand by increasing the hours of current employees and, where necessary, hiring part-time and temporary workers. Most firms prudently plan to await solid, demonstrable, sustainable increase in demand before hiring new workers.

What should a laid off professional do? Give up and stay at home? Hardly. Even if current prospects are slim, shutting down a search and dedicating time to watching TV instead is self-destructive—both to one’s current attitude and to future employment prospects.

As I see it, everyone in this position should take some combination of five steps:

  1. Continue and expand your networking, both physical and virtual though the use of online social media.
  2. Keep your existing skills current or go back to school to learn new skills in fields that promise to offer better job prospects;
  3. Learn technical skills that complement those of your chosen career (especially relevant IT, math and science skills) that will allow you do deliver higher levels of value;
  4. Document your skills development efforts so that when you do get an interview, you can clearly demonstrate the currency of skills, your adaptability and ambition; and perhaps most importantly,
  5. Diversify or adapt your search strategy by positioning yourself as a temporary or part-time solution to a pressing employer need, rather than as a full-time employee.

This fifth step will be difficult to for many to swallow. It will, however, be particularly appropriate over the next 6 to 12 months as business begins to expand and corporate profits increase, but as companies, uncertain of the future, remain skeptical of committing to new expenses.

True, this approach will probably entail lower pay, little or no job security and no benefits. Worse still, it may make it more difficult for the under-employed to search for a full-time position. On the positive side, however, this strategy will allow you to position yourself as a low-cost, low-risk solution to a company’s staffing needs, rather than be part of the problem of increasing overhead in an uncertain economy. It will also give you an opportunity to prove yourself (for when the company is ready to hire), allow you to bolster your resume and (hopefully) learn new skills.

Moreover, selling yourself as a part-time solution to a pressing problem will also be great training for what many laid off professionals will find to be their best long-term career opportunity—becoming a consultant or starting your own company.

Posted in 21st Century Careers, Business Trends, Creating the 21st Century Workforce, Economic and Political Forces, Economic Forces, Global Forces-General, Innovation/Entrepeneur, Job and Career Opportunities, Skills Requirements, Societal Forces, Technology's Impact on Job Skills, Workforce Trends | No Responses »
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