Offshoring and AI: A double threat to early careers

The UK economy and labour market has been subject to several challenges in recent years. The combined impact of leaving the EU, COVID-19 pandemic and war in Ukraine has seen the cost of living increase dramatically and driven organisations to re-evaluate every aspect of their operations, including workforce strategy.

Motivated by the need to optimise costs and maintain competitiveness, locations such as eastern Europe and India have once again become a more prominent feature of an organisations operating model and strategy, accelerated by the viability of remote work and advancements in cloud technology.

Recent developments in generative AI, with the ability to learn, adapt, and perform tasks typically requiring human intelligence, has resulted in a universal pause for thought. Organisations are now assessing how generative AI will impact future hiring strategies given its ability to automate a wide range of jobs, in particular those requiring less experience and often key entry points into many organisations.  

The recent World Economic Forum’s Future of Jobs Report 2023 has emphasised the burgeoning role of Artificial Intelligence in shaping the employment landscape. The report predicts that 97 million new jobs will require different skill sets, while automation and machine learning will replace 85 million jobs, leading to a net loss of 52 million jobs worldwide. A stark reminder of the impact of technology and the rapidly changing employment landscape.

The convergence of offshoring and AI automation creates a challenging environment for those at the start of their career. School leavers and graduates find themselves in a paradox; while their educational and practical training are comprehensive, the pool of entry-level opportunities, often the cornerstone of their careers, is undoubtedly at risk of decline.

Roles most susceptible to offshoring and AI are often those providing foundational experience. These jobs offer a platform for skill development and career progression and are vital steppingstones for young professionals. The diminishing availability of such roles due to offshoring and automation poses a systemic risk to those at the start of their careers and the wider economy.

Moreover, AI introduces another layer of complexity. The ‘skills gap’ between what is being taught at university versus the demand of the evolving job market is also widening. Graduates need to be equipped with the required skills to work alongside AI, a necessity that many current programs do not adequately address.

The introduction of T-Levels, reform of apprenticeships and skills bootcamps are useful developments that will go some way to closing the current skills gap. However, educational institutions must adapt faster to the changing job market, emphasising ‘AI literacy,’ including understanding how AI works, its ethical implications, and how to effectively leverage it in various professional contexts.

The dual impact of offshoring and AI automation threatens not only individual career prospects but also the broader economic and social fabric of the UK. Reduced employment opportunities could lead to consequences for the UK such as economic stagnation, lower tax revenues, decreased consumer spending, and increased income inequality.

Additionally, the reduction in entry level job opportunities will have a significant impact on workforce diversity, reducing the ability for organisations to attract and develop future leaders at the grass roots. A reversal in workforce diversity would create several structural issues that would be difficult to correct, including the ability to attract future diverse talent at a time when organisations need to reflect the customers and communities they serve.     

Addressing this issue requires urgent and unified effort between UK Government, educational institutions, and business to avoid an acceleration in inequality and rise of youth unemployment rates. Based on recently published statistics from the Office of National Statistics (ONS), between Jan-23 and Mar-23, youth unemployment, including individuals between the ages of 16-24 stood at 482,000, a rise of 45,000 or 10.6% up from the year before.    

To address this challenge policymakers must create greater incentives for companies to retain jobs locally, through greater tax incentives, subsidies and grants, improved infrastructure and more public-private partnerships focused on the creation of technology centres across the UK to foster innovation and job creation.

Additionally, it is imperative that the government expedites the introduction of regulations to ensure AI augments human work, rather than replaces it entirely.

Finally, UK PLC has a crucial role as well. They need to acknowledge the long-term value of investing in local talent and balance the use of AI and offshoring with preserving entry level roles.

In conclusion, the combined impact of offshoring and AI on the job market presents a formidable challenge for individuals at the start of their career. However, by incorporating thoughtful policy, educational reforms, and responsible business practices, it’s possible to strike a balance that supports global and technological competitiveness while protecting employment prospects. The future of our economy depends on a greater distribution of opportunity and high employment, to achieve this we need jobs to begin with.