What's the point of the tech industry?

The industry is a paradox scarred by some uncomfortable truths

Tech industry

The Internet of Things, big data and even the cloud are all about one thing only: cutting costs. By streamlining, automating and increasing efficiency, the tech industry creates wealth – but only for a tiny minority.

A study by the Oxford Martin School shows that less than 0.5% of US jobs have been created by the tech industry since the turn of the century, making Silicon Valley wealth seem largely meaningless on a national scale. It also appears to add to regional disparities in wealth. So what is the point of the tech industry?

Is the tech industry just about wealth creation?

Uber, AirBnB and Facebook are all about wealth, not job creation, according to 'Industrial Renewal in the 21st Century: Evidence from US cities' by Dr Carl Benedikt Frey and Thor Berger at the Oxford Martin Programme for Technology and Employment.

The study examined jobs that did not exist in official classifications in the 20th Century, using data on 1.2 million workers in the US to identify new tech industries. The majority of the 71 new tech jobs discovered relate to the emergence of digital technologies (such as online auctions, video/audio streaming and web design), and the study also found that new jobs cluster in skilled cities – like those in California's Silicon Valley, or London.

Uber is about creating wealth not jobs Image Uber
Uber is about creating wealth, not jobs (Image: Uber)

"Because digital businesses require only limited capital investment, employment opportunities created by technological change may continue to stagnate as economies become increasingly digitised," says Dr Frey. "Major economies like the US need to think about the implications for lower-skilled workers, to ensure that vast swathes of people don't get left behind."

Will automation make it worse?

As society becomes more digitised, the automated robotics and software created by the tech industry will threaten many jobs. Should we all be fearful? Or is this natural and normal?

"If you go back to 1860, 80% of the world's population was employed in agriculture," says James Hall, CEO and Founder of robotic process automation company, Genfour. "By the end of World War II that had dropped to 40%, and it now stands at 2% – it's taken 150 years for humans to adapt and re-skill."

That makes it sound like a natural, even inevitable consequence of human progress, but the 21st Century does present a much bigger challenge because the speed is that much quicker.

"The challenge with these new technologies is the dramatic shift in what people are doing over the next 15-20 years, which gives us a tenth of the time to re-skill and find new things to do," adds Hall. That squeezed time-frame means only one thing – the wealth generated by new technological innovations will be condensed into a fraction of the population.

Toyota is investing in artificial intelligence Image Toyota
Toyota is investing in artificial intelligence (Image: Toyota)

What about artificial intelligence?

Will you be replaced by an algorithm? Will robots and AI render the tech industry an even smaller employer? "No," says Hall, who thinks that AI will reduce overall employment only until we shift to new ways of working.

"It will massively increase demand for people with the right technical skills over the next 15-20 years … the overall goal is to make technology easier to work with, enabling people without technical skills to put ideas in motion."

So IT staff needn't worry; they will need to adapt and re-skill, but haven't they always done so? Machine learning may well take hold, but the machines will still require humans to teach them.

  • (Top Image Credit: JNTO)