I recently sat down to read Richard Horton's (Deloitte, Head of Finance Research) latest piece of research, entitled ' The robots are coming'. I was immediately disappointed to learn that robots are not the walking, talking auto-bots we know and love from 1980s sci-fi films, but rather invisible bits of software. Having recovered from that news, I soon realised that Richard's report on the growing automation of boring back-office chores actually has some pretty significant implications for the way firms might use office space.
Shared services and Global Business Services (GBS) leaders are
always on the lookout for efficiencies in their organisations, so
the automation of processes and use of robotics is an increasing
area of focus for them. The implementation of robotics is at a
relatively early stage, but ultimately more than half of all roles
in a typical finance function could be automated.
One of the reasons why automation hasn't been adopted more quickly is that outsourcing roles to cheaper locations – be that within the country, or further afield - can already reduce the cost of a full time employee (FTE) by up to two thirds. This is a tried and tested approach that many businesses are comfortable with. However, there are much bigger gains to play for: robots are typically just 10% of the cost of an FTE. Robots have plenty of other benefits aside from cost, too. They can work at night or over the weekend, they have lower overheads and fixed costs than people, and their error rates are virtually zero.
Of course, one outcome is that the adoption of robotics makes companies more profitable, allowing them to expand more rapidly, but at the expense of some back-office jobs in areas such as shared services and GBS functions. Our research into the impact of automation on jobs in the wider economy (see London Futures: Agiletown) certainly suggests that this is a possibility, with around 1/3rd of UK jobs being at high risk of automation over the next 10-20 years. As these roles often provide low to medium incomes, this has broader socio-economic ramifications – those who can least afford it are most likely to be at risk of losing their job to machines or software. For property, there could of course be equally direct implications: if automation becomes more popular, demand for traditional back-offices, whether abroad or in the UK, could be dented.
Yet perhaps that isn't the only outcome. For a start, not every job can be automated entirely – some aspects are just too complicated or varied for automation to be effective. Unsurprisingly, the greatest potential for efficiency gains lies amongst clerical and administrative jobs that feature a high degree of repetitive processes. But in taking away some of the most tedious tasks from these roles, robotics could free up employees to spend time on more varied, more productive, and ultimately more creative types of work. As Tom Davenport writes in a recent essay for Deloitte University Press, "Instead of simply automating [employees] out of a job, I would encourage you to think about how smart machines and smart people can augment each other. Some people may work closely with the technology, monitoring its performance and dealing with exceptions it can't handle. Others may "step up" above the technology to examine its broader impact on the business—portfolio management in asset management firms is an example of this".
And if the type of work that is being done changes, it is only a short hop to thoughts about how the workplace environment needs to change too. Regimented banks of desks may be an efficient use of space where employees are undertaking routine tasks with little need for new thinking or collaboration, but if automation paves the way for roles to become more creative and collaborative, this layout may no longer be optimal. By way of example, some of the most creative parts of the technology industry have been early adopters of the new breed of serviced office and co-working spaces. These offices can provide a variety of environments – fixed desks, meeting rooms, breakout areas, flexible spaces - that can be used depending on the task at hand. Implicit in these options is a recognition that employees want to use different types of space for different types of work. For real estate then, the challenge posed by automation is likely to be much less about dealing with reduced demand for office space and much more about further changes in its characteristics.
Employees themselves have been casting a wary eye on technology since at least the early 19th century, when the Luddites faced off against new power looms that threated to (and eventually did) take jobs from textile workers. Yet history shows technology that appears to reduce the need for human effort actually has a remarkably strong correlation with job creation. The caveat is that it isn't always easy to predict exactly where those new jobs will surface or what they will be: a glance at our most recent London Office Crane Survey shows that some of the largest offices being built in central London will be occupied by businesses from industries that didn't exist 20 years ago.
By the time I had finished reading Richard's report, I had two main questions: the first was the extent to which both the creators and users of workspaces are really considering the impact of new technologies such as automation; the second was whether it might not be more fun to have robots that are, in fact, walking, talking auto-bots.
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