Type: Process Essays
Sample donated: Jana Harrison
Last updated: September 28, 2019
Effect of Artificial Intelligence on Business Environment IntroductionHumans have been constantlydeveloping tools to help them in their work. In the second industrialrevolution, we made machines which were at the centre of the development andprosperity it bought with themselves. Cut to today, we have smart machines, whocan not only help humans in their work but also mimic them in their work.’Artificial Intelligence’ is study of devices and machines that can copy thecognitive function of humans and perceive things in their environment in orderto take decisions.
AI is finding its use in businessenvironment all over the world. We have self-driving cars, supercomputers whichcan do find relationships in complex data, figure out tax returns, performcomplex calculations and find out right mix of molecules to make a vaccinationand many more. The benefit is that with the speed of computer and the cognitionactivity of humans, a lot of work that was previously done by humans can now bedelegated to machines. With this, businesses have been able to streamline theiroperations and increase their profits. The result is that more and moreindustries are starting to use AI for basic functions and it has led tounemployment. Large companies prefer to invest in technology that will replacethe need of human labour in the future and it has lead to many people losingtheir jobs. While the proponents of AI say that it will only increase the jobsand standard of living of the people, those against feel that people losingtheir jobs are the ones at the bottom and it will increase the gap between richand poor even more.
In our assignment, we try to lookat the effects of AI on the Business Environment and suggest recommendationsfor the issues that come up in the discussion. AI inbusiness environmentOver the years, technology hasbeen the biggest business growth driver. Advent of technology into the businessenvironment has led to the development of innovative business models.Artificial Intelligence is undoubtedly the most pervasive technology that isbeing used in businesses today.
ImplementationMajority of the businesses areimplementing AI only for machine to machine interactions at present but thereis an inevitability that it will spill over to take human jobs and as a result mightlead to unemployment. According to a recent survey on the Harvard BusinessReview, AI is being used majorly in Information Technology activitiesparticularly to help organizations help detect security infringements. AI isalso fast helping the marketing departments of companies to anticipate futurebuying patterns of customers and make adjustments to their discounts andpricing accordingly. AI also enables high frequency financial trading andenables call distribution without manual intervention. Figure 1 shows some of thevarious functions which is being performed by AI in the various sectors of anorganization and the relative levels of utilization in each of themFigure 1- CurrentImplementation of AIArtificial Intelligence is beingincreasingly implemented in profit intensive functions of the organization suchas supply chains, advertising, etc. It has also enabled companies to achieve ahigher market penetration by increasing their customer reach.
Impact Artificial Intelligence ishelping businesses achieve new feats which were unthinkable a few decades ago.It has completely changed the way businesses are being perceived by mankind.Some examples were AI has significantly impacted traditional businesses are:· Hospitaland Medicine Industry: Accurate disease predictions for efficienttreatment.
Revolutionized the way drugs are manufactured· AutomotiveIndustry: Fully automated cars equipped with sensors and speech detectorsfor enhanced human-computer interaction· Sports:Sports teams around the world are using AI to study more about their opponentsand their own players’ performances. In football, usage of AI can generate indepth insights and predictions about each player’s movement and reactions· Agriculture:AI enables farmers to keep track of livestock, manage their crops duringvarying seasons and also ensure maximum productivity from the harvest area Fears regarding implementation of AIThe major fear regardingArtificial Intelligence is about the prospect of it replacing humans completelyin all walks of life. From a business perspective, this could result inextremely high levels of unemployment which would have severe repercussions onthe world economy. AI with its automation capabilities, has significantlyresulted people in losing their jobs. AI has displaced workers in assemblylines by performing the same function with higher efficiency and lower costs.
It has been predicted that AI will reduce the global workforce by around 6% by2021, which is around 9 million jobs in a super power country like USA alone. Thereis an increasing awareness to exercise control over AI usage such that there isa fine balanced achieved between human workforce and automation that would helpbusiness achieve maximum profitability. IndianContextIndia is one of the leadingcountries in adoption of disruptive technology like Artificial Intelligence.58% of the AI using companies are adopting it at a scale much bigger than pilotand small-scale projects. The business environment is under a process of rapidchange which is creating newer opportunities as well as creating the need forvarious steps to regulate it. Social EnvironmentIndia accounts for about 6% ofcompanies that use AI in its processes. AI industry revenue in India is about180 Million USD and employs around 29,000 professionals.
While the technologycompanies are involved in its development, increasingly e-commerce and financesector are utilising AI in their processes. The skills looked out for AIProfessionals are Machine learning, Natural language processing, NeuralNetworks analytics, Pattern Recognition. Share of India in AI jobs is around 7%and is set on a rapid increasing trend. Focus should be made on further developingthese skills in the education and skill centres to make best use human resourcecapital in the changing environment.
While new jobs are being created, there isa threat to existing jobs which involve clerical works especially in banking,tax, insurance, manufacturing, retail. Economic EnvironmentBesides the large Tech companies,many start-ups are developing innovative solution using AI in fin-tech andhealth -tech sectors. These start-ups are growing at a fast rate of 75%. Thisis a sign of growing competency of India in technology industry. The growth isalso a signal of expanding human capital expertise in this sector.
Presence ofmany global software and technology services companies and R&D base inIndia is another testimony of the growing demand for Indian professionals. AsAI is one of the fastest growing technological disruptions, human capital withrequired skills in India have a high number of job opportunities. According toconsulting firm Gartner, AI will be a top investment priority for Technologicaldepartment of more than 30 percent companies. Legal EnvironmentIn India, the laws andregulations for governing the artificial intelligence are not well framed andare in a nascent stage.
An existing body Artificial Intelligence Association ofIndia (AIAI) had been formed in 2009, focusses on enhancing the publicknowledge of AI systems, support research, and training fundraisers on thepotential of AI in current and future times. Recently Union Ministry ofelectronics and Information Technology has initiated steps in forming a policyon artificial Intelligence. The Govt has come up with a seven-point strategy toregulate growing adoption of AI in businesses. The strategy includes developingmethods for human machine interactions; ensuring safety and security of AIsystems; creating a competent workforce in line with AI and R&D needs,understanding and addressing the ethical, legal and societal implications ofAI, measuring and evaluating AI technologies through standards and benchmarks,among others. Govt is currently supporting digital initiatives like Make inIndia, Digital India, Skill India in turn creating a favourable environment forArtificial intelligence.
Technological EnvironmentFor growth of Artificialintelligence in India, apart from outsourcing human capital services, researchneeds to be emphasized in this area. Technological infrastructure has a crucialrole to play in this regard and is a major development area in India. Cloudcomputing centres which can hold large amount of data of AI applications shouldbe developed.
New technologies like Artificial Intelligence work oninterdependence of many systems which invites the risks of systematic failuresdue to glitch in any one system. About 75 percent of respondents to a recentsurvey by consulting firm EY India said cybersecurity deployed in theirorganisations does not meet their needs, Cyber securities laws in India need tobe upgraded to meet the growing network of Artificial Intelligence. Theglobal contextToday, the world is extensivelyusing AI. Most of the developed countries have AI systems extensively in use. Globally,companies are integrating AI into their work in order to get the most out of theiroperations. People, all around the world are using AI systems around us on a dailybasis. For example, search engines like Google, Bing use AI to give suggestionsbased on our past searches.
Facebook heavily relies on AI for making friendsuggestions, tagging options. Google Ads use AI to show us ads we are mostlikely to click on. All these have made the online experience of a person highlypersonalized.
PwC, in a recent report states –”According to our analysis, global GDP will be up to 14% higher in 2030 as aresult of the accelerating development and take-up of AI – the equivalent of anadditional $15.7 trillion.” As per the report published by PwC, and also statedin an article published by CNN Tech, America, China and India are the big 3 ofAI. America: North America is likely to seethe fastest growth with the development and use of technologies associated withAI. Silicon Valley giants like Amazon, Google, Tesla, Facebook invest heavilyin AI, and the development of AI is accelerated by advanced technology andconsumer readiness for change in the general experience.
AI is taking over inmedicine, agriculture and designs of cars. The result is that with newadvancements, companies are able to offer more to customers in experience andat the same time make more profits with more customer engagement. It has alsoled to more research funding to universities for AI.China: Unlike the corporates and the consumers pushing AI inAmerica, AI in China is getting a push from the government. The government hasan ambitious plan of China becoming the ‘world’s innovation centre for AI’ by2030, through an investment plan with a spend of $150bn. This has led to incentivesfor companies working in the field.
India: MNCs in India are highly relying on automation in theiroperations. Online bots in customer care, Aadhar database are all examples ofAI being used to help relieve the burden on human beings and take up repetitiveor data heavy tasks. Companies like Infosys, TCS, IBM that outsource some oftheir operations to India, are the main promoters of the shift to AI andautomation.
AI in today’s world In the field of agriculture, AIis being used to diagnose crop diseases. It is using past data and collating itwith weather conditions and helping farmers avoid losses due to crop failure. Theresult is that farmers are able to sell all of the produce and increased agriculturalshare in national GDP. AI is also being used for inspecting blood films todiagnose malaria. Added to this, AI is being used in biotechnology to determinehoe different molecules will react with each other and helping scientists make vaccinationsto a number of diseases. This has lead to new treatments, vaccinations whichhas reduced the mortality rates all over the world. However, AI is becoming cheaperthan labour and companies are preferring to invest in AI rather than human capital.The fact that machines with AI have higher returns coupled with lower operationand maintenance costs is making the companies adopt AI faster than before.
Thisis putting countries like India, Bangladesh, China at a loss because thefactories in these countries are facing reduction of labour. The leaders around the world intech, politics, social issues are divided when it comes to AI. Google’s LarryPage and Facebook’s Mark Zuckerberg are optimistic about the future of AI. Theyare of the opinion that AI will help make our lives easier. They look at AI assomething that will help improve their offerings and maximize the value oftheir portfolio.
Their companies have initiated investments in hiringtechnologically literate employees, hiring pioneers in machine learning assenior management, incorporating AI into their products, investing in researchand development of AI. On the other hand, people like Elon Musk, Bill Gates andStephen Hawking are wary of AI. They think it is the greatest risk we face as acivilization, and investing in AI is like summoning the demons. According tothem, AI can overtake humans in cognitive ability and human race can face a warin the future against its own invention. Overall, the sentiment is that AI, ifmisused or not planned well can cause harm to the humankind. Its executiontherefore should be highly planned and controlled.
RecommendationsArtificial can both be a boon and a bane and it is up to ushow we use it. Following are some recommendations that can help a smooth adoptionof the technology· Robust Regulatory system w.r.
t the legal laws,cyber laws need to be made to mitigate the risks of systematic failures associatedwith AI.· Skill development programmes need to beinitiated to develop specific AI related skills utilising the demographicdividend of labour. This will help those whose jobs are getting affected by AIand enhance the overall productivity of the workforce.· In India, technological infrastructure need tobe developed to utilise the growing technology sector and ensure that the countryis at par with the global standards in case of use of AI.