Investments in automation boost incomes, productivity and jobs
SnapLogic and the Center for Economics and Business Research (Cebr) published a study on the economic impact of automation. The study examines the growing adoption of automation and its role in boosting business incomes, creating jobs, increasing productivity, and building economic resilience.
Research reveals that investments in automation are directly linked to increased business income (up 5-7%), job growth (up 4-7%) and long-term productivity (up 15%). Driven by the pandemic, adoption of automation is accelerating, with companies in the US and UK spending 8-13% of their annual revenue on automation-related technologies.
Investments in Automation Boost Income and Economic Resilience
Research reveals that companies that have invested in automation have seen a marked increase in their revenues. Additionally, research indicates that the more a country uses automation, the better equipped it is to deal with global economic disruptions, such as a recession or the recent COVID-19 pandemic.
- Increase in income – In the three months following the investment, American companies saw an average increase of 7% in their revenues year-over-year, or an additional 195 billion dollars per month, according to the study. UK businesses saw an average increase of 5%, or £ 14bn each month.
- Economic resilience – Analysis suggests that during the COVID-19 crisis, countries with greater adoption of automation were better equipped to deal with the disruption.
- The UK could have avoided £ 10-14bn of its GDP contraction in 2020 if it had matched the level of automation of a country like the US
- Meanwhile, the United States could have witnessed a lower GDP contraction of $ 105 billion to $ 212 billion had it entered the pandemic with a degree of automation similar to that of a country like Singapore.
Automation drives job growth and worker productivity
The report presents a relationship between automation, job growth and worker productivity. Despite some claims that automation can limit opportunities for employees, the results tell a different story:
- Job growth – U.S. companies adopting automation-related technologies saw an average annual increase in employment of 7%, equivalent to a total of 7.2 million jobs, in three months (compared to a year earlier). UK businesses recorded an average increase of 4%, estimated at 676,000 total jobs.
- Improved productivity – In the UK, automation has the potential to increase productivity by 15% in the long run, with notable benefits in sectors such as transport, healthcare and social work. This translates into the possibility of creating up to 3.3 million additional jobs. If the same increase in productivity were to occur in the United States, it would support the creation of about 16 million jobs.
The use of automation is increasing, supported by basic technologies
The popularity of automation continues to accelerate in the US and UK. According to the report, US companies spent an average of 13% of their annual revenue (or $ 4.4 trillion) on automation-related technologies, while in the UK the average spend was 8 %, or 268 billion pounds in total.
This increase in automation spending has focused on some core technologies:
- cloud computing – The adoption of cloud solutions has led the way, with 78% of US businesses and 64% of UK businesses investing in the cloud to help them improve and automate their businesses.
- Data integration – Data integration was the second most popular technology implemented, with 71% of US companies and 44% of UK companies relying on it as part of their automation strategy.
- Internet of Things (IoT) – IoT was ranked third most adopted automation technology, with 64% of companies in the US and 40% in the UK looking to extend their IoT projects to power automation.
- Big data analysis – Meanwhile, the analysis and use of big data was part of the automation strategy adopted by 62% of businesses in the US and 41% in the UK.
Companies also had clear business goals for moving forward with the adoption of automation:
- Increase speed and agility – At least half of US (52%) and UK (50%) companies identified the need to improve business speed and agility as the number one reason to adopt automation.
- Increase worker productivity – The idea that automation can help increase worker productivity was the second highest adoption driver in the US, identified by 47% of businesses in the country and 35% of those in the UK.
- Lower the costs – 38% of US companies and 37% of UK companies have invested in automation to reduce business costs.
- Improve customer engagement – 39% of US companies said their investment in automation technology was driven by an expected improvement in customer engagement, compared to 37% of UK companies.
“Our new research confirms a significant positive relationship between automation and economic resilience,” said Josie Dent, chief economist at Cebr.
“The adoption of automation, spurred by the recent pandemic, has helped organizations protect themselves from disruption and quickly position themselves for accelerated growth. Automation has also led to job creation and greater worker productivity, a significant contrast to the economic situation seen in the post-global financial crisis period. “
“This first Cebr report demonstrates the power of automation to help businesses overcome widespread disruption and shows how it can be used as a tool to accelerate growth in the post-pandemic era,” said Gaurav Dhillon, CEO of SnapLogic.
“Companies today must equip themselves with enterprise automation technologies that will allow them to adapt and execute business strategies quickly in a rapidly changing world. “