Effect of COVID-19 on the Economy
As countries around the world continue struggling to contain the COVID-19 virus, the economy is left in shambles. In the US, the GDP fell at an annual rate of 32.9%, which is the deepest decline since records began in 1947. The EU economy is expected to shrink by 7.4% this year, which is a lot worse than the economic crisis of 2009. Let’s take a closer look at some sectors of the economy that have been hit the hardest and try to find ways companies can better deal with the new market conditions.
Commercial Real Estate is Taking a Hit
Since more and more companies are allowing their employees to work from home as a result of the pandemic, they are also downsizing their office footprint. Such a move allows companies to increase the safety of their employees and cut costs as well. According to Reuters, 25 large companies in the US plan to reduce their office space which is the second-largest expense after payroll. The financial services company State Street Corp will continue allowing a large portion of their employers to work from home while the bedding company Sleep Number Corp will reduce office space due to the growth of e-commerce. A lot of analysts are predicting that the reduction in office space is just the first wave of the cost-cutting measures and companies will try to lower costs even more to survive the recession.
Since employee payroll and office space rental are the two highest expenses companies are grappling with, one of the solutions businesses are turning to is outsourcing since it solves both problems. The outsourcing provider is responsible for leasing the office space while the employee salaries are usually a lot lower overseas. In fact, companies can utilize outsourcing to start growing again since they will be able to get the same level of productivity at a fraction of the cost.
The Rise of Automation
Due to social distancing and contactless work, companies are turning to automation to slow down the transmission of the virus and also reduce costs. For example, FedEx has managed to automate what it considers to be the toughest thing to automate: sorting envelopes and packages. They are using a robot arm created by Yaskawa along with software developed by Plus One Robotics to automate such monotonous jobs that were usually performed by humans. FedEx’s goal is to process 80% of its packages processed by robots by the end of the year and judging by the results we have seen so far, this goal is very much attainable.
The robots are powered by computer vision cameras that enable them to read and recognize the address on the packages and place them in the proper container. A lot of text annotation is required to train the machine learning algorithms to achieve such a high level of accuracy that they can replace humans. While human oversight is still required, the robots are so accurate that a single human employee can oversee as many as eight robots. Human intervention would be required in rare circumstances, for example, if the package fell off the conveyor belt and the robot did not know what to do, but even such tasks will be automated down the line. Even though the robots may work more slowly than humans, they can perform their jobs 24/7 offering substantial cost savings in employee salaries and also stopping the spread of the virus.
Companies across industries have shifted towards automation as AI technology is perfected. In certain situations, the robots simply assist humans in performing their jobs, while some jobs have been fully automated. The statistics certainly show that automation is the future since there are already about 3 million robots in US factories performing various heavy-duty jobs and about 30% of jobs are at risk of being automated. To put that into perspective, that’s 375 million jobs around the world.
Mindy Support is Helping Companies Deal With the Crisis
Mindy Support continues to provide BPO services throughout the COVID-19 crisis and honoring the obligations made to our clients. In fact, we are one of the few companies that managed to grow during this difficult time and provide a lot of stability for our clients and employees. We are one of the largest BPO providers in Eastern Europe with more than 2,000 employees all over Ukraine and provide comprehensive data annotation and BPO services to help companies lower labor costs and develop new state-of-the-art AI technology.
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November 4th, 2020Mindy News Blog