How Does Technology Affect Productivity?

Posted by Andre Mayer on Apr 9, 2014 2:49:00 PM

"Has technology allowed your company to produce more goods or provide more services than a decade ago with the same or fewer employees? Can you quantify the economic effect?"

ProductivityOn AIM's March Business Confidence Survey, 62 percent of the employers who responded said "yes" to the first question. The second question proved harder to answer for many.

The 37 percent reporting no significant impact were almost all smaller firms (fewer than 100 employees) and were largely in services or other non-manufacturing sectors, although there were a few manufacturers – "everything is still handmade" said one.  A few members chose "not applicable" either because they interpreted the question narrowly or because they were not in business 10 years ago.

Those who were able to quantify gains often reported productivity increases in the 10-25 percent range, but one manufacturer doubled output without adding workers, and a non-profit service provider more than tripled productivity. Some manufacturers noted that productivity improvements did not strengthen their bottom lines due to downward pressure on prices, while companies in various services industries cited offsetting costs from new regulations.

Respondents' comments revealed the complexity of technology's impact. One noted that although productivity per se was unchanged, it could now offer an expanded range of services. "Not 'more' … just better" was a recurrent theme.

"We are handling requirements for new customers that we would never have been able to handle with our legacy systems," have the "ability to market to a larger audience," can "identify more jobs to bid on" thanks to new technology, respondents said.  In the construction sector, better cost estimation is key: "You cannot operate today without a good software program to control cost and show market trends."

The effect on staffing levels was mixed; the largest group of employers seems to have held steady, others downsized, and some reported adding jobs as a result of technology.  

Topics: Technology, Productivity, Profits

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