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We help you develop a Strategy and a Roadmap, including Tool Selection, Productivity metrics and ROI Models.

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The Automation Wave and What it Means for the BPO Industry

What if someone told you that in order to survive, your business would have to embrace automation or perish. Would you believe it?

At one point, this may have sounded drastic. But the future of business process outsourcing (BPO) is facing its biggest challenge yet: automation. As new technology emerges, the BPO industry will continue to be disrupted. Let’s talk more about the automation wave and what it means for the BPO industry.

Ease of BPO and IT Services

The outsourcing of business processes surfaced in the 1990s and has done remarkably well thanks to its alignment with IT services. Businesses have been able to take advantage of BPO services, e.g. call centers, payroll processing, accounting and human resources, from companies that offered IT services. In countries such as the Philippines, BPO has been one of the fastest growing sectors; however, the industry is changing.

As technology evolves and automation becomes more commonplace, the BPO industry continues to be altered. Currently, there are two main issues that are preventing BPO from reaching its full potential: resistance and emerging technologies. IT services are still going strong, but BPO services have faced more resistance and change management. Yet, the bigger factor is Robotic Process Automation (RPA).

Limitations of BPO and a Greater Need for Automation

RPA minimizes or eliminates the need for human intervention. This leads to a wide range of benefits, including decreased costs, improved efficiency and fewer headaches. RPA is making its way into all types of industries, so its growth is not to be underestimated.

The Banking and Financial Services industry is the largest consumer of Information Technology Products and Services, to the tune of $487 Billion globally, according to Gartner. Even at these levels of spending where new products and services are introduced every day, there is a tremendous amount of manual and repetitive work that drives down productivity.

The reality is that even the most sophisticated software like Marketing Automation (MAS), Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Accounting G/L and SAAS based systems, create challenges where disparate internal and external systems are not integrated.

The challenges outlined above have also created the $63 billion business process outsourcing industry, where in many cases BPO providers primarily use the offshore labor arbitrage to drive the costs down. Any labor arbitrage-based model has its limits. As the industry hits the maturity cycle (wage inflation combined with productivity loss due to time zone and cultural issues) the cost benefits are washed away. A similar trend can be seen in the China-based manufacturing industry, where we see some manufacturing jobs moving back to the US.

How the BPO Industry May React

The BPO industry is changing and to be competitive, the industry will need to change its model. One way to do this is by integrating robotic process automation into their model. This is possible, though it is unlikely to happen since the FTE model appears to be more favored.

Another approach may be to focus on services that can’t be automated. There are some tasks that still need the human element. Finally, the BPO industry may choose to compete with their own RPA software that has a more DIY touch to it; only time will tell.

Implementing RPA

How should your corporation handle these changes? First, don’t be afraid to implement more automation into your processes. RPA empowers your business; it cuts costs, increases productivity, and reduces error. It works exceptionally well for tasks that are repetitive and rules-based.

Second, taking advantage of RPA today prepares you for the future. Though it’s a newer technology that probably affects 20% to 40% of processes, these percentages will increase as the technology further develops.

Conclusion

Automation is not a fly-by-night trend; It’s here to stay. RPA makes sense for today’s businesses because it allows them to reduce spending and increase efficiency without compromising production or customer service. If your business currently relies on BPO, it’s worth looking into robotic processing automation and what it can do for you.

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