Our Thoughts: Automation Challenges Business Process Outsourcing Industry
The Offshore Business Process Industry is a $63 billion Industry. It grew rapidly over the past 20 years as internet connectivity became mainstream and cost effective worldwide. The underlying premise behind its growth was a relatively infinite availability of cheaper knowledge based, English-speaking labor pools in countries such as the Philippines, India, etc. Most of the Back Office and Customer Service (Call Center based) functions have already been off-shored over the past two decades.
Albeit still growing, the offshore BPO industry has reached a maturity cycle. The challenges do not only include rising labor costs, but also rapidly advancing automation technologies such as Robotic Process Automation and Artificial Intelligence. Experts argue that in some cases, automation technologies will eventually eliminate the need for BPO outsourcing in its current form, as much of the rules based repetitive back-office work can be performed by robotic software implemented on premises. In the short term, we see a hybrid of Human/Robot workforce developing within the enterprise where the subjective decision making provided by humans is coupled with the efficiency and accuracy of robots performing routine and repetitive tasks.
Over the long-term, the robotic software coupled with AI technologies such as IBM Watson, Google AI, Amazon Machine Learning, etc. will be capable of increasing levels of decision making (think self driving cars vs. today’s adaptive cruise control technology). Due to the evolution of such technologies, we see some levels of consolidation within the BPO industry as well as the new and leading players rushing to adopt these technologies and reinvent their bodies-based business models into more Automation driven and Outcome based Business models.