All Outsourcing is not Created Equal; the Rise of Business Process as a Service

In a great scene from the sitcom “The Office,” Dunder Mifflin office manager Michael Scott haphazardly assures his employees that their in-house “backend” jobs are safe from the encroachment of Artificial Intelligence (AI). “People will never be replaced by machines,” Scott declares. “In the end, life and business are about human connections. And computers are about trying to murder you in a lake. And to me, the choice is easy.”

It’s a funny moment, but a complete misread of the trends we’re seeing today.

I wasn’t trained to do all the back-office work that keeps the rest of our businesses greased and nimble. But I understand that those engaged in customer service, accounting, supply chain management, and other commodity services provide invaluable work for those of us focused on the core value proposition delivered by the business. I also appreciate that cost savings and efficiencies are realized when many of the back-office services are outsourced to firms that make accounting, customer service, credit, etc. their “one thing.” As I noted in an earlier piece, a growing number of businesses are outsourcing their back-office work. Business Process Outsourcing, aka BPO, has been around for decades; however now, it’s BPaaS; Business Processing as a Service.

Much to Michael Scott’s dismay, BPaaS can now provide the traditional BPO services through cognitive automation in the cloud. If the goal of traditional BPO is focused on reducing labor costs, BPaaS focuses on reducing labor count. Through automation, costs decline. A multi-tenancy approach to BPO, BPaaS is customizable, remotely accessible, and sometimes subscription based. If you need a case of paper from Dunder Mifflin, you don’t want to sit on the phone with someone in Michael’s Scott Office. You want to interface with a website, apply for credit, select your product, and have everything shipped to you in a few key strokes. Having trouble navigating the site? A virtual assistant will walk you through it. Chances are your social media provider, search engine, and home office solutions are built using BPaaS.

Over the next several years, the market growth of BPaaS will continue its precipitous rise. One study produced by MarketsandMarkets Research predicts BPaaS market size to grow from USD 40.20 Billion in 2017 to USD 68.76 Billion by 2022. This robust growth means investment opportunities for consumers and design opportunities for technology firms.

BPaaS will also increasingly support a mobile workforce. In this era of remote work, easy access to data, automated forms, and an assortment of business processes make the mobile worker better equipped to do their job. If there’s access to an internet connection, BPaaS brings the office to Timbuktu.

In the future, BPaaS will help entrepreneurs create business hubs in technologically arid settings. Instant access to information and important business processes provide tremendous opportunities to the developing world. Michael Bellot, the Hattian-born inventor of the Solobag I featured in a recent article, depended on BPaaS to market and sell his hugely successful product in a technologically arid setting. We’ll see more of this soon.

Consumers, especially, will continue to drive the rise of BPaaS. How did Quicken Loans become the second largest mortgage servicer in the US? Cloud-based mortgage applications and underwriting. (Financial services are expected to have the highest share of the growth in this market.) Customers will not seek bricks and mortar solutions if they can do all that they need to do on the cloud, at their fingertips.

Sorry Michael, your days at Dunder Mifflin are numbered. BPaaS will not throw you into a lake, but chances are it will take your job soon. No worries. Office Depot is hiring.