The reports of my death have been greatly exaggerated. – Mark Twain
While it’s impossible to pinpoint the time of death and all the conditions that led to the precipitous demise, I’m ready to call it: Traditional BPO has expired. Rest in Peace. The good news? There’s a happy ending attached to this obituary. The emerging model of BPO leverages the power of Digital Transformation – Artificial Intelligence and Robotic Process Automation to create even greater efficiencies and quality for the work that keeps businesses nimble and profitable.
Much of my career has been serving in B2B technology and services organizations with a strong focus on Business Process Services or Outsourcing programs. In fact, my first executive position (almost 20 years ago now – yikes!), I served in one of the big Business Process Outsourcing outfits that probably serviced your organization or one you were a customer of. From the early days of offshoring to the initial rise of technology enablement, I’ve seen it all in my BPO work, recognizing some time ago that clients needed to make the digital transformation (in all aspects of their business and not just BPO activities). This transformation from human capital outsourcing to digital workforce options has grown slowly, albeit steady. Why? Arms and legs labour arbitrage has been the game changer for decades. If an actuary in Poland or a data entry clerk in Delhi has the skills to do the job at a fraction of the cost a company would spend on “Ted in Toronto,” then it makes sense to offshore the work. Similarly, if it’s economically appropriate for a company to move the whole operation to Mexico because of a substantial reduction in labour costs, you better consider the move to Mexico. Here’s the thing…the fluidity of global commerce continuously feeds this migration of workers and the outsourcing of office tasks.
The Rub? Traditional BPO is still labour intensive. While employees in Manila earn less than those of their counterparts in the New York City office, what a company may save in payroll, they those benefit through other expenses like travel, training costs, supervision of the workforce, and/or mistakes in the work product because of communication issues, misunderstanding of the content and context, etc. Further, as the advance of globalism and economic prosperity flow into emerging markets, the once “value-priced” outsourced labour force may become too expensive for the outsourcing company. That’s a recipe for disaster.
The Promise of RPA and AI
For companies investing in contact centre workers and other examples of pure labour arbitrage outsourcing, the labour savings over in-house, back office sourcing can range from 15-30%. This is a great value until you consider the savings potential with RPA & AI. With digital automation in place to handle much of the repetitive processes and contact, labour savings can skyrocket to 40-75%. Pointing to a new class of automation rising within her broader designation, “Digital Labour,” Lina Tucci of TotalCIO sees a BPO paradigm shift underway in the marketplace fueled by the proliferation of technologies that are efficient and economical. “As traditional business process automation – one of IT’s principal jobs in the enterprise – is combined with machine learning, data analytics and ‘cognitive inventions,’ a new class of digital labour will arise that can do the work of humans — faster, better and cheaper — no matter where those humans reside.”
While this deepening dependence on digital labour means a decline in available jobs for those in outsourced contact centres and back office settings, businesses should have additional capital on hand to attract high-end HR targets like relationship and client value leaders, marketing gurus, software designers, etc. Top floor talent fuels the innovations today’s businesses must have to keep their products and services relevant. As much as, I, for one, appreciate a quality customer service agent or a precise data entry clerk on my team, I need the woman with the Stanford University shingle and years of experience with the cognitive enterprise or internet of things on the team even more. With savings on the lower end of the labour pool, I have the funds to hire and retain the star who will keep challenging my department with new ideas and processes. Digital labour also gives existing team members some space to hone their skills or develop new ones in other higher value areas of the business.
Death? Not So Fast…
While the flesh and bones model for BPO is quickly becoming a relic of the dying analogue world, the rise of RPA & AI is taking the BPO potential to new heights. It may take some time for the true potential of RPA & AI to be realized, but I already like what I’m seeing. And I’m in…ALL IN. I’m excited to see how enterprises can gain competitive advantage as they turn their focus to innovation and focus on the disruptive opportunities. As the saying goes, “The light bulb did not come from continuous improvement of the candle.”
