Global sourcing trends

Robotic Process Automation – Will It Make or Break the BPO Industry?

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As automation capabilities continue to advance and as labor costs continue to rise globally, robotic process automation (RPA) is becoming a promising alternative to traditional labor-intensive BPO operations. Though this is a rosy future for businesses looking to save costs and improve quality, it doesn’t bode so well for the millions of humans worldwide currently employed in BPO.

What is RPA?

RPA is not the physical use of robots, as many suspect it to be. RPA is the use of artificial intelligence (AI) and learning capabilities through software-based machines to perform tasks repeatedly in large volumes.  RPA can already be seen in mature BPO hubs like India, Philippines, and Poland, where cloud service providers are on the rise. This software is capable of analyzing large amounts of data with computing, while it has the problem solving ability of human brains. This leads to flexibility, cost reduction, timely execution, and transparency in any process.

Benefits of RPA

When it comes to repeatable, high volume tasks, RPA offers many benefits over its human labor counterpart:

  • Dramatic cost savings – Companies can expect a labor cost reduction of 40-75% as RPA enables around-the-clock operations at a fraction of the cost of its human equivalents. The estimated cost of an RPA robot amounts to only one-third the price of an offshore full-time employee. By implementing RPA into a process, a service provider can reap positive returns on the investment within just six months.
  • Reliable digital labor – Digital labor can work 24 hours a day, seven days a week and does not require training. Typically, one digital robot can do the work of two to five humans.
  • Accuracy and Quality – RPA is suitable for processes vulnerable to high human error rate as it will help in avoiding re-work. Robots are programmed to follow rules to produce 100% accuracy, thereby increasing the quality and accuracy of the process output.
  • Reduced process cycle times – Based on the required technology and environment, RPA can perform tasks faster than humans. Switching to RPA can reduce processing up to 90%, whereas currently, only 30-50% is being achieved for an average process.
  • Improving insight and analytics – The available RPA platforms do not have advanced analytical capabilities. However, in the future, RPA will make it easier to gather and organize data so that business leaders can derive outcomes and optimize their processes.

Risks & Challenges of RPA

There are several risks and challenges that arise while outsourcing workflows through automation.

  • Governance – Governance requirements differ for traditional BPO services and for automated workflows. Presently, processes by service providers are based on outputs from offsite delivery centers. Due to this, a workflow governance structure must be considered to support transparency of the process changes.
  • Technology by Limited Vendors – Software used by the service provider will require functionality on the robotic and enterprise levels. Service providers focus on traditional technologies to promote quality and resource utilization, so business leaders have limited vendor options.
  • Work Roles and Locations – BPOs often face a difficult transition phase to incorporate RPA into current work roles and locations. Today, a majority of the processes take place in low cost and scalable offshore delivery centers. Introducing RPA offerings will drastically change existing work roles and locations in multiple ways. Without having resources with adequate skill and knowledge, the software-based machines cannot perform. As a result, business leaders will have to continue to hire and retain qualified workers in the short-term.

Impact of RPA on the Global Workforce

The primary challenge facing RPA is the expected loss of jobs of millions of call center workers worldwide. Some claim that by 2020, service providers and BPO companies may no longer exist due to large-scale replacement of call center and process workers by virtual autobots. Market experts, however, believe that demand for workers in BPO will not altogether disappear. After all, implementing RPA within an organization will require some humans to execute the related tasks and monitor/manage the new systems. Additionally, by removing repeatable tasks from day-to-day activities of employees, RPA would enable them to focus on other aspects of the business, leading to innovation.

It’s clear that RPA will have a significant impact on the BPO industry, but our market research doesn’t show any sign that the BPO industry is moving toward extinction.

Is RPA Right for Your Company?

Here are four things to keep in mind when deciding if your company is ready for RPA:

  1. Have you identified key processes for automation, but are unable to deliver in a timely manner? In a competitive market, agility and responsiveness to unpredictable environments drives success.
  2. Does your company hire seasonally during cyclical peaks in workload? Recruiting during seasonal peaks or retaining a workforce for a project is often expensive and harms the normal line of business. RPA can reduce seasonal hiring and operational costs associated with cyclical peaks.
  3. Are your employees re-working on repetitive, time-consuming tasks? Switching to RPA gives companies the opportunity to remove repetitive, data-driven processes to software robots. This will allow employees to handle responsibilities that add more value to the business.
  4. Are you able to integrate all operations without being hindered by technological shortcomings? RPA offers an efficient way to integrate critical operations without modifying the mainframe allowing business leaders to leverage applications with new systems and cloud-based services.

For more insights on the impact of robotics and automation on the outsourcing industry, check out Supply WisdomSM Alerts. Try a free trial to see how we can help you stay up-to-date on latest trends and be more proactive about monitoring and managing risks across your global locations and suppliers.