When linked together in one sentence Robotic Process Automation (RPA) and Business Process Outsourcing (BPO) do not roll off the tongue easily, but I will explain the interconnection between them and how RPA is threatening to replace BPO. RPA is the use of a bot to replace a human in repetitive data entry tasks. This tech also has the capability to allow the bot to learn the rules, rather than being taught them, using Machine Learning. This approach uses Artificial Intelligence (AI) to determine the rules around decisions rather than having them defined.
With BPO, an external company is used to deliver services. The majority of their delivery work is performed either in low-cost locations or by teams that have been brought on-shore to deliver the work in the customer’s location. This approach is generally deployed where it is deemed that they can deliver the service at a lower cost than doing the work in house. There are BPO providers for many of the standard functions that companies need, including procurement, logistics, accounting, tax and facilities management.
Delivering in a variety of ways
BPO became widely popular for good reason. It provided a cost saving by enabling companies to perform tasks cheaper than they could do themselves or gave access to skills that where variable demand made them expensive to maintain in-house. In areas such as IT, it makes sense for some businesses to use highly skilled specialists from an external company, giving flexible access to a broader range of skills and the ability to pay only when needed. However, one of the fastest growing BPO areas has been taking low skill white collar work and moving it to a country where the people are paid less – commonly referred to as labour arbitrage. But there are a couple of challenges to this approach.
Firstly, business technology is changing faster than a model at New York Fashion Week. So, the ability to grasp the latest concepts and use them to a company’s advantage is severely hampered if the people doing the job are on the other side of the world, don’t work for you and are managed under a contract where any savings gained through efficiency are not for you but the BPO organisation.
The second is RPA. A bot is able to do the equivalent of three shifts in 24 hours, doesn’t take holidays and is never sick, unless of course, in the unlikely event that it catches a bug. The bot is also under your control, so if you take advantage of new tech or change a process to help you reduce costs or enhance customer experience, the bot can be reprogrammed to deliver what you need. This is why RPA will potentially replace BPO providers, in the same way as the digital camera replaced Kodak and most of the film processing business.
If you were not already aware of RPA, you will undoubtedly be questioning the impact of such technology on the workplace. Over thirty years ago there was scary speculation on the social impact of computers and AI on the workplace. Has the technology finally caught up with the rhetoric and will RPA finally make the human race redundant? Unfortunately not, as the general consensus is that RPA will continue to let humans do more interesting work activities. In fact, one expression that is sometimes used to reflect this is “helping humans become more human at work”.
The next big thing
So this all begs the question: Is RPA the next big thing? Quite possibly. There is currently a long list of next (and current) big things which include IoT, Big Data and analytics – all of which are already becoming intrinsic in day to day life as their use cases grow exponentially as costs shrink, but intelligent RPA may be the one to watch. SAP, the worlds biggest business software house recently bought Contextor, a leading edge RPA house. With the Contextor acquisition, SAP moves their game from providing digital enterprise tools to the automation of their usage, which is a major step forward.
RPA is the business equivalent of a Sat Nav or music streaming – low in cost and high in its ability to make things easier. This has not been lost on BPO providers who are either developing their own RPA tools or partnering with market leaders such as Blue Prism or UI Path to ensure their threatened business model is still relevant.
So the BPO Industry is under threat from RPA, but who will be the game changers? Who will benefit the most? In this case, not the IT or service industries – it will be the businesses where the executives kick off and build on pilot RPA initiatives, where they build competency internally on how to leverage the bots to make their companies more competitive through better use of their human workforces.