You, Robot?

Our series looking at ‘Post-Human BPO’ and the robotic revolution begins with an exploration of the impact automation technology is having – and will have – on end-user organisations and the outsourcing provider community: professionals, transform!

The past couple of years have seen a great deal of buzz around “robotics” in business process outsourcing; while the word may conjure up images of large, grinding hunks of man-shaped metal the reality may be a lot more prosaic in appearance – but nonetheless remarkable in terms of its potential to shake up outsourcing, and business, forever.

The automation of processes is not, of course, new – look at the evolution of the assembly line – but in the back office its application has had a much longer gestation. Once fully adopted, however, robotics could have as great an impact upon back-office processes, corporate structure and the practice of sourcing work as it has had upon manufacturing.

The most obvious place in which robotic automation can demonstrate its value is right on the bottom-line – and, as with outsourcing generally, people cost is a critical factor here. Substantially automating an organisation’s back office, or the processes provided by an outsourcer, is going to result in a significant reduction in the need for humans to carry out work, at a cost much lower than that of those humans currently on the payroll. Where those offshoring work might look at a people cost of around 30-50 per cent of the onshore equivalent, robotics solution providers might tout savings of the same again – a compelling advantage when competing against low-cost headcount-centric offshore providers or captives, and certainly against onshore provision, even when taking into account the cost of implementation (which is anyway the equivalent of knowledge transfers when offshoring work, which also incurs cost).

Once in place and in action, a robot has a number of other P&L advantages over its human counterpart. Firstly, it consigns the concept of attrition to the dustbin of history: train a robot once and it will carry out its work until replaced, caring nothing for the temptations of the better-paying organisation up the road and having no complications such as family obligations which might keep it out of the office for extended periods or prompt it to move away altogether. Secondly, it can if desired operate 24/7 throughout the year in a manner completely beyond the abilities of even the most Stakhanovite human employee. A degree of downtime is an inevitability but this will be infinitesimal compared with the hours not worked by a human over the course of the year.

Furthermore, robotics has the huge potential cost benefit of reducing the need for a whole host of activities and processes related to people: because the robots are not human they have no requirement for human resources and aren’t subject to worker’s legislation. Breaktimes, holidays, unions – all obsolete concepts in the brave new world of robotic automation. A robot will never cause – at either end of the exchange – a sexual harassment suit or a bullying allegation; it will never fail a drugs test or send an inappropriate tweet; it will not get pregnant or become embroiled in a public scandal – and, as such, the costs involved in the creation and policing of policies and actions around those challenges can be saved and ploughed back into the business.

In some cases, capital investment can also be avoided or reduced significantly by introducing automation around an off-the-shelf product which might not include all the processes your organisation needs to optimise. Customising software can be both expensive and time-consuming, and fitting automation around purchased kit – while not itself without some cost – can deliver healthy savings while ensuring the best compatibility with the rest of your service and system architecture.

There are also bottom-line benefits which can result from robotics simply doing work faster and better than people. Cash can be saved – and revenues can be grown – thanks to faster processing and improved data collection; in the customer contact arena, for example, automation can reduce voice-contact requirements and improve routing (and offer advantages in the area of customer experience analysis).

Substantial benefits can also be seen in the field of operational excellence. Robotic automation can provide the opportunity to knit together disparate systems to improve process coherence and cohesion. A great deal of money is spent each year by organisations seeking to enhance existing processes, to analyse wastage and generally to deepen the corporate understanding of its own system architecture. The application of automation can increase the speed and quality of data collection as well as providing solutions to challenges around how to integrate related but technically separate systems – which can, again, reduce human interaction. For example, a bank offering online services might have a lengthy verifications process involving multiple human touchpoints. Automation can eliminate a number of these and strip human involvement down to the minimum which compliance or corporate security policies might require.

Human involvement, of course, is unlikely ever to disappear from some of these processes altogether – as James Hall, managing director of Genfour, points out, “humans do better when they’re doing what they’re good at…” – but the nature and scale of that involvement can often be better analysed and adapted thanks to the integration of robotic automation into the process. Firstly, the human requirement within, for example, exception handling within a claims processing department can be scrutinised and perhaps reduced thanks to pattern analysis and perhaps some relatively basic alterations to the process identified by the automation systems (this can also help to pick up laggard or, at the other end of the scale, superior performers which can have a positive impact on workforce management).

Scalability is a major advantage. Once processes have been built and optimised, scale can be achieved simply by adding more automation power – more robots – which can be “taught” the processes almost immediately as opposed to what can prove a lengthy (and hence expensive) learning curve for a human operator – let alone the cost of hiring them in the first place (and the cost of replacing them thanks to attrition, as mentioned earlier). Furthermore, and crucially, high-capability robots can learn from the data accumulated over time and “teach” new additions to the robot workforce.

This is especially attractive to organisations such as BPO providers with multiple clients. Assuming all security measures and firewalls are in place and respected, data gleaned as a result of activity carried out for one client can inform and improve processes for another. Moreover, if a provider is running similar processes for multiple clients it is a lot simpler for that provider to apply the existing systems when new business is brought in. The potential impact upon major providers here – especially those operating a low-cost, headcount-based model – is extraordinary. It’s no exaggeration to say that tens of thousands of FTEs could be taken off the payrolls of major providers over the next few years directly as a result of the uptake of robotic automation. This of course poses serious challenges as well as opportunities, as revenue models stand to be utterly disrupted – but, as is the case with much of the technology to have emerged in recent years, it seems almost inevitable that those organisations which are unable to go with the flow in this area will rapidly be first hurt and then gobbled up by those leveraging it to the fullest: the cost advantages of widescale robotic implementation are so overwhelming, and the competition for business and to maintain margins already so fierce at that end of the provider market, that bloated headcounts will more than likely simply prove unsustainable once the full force of the robots is unleashed.

It’s important to realise that robotic automation needs to be “considered a capability, not just a tool” in the words of James Hall: there is a management layer required both to ensure operational effectiveness and to generate the understanding required to fully leverage the model for the benefit of your broader organisation – for instance, the benefits yielded for one department or function might be plentiful, but without a good management framework in place which enables reporting back to the business other departments and divisions might not be exposed to the new technology and hence be unable to assess its potential to enhance their own activities. What’s more, the technology is evolving so rapidly – and so are the compliance and legislative frameworks within which companies need to operate – that existing processes may become obsolete in a comparatively short timeframe. A robust management layer is necessary to ensure these challenges do not become insurmountable, and to enable organisations to utilise the automation model in a way which reduces the requirement to overhaul or even replace obsolescent infrastructure.

The introduction of robotics also stands to have a significant impact upon the workforce. On the one hand, of course, there are what may be felt as negative ramifications in the sense that jobs stand to be lost (though that can be the case, of course, with any outsourcing); however, one subtle development is that employees may feel less aggrieved about work being transferred to robots rather than to other humans in lower-cost destinations (psychologically, outgoing staff may feel that events are simply a response to technological advancement rather than feeling, perhaps, victimised or in some way inferior to the person or persons inheriting the work they used to carry out – this may not of course go all the way towards resolving their own personal complications but might at least partially soften the blow).

Similarly, corporates in certain geographies (especially those with strong worker’s rights legislation, including several large European economies) may find it politically very difficult to achieve savings through offshoring-based labour arbitrage – or even moving work out of the organisation at all. However, the same qualms are often not felt when it comes to automating processes, which is seen as little more than an inevitable consequence of humanity’s technological march forward. The era of the Luddites is well and truly over and there is a general acceptance that automation can be expected, with the logical consequences for employment. This will not, of course, guarantee that no protests will result – especially in today’s difficult employment market – but both legislation and sentiment favour automation over offshoring to a noteworthy extent.

For those humans remaining in the organisation, meanwhile, there can be substantial benefits in the sense that a great deal of the lowest-denominator transactional activity will simply be automated away, allowing humans to focus on the higher-value, more challenging and more rewarding work. Moreover, new job opportunities will be created in the field of robotic design, systems management and analysis. As noted above, the human requirement is unlikely ever to be eliminated completely – what remains will be more rewarding both psychologically and, considering the higher-value nature of the work to be done, financially.

In sum, then, the introduction of robotic automation has the potential to revolutionise the back office (and its ramifications reach deep into the front office also). Organisations with the ability and drive to adopt this dynamic technology could propel themselves to the top of the heap thanks to improved margins, reduced costs, increased agility and scalability and much better reporting and analytics. For the outsourcing industry itself robotic automation is almost certainly likely to be a game-changer in the profoundest sense, especially in the offshore, headcount-focussed segment. If in one sense these developments can be seen as inevitable – in the words of Bob Marley, “none of them can stop the time” – they should not be viewed with trepidation by any organisation determined to adapt and flourish; indeed, such kit should be viewed as an opportunity to do just that, whether by implementing the systems directly or by outsourcing to a provider able to offer extremely competitive rates as a result of its own robotic implementation. These are exhilarating times indeed: let’s see what the future holds…

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This article originally appeared in Outsource magazine Issue #34 Winter 2013.

Each OutsourceXplores is a separate content series created in collaboration with a commercial partner. The Outsource editor retains final editorial control of course. For more information write to jamie.liddell@outsourcemagazine.co.uk