By enabling software programmes to execute a wide range of routine and repetitive tasks traditionally performed by humans, Robotic Process Automation (RPA) is transforming the sourcing marketplace and redefining the business strategies of both buyers and service providers. Businesses seek to leverage the potential benefits of increased productivity as well as increased speed, accuracy, and auditability of automated processes. In addition to cost savings, RPA is providing significant ancillary benefits in areas such as regulatory compliance and customer insight.
How is RPA affecting the workforce?
But smart tools are also fueling fears of mass unemployment, especially as programs with increasingly sophisticated reasoning and thinking capabilities come on line. Indeed, some reports predict that up to a third of all jobs will be replaced by robots within a decade.
While RPA certainly reduces requirements for human labour, the elimination of rote and routine tasks has to date not driven significant displacement of jobs. What typically happens is that, rather than replacing 40 people in a 100-person department, RPA will eliminate 40 per cent of the work performed by each individual in that department, so that people have an additional 40 per cent of bandwidth. While that can certainly lead to downsizing and displacement, it also creates an opportunity for people to take on new roles and acquire new skills, and spend more time on value-adding activities.
In an insurance claims setting, for example, an RPA application can automate a significant portion of routine claims reviewed by human processors. This means that, rather than spending five hours a day processing routine claims and three hours researching and resolving complex cases, a reviewer now spends the vast majority of their time focused on assessing unusual cases that don’t fall into the category of typical case. This puts a premium on industry experience and knowledge of the insurer’s policy guidelines.
From a different perspective, RPA can serve as a politically attractive alternative to traditional outsourcing in economically developed regions where voters object to the notion of 'sending jobs overseas'. The business rationale behind traditional outsourcing is the low cost and availability of labour resources. Due in large part to its thousands of highly skilled and competitively salaried labour resources, India is today the recognised global centre of outsourcing operations. And in general, the value proposition of any sourcing location – be it China, Eastern Europe, or Latin America – is based to a significant degree on skillsets and labour costs.
RPA: Changing priorities
With RPA, the availability of labour becomes less important as a criteria for decisions around service delivery location. By enabling more work to be performed with fewer people, RPA undermines the basic premise of labour arbitrage. Put simply, cheap workers – however skilled or capable – now present a significantly diminished competitive advantage compared to software that doesn’t require a weekly wage and never takes a holiday. Moreover, the processes most suitable for RPA – digital inputs and outputs, with rules-based decision making and no requirement for voice or in-person interaction – are also the ones most likely to be offshored.
As the cost and availability of labour becomes a smaller component of overall service delivery, factors such as language, culture, time zone, and IP security will become more important drivers of service delivery location decisions. This change in priorities will force global enterprises to re-think their service delivery models, which today combine a complex mix of onshore and offshore locations designed to maximise the advantages of each location while making the hand-offs and touch points between locations as seamless as possible.
These shifts are occurring already with ITO and BPO early adopter providers who are using RPA to compete against the larger established players. These upstarts are using an optimal mix of skillsets from onshore and offshore labour, with a focus on maximising quality of service rather than minimising cost of labour.
Many of the established global providers recognise what the future holds as well – consider recent reports of Wipro’s plans to reduce headcount by 47,000 in the next three years by leveraging automation, artificial intelligence, and digital services.
The bottom line
RPA, artificial intelligence, and cognitive computing will over time make geography increasingly irrelevant to more and more job functions. RPA is already having a significant impact on sourcing location decisions, by redefining the criteria and priorities used to determine where work gets done. As such, RPA may not be the job killer it’s often portrayed to be, and instead emerge as an additional element in an increasingly dynamic and complex global labour market.
Jeff Frazer, Managing Director at Alsbridge
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