We know Outsourcing is a trend that is very common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business. And outsourcing has another dimension called offshoring where some portion of the business processes is given to external organization in another country where resource wages lesser than the domestic rates. The difference in the wages is generally called as ‘Labour Arbitrage’ and many IT companies use this as a primary lever to grab the outsourcing opportunities. The difference in the wages for the same skill typically will vary anywhere between 20% to 40% and Organizations in North America and Europe Geographies save the OPEX to that extent. And this is really a win-win situation for the ‘Outsourcing’ and ‘Outsourced’ companies.
And now the question is “Is it the only way to reduce OPEX? Don’t we have any other avenues?”
Yes, we have… there is another new avenue now…
Outsource to Robots….
Yes… it sounds strange, but the simple answer is to replace the humans with Robots. It is expected that as many as 110 to 140 million FTEs could be replaced by automation by the year 2025 (Source: Mckinsey Co), which clearly shows how it is going to revolutionize in the coming years.
Let us see what are these robots? How do they work?
These robots are not like the industrial robots which we are aware of. These are the software robots which mimic the human actions they generally perform in any back-office or support operations. Here the robot is basically a Physical Desktop / virtual desktop which will work on its own without any human intervention. It will execute all the tasks assigned to it in the defined sequence. Most importantly, they perform twice faster than humans, without any errors and obviously they can work 24/7. Thanks to the advent of RPA (Robotic Process Automation) which made this possible.
RPA is essentially a technology which envisages automations at the user level, unlike the IT automations, moreover, it doesn’t warrant any changes to either the IT environment or the Processes at all. Also the automations can be much rapidly implemented when compared with the IT automation. The other interesting feature is the RPA Configurators/teams who configure the automation doesn’t require to know the customer’s IT architecture/ Data Models /Frameworks etc. /Product for Service Mapping etc. A proper standard operation procedure document is enough to implement the automation.
And the important question here is what type of tasks that can be automated, because definitely all tasks do not qualify for automations as some tasks are cognitive. Then what are the various types of tasks that can be automated? Repetitive tasks with a set of standard rules are the best candidate for Robotic Automation. Generally there will be certain repetitive tasks that prevail any sort of operation and would contribute somewhere in between 30% to 40% of tasks. Password resets, order processing, invoice generation, reconciliations etc. are few of many such tasks we can think of.
The other question is which are the industries applicable for RPA? In fact RPA is applicable for all Verticals and Horizontals and we observed its applicability is much higher for Telecom, Retail, BFSI and Healthcare verticals.
Many of the IT Organization already realized the fact that how the Robots are going to storm the industry and already initiated strategies around RPA and geared up with their solutions. Companies like TCS, Infosys, and Accenture have already initiated the plans and strategies for RPA and making the solutions ready for various verticals.
Tech Mahindra is also in the forefront in offering the RPA solutions under its CareXa frame work which is mainly intended to improve the customer experience and reduce the Opex by 40%. Tech Mahindra, while providing solutions, though its partners like Blue prism and Automate who are the global leaders in this space. Tech Mahindra also built an RPA solution, called UNO and making plans to take to a new level with its vast experience in the automation skills. Tech Mahindra has included the unified desktop function is also made part of the RPA as a differentiator. Tech Mahindra has seen the results encouraging and is achieving benefits of 20% to 30% in the half dozen solutions being implemented.
What do Enterprises have to do?
The main challenge in front of the enterprises is to be competitive in the market. So far they are relying on off-shoring for their operations and now they can look at RPA making use of Robots and amazingly a robot will give a price benefit as high as 80%, whereas off-shoring give somewhere between 4o to 60%. So Enterprises have an option now to switch to avenues like RPA, not only to reduce the Opex but it also gives opportunity to get the competitive edge over others. Good thing is that some of the Enterprises have already realised the need of RPA for their organisations and started exploring opportunities, and many are also raising RFIs and RFPs. But the fact is that, many of the Enterprises are still not aware of the RPA technology, how it can help and where it can help. Some of them have some apprehensions like how does it work without IT integrations and how does it fit to their kind of operations etc.
This is where the IT companies to take the lead and bring that awareness and understating by socialising the concepts through various platforms. They have to build and showcase relevant use cases for the various industries, build PoCs in the customer environment show the results and drive opportunities which can be a win-win situation for both the IT Organisations and Enterprises. We observed the FTE reduction is somewhere between 20% to 30% and thus the OPEX in a typical RPA implementation.
This is really going to disrupt the way of the operations are currently run and transform the businesses. It wouldn’t be a surprise if 50% of the operations are run just by Robots in some of the industries in the near future.