Over the last few decades, outsourcing has been the solution for organizations looking for quick ways to tackle increasing workload or to cut costs. Of course, there’s always more complex reasons for some organizations, such as tax and contractual implications, but for the majority of business leaders the main benefits are seen through labor arbitrage and shifting fixed costing. While we’ve seen a change in this approach over the last few years, now more than ever organizations are seeing their outsourcing plans aren’t delivering what they, or more importantly their customers, desire from it.
The advantages in the past were a clear lure for advanced economies, with outsourced labor at a fraction of the cost of in-house staffing. But, customers now want more and companies can’t purely rely on searching out the cheapest labor. They ideally want a human touch and service that makes them feel the center of attention, while having processes and requests in the back office handled rapidly. And, the old model doesn’t really deliver that. But, with traditional outsourcing on the way out, what is the new approach for organizations?
Organizations are beginning to consider Intelligent Automation to automate instead of outsource with digital labor as a service.
Digital labor is the combination of Robotic Process Automation (RPA), Artificial Intelligence (AI) and Cloud deployment, which can perform a range of tasks from back office to front office. It performs repetitive processes previously bogging down the human workforce by applying a range of cognitive technology, such as Natural Language Processing (NLP) and robotics, to automate work — at machine speeds, without error and at a fraction of the cost. According to Mckinsey, the amount of work that digital labor can automate ranges from around 15% to 70% dependent on the task.
Route one: Bringing automation in-house
The benefits of bringing some, or all these capabilities in-house are usually good for your business productivity - because who knows your business better than you do. And, it gives you the opportunity to retain the competitive weapon of digital labor. This gives you the chance to grow your business idea and removes the reliance on outside contractors. This brings the cost base down so certain customer facing positions that require human touch, for example in your call center, can be brought back in house — such as organizations like telecoms network EE have done.
Route two: Outsourcing automation
In some regions, the relative cost of labor arbitrage may still be an attractive prospect. But, in the main areas that businesses would usually find the benefits of cost reduction, such as Business Process Outsourcing (BPO), or IT Outsourcing (ITO), it is no longer the only consideration. Even though in one report by ISG, they found up to 50% cost reduction in BPO and similar results in ITO by implementing automation — this shouldn’t be the only reason why outsourcers are starting to use digital labor. If you think about the potential benefits of digital labor, in the form of Intelligent Automation, such as reduction of human error to zero, speed of completion and reduction in overheads, it is clear why outsourcing organizations are using digital labor to augment their own processes. If you move into using digital labor through outsourcing you levy their existing experience. And, some may have standardized ways of delivering on lower level processes.
Overwhelming Victory for Digital Labor: What Path Next?
Digital labor is cheaper, faster and overwhelmingly better than traditional outsourcing. There’s not really any question about that. The future is either the deployment of internal initiatives with digital labor in-house, or outsourcing using it on-demand. So, the question is not if, but when you are going to change your traditional outsourcing approach.
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