Will robots overtake the BPS business?
Romanian and international business services leaders say automation is only here to help, to upscale the human work and to ensure progress. As most of the industry's repetitive processes will be replaced by top-shelf software programs, called either robots or 'cobots', the face of the industry as we know it will change, Bogdan Tudorache writes for Outsourcing Today
Czech author Karel Capek, who invented the term "robot" in 1920s, would have never guessed the amplitude of factors defined by it into the near-future. Robots are continuously changing our lives and the way that the entire civilization moves. At the end of the day, we call that progress, but some economists fear that robots may replace up to 30 per cent of the jobs by 2025, as a Gartner study, an information technology research and advisory firm, predicts.
Romanian business services headcount of 60,000 employees at the end of 2014 registers a boom, says the largest investors' organization in Romania, which employs 30 per cent of the professionals in the industry today. The Association of Business Service Leaders in Romania (ABSL) estimates an increase in the industry to 150.000- 300,000 employees during the next five years, says Florin Grama, President of ABSL Romania. But how will automation change this picture?
Automation is not evil
As automation and robotics are significantly changing the face of the industry worldwide, Romania will delay its adoption due to fact that organizations need a lot of time to invest into, replace and adapt their software programmes.
Wipro, one of the local BPS (business processes services) leaders that will grow this year to more than 1,000 employees in Bucharest, will strive to keep the pace with the technology changes, says Vivek Bakshi, Wipro's chief of International Operations (Europe).
"We are developing various robotics models for some of the business lines. It will change the way we are doing business, slowly," Bakshi explains in an exclusive interview for Outsourcing Today.
Automating affects only regular, repetitive processes that require minimum human intervention.
"If your process involves reading, scanning and introducing various parts of an invoice, this can be done by an automated program. This is changing the way we do business. Definitely it reduces errors," says Bakshi.
But Romania is not hurrying up adopting robots. UiPath, a local robots producer, has only international customers so far, none of which are Romanian-capital or locally based.
"Don't be afraid. Robots are not going to cut jobs, but just decreasing labour costs while increasing operations' efficiency and reducing errors," says Daniel Dines, founder and CEO of UiPath.
Robots will only be involved into repetitive manual processes. "Many BPOs hire people involved in just doing copy-paste operations," Dines adds.
Traditional Enterprise Resource Planning (ERP) programmes will be difficult to replace, as robots, also called automated FTEs (full-time employment equivalents) may only do simple operations, such as reading preformatted e-mails, PDFs and filling forms, "all that you do on a computer screen," Dines explains, presenting a case study from India, in which the client replaced about 70 per cent of the manual work of some 800 FTEs with just 50 robots, or 100 FTEs.
Also, the robots are "scalable", meaning that they are very flexible in learning and remembering the operations as one, so far that a new line of instruction introduced into a program will be easily replicated throughout other similar programmes. Advantages? Robots do not need training, coaching, mentoring and certifications that humans do. Disadvantages? They cannot operate yet difficult professional tasks.
On what scale will the robots replace the humans?
"I don't say that they will replace human employment, I say they will upscale the human labour - the humans will be able to do more complicated tasks. Eventually, automation will free the human being or operator to do more brain work, while the more repetitive work goes to a program, which eventually leads to less mistakes, more quality, so it's not something to be scared of, but something to be looking forward to," Bakshi adds.
Yet, many people fear a jobless future - and their anxiety is not unwarranted, as Gartner, an information technology research and advisory firm, predicts that one-third of jobs will be replaced by software, robots, and smart machines by 2025, according to a study quoted by Business Insider.
Experts are calling this movement the "Second Machine Age," as it is comparable to what we saw 200 years ago with the invention of the steam engine and the machine age that ensued. And it is happening now, even some organisations do not hurry up to embrace it.
David Autor, an economist at MIT who has extensively studied the connections between jobs and technology, also doubts that technology could account for such an abrupt change in total employment as Gartner predicted. "There was a great sag in employment beginning in 2000. Something did change," he says. "But no one knows the cause," he is quoted as saying by Technologyreview.
"Why this process doesn't get done sooner? Because all companies search for immediate profit," says David Hand, head of Global Business Services, ACCA (The global body for professional accountants). "No company is going to lose revenue for a period of time to change processes," he adds.
Managers need to implement new programs step-by-step, to start small, do a project at a time, and make sure management decision is there.
"It's also a question of predictability" if there's no prediction about the end-result, no decision can be taken," explains Catalin Iorgulescu, managing director of WNS's Romanian operations and ABSL Romania vice president.
In order to move operations, organisations have to streamline their activities without losing customers. "We had to move operations of customers from Bucharest to India, for several clients, and we had to ramp up and down. New management of change and new corporate governance processes takes about 50 per cent of our time, while the rest of the time we spent simplifying and optimising the data," also says an industry pundit.
Big Data poor usage reveals the need for "cobots"
The vast amount of data continually collected, stored and transferred by technologies is changing the priorities of businesses, posing important questions for their leaders. How can diverse, disparate and often amorphous datasets be managed profitably and responsibly?
"Get big data right and it will facilitate ways of improving performance and productivity, and creating new wealth for shareholders and stakeholders. Get it wrong and the result will be poor decisions, breaches to data security and privacy codes, damage to organisational reputation and brand, and destroyed value," explains an ACCA and IMA (The Association of Accountants and Financial Professionals in Business) joint report.
Data management is becoming a business-critical function as leaders seek ways to use the resource of big data strategically and unlock the insights that transform companies - without threatening their relationships with customers or exposing themselves to unacceptable risks. The market for big data analytics is, unsurprisingly, growing rapidly, forecast to reach US 23 billion by 2016 (IDC 2013).
The open-source software movement and the software industry have developed solutions such as new programming models and new suites of data tools. Combined with increases in processing power, these solutions make it possible to synthesise vast amounts of information with previously unimaginable speed and accuracy, but they are only part of the answer.
"We are moving from an internet - based society to a connected - based one. The buyer power is huge, so munch so there are fears that sales persons may disappear," says Dan Vasile, partner, sales executive MBS- Microsoft Romania. And companies need to adapt.
But as big data usage decreased to just about 30 per cent, and about 70 per cent is not used at all, this highly affects productivity - which gives birth to the need for automation. "According to a study, employees are 75 per cent of the time engaged into non-customer activities. Also, workers lose 40 per cent of their productivity when they have to switch in between tasks," says Vasile.
Also, employees are 15% less efficient when they don't use business applications. And out of the eight- hour program, just four are really productive, while only six are spent in the company's interest. So, is the need for automation questionable?
Large global organisations already adapted to "bots"
"The automation process already changed in many ways the way we are doing business. Obviously how we collect information from the client, how we interact and deliver things back to the client, almost everything is already automated," says Ahmed Hassan, country managing partner of Deloitte Romania.
And cloud and mobility became sine-qua-non instruments for the industry.
"Even for auditing, we have a new system which is cloud-based. So we don't need to re-share our files. We communicate with the clients in the cloud, where anybody can access them (the files) from anywhere. You don't need to carry bags with computers with you all the time, you can use any device to access them," says Hassan.
The benefit of that? New tools can be used, and programs such as Excel lost their kingship. "There are so many tools, that everybody has on their computers, and Excel is no longer the key-tool anymore."
In many operations, such as payroll processing, "we hardly see the face of the client."
The systems are interconnected, so the client gets the final calculations on salaries volumes and details such as structure online, those being sent to the bank in real time.
"There are multiple example of automation that already took place."
Changes in the structure of personnel included the fact that many employees have to have tech knowledge.
"Now many teams have IT people embedded into them. Previously there was one supporting IT team, and now there are IT specialists in different teams," says Hassan.
Carmen Baibarac, HR Director, admits the recruitment process takes more and more into account the IT skills. One other aspect that technology impacts on is corporate culture. "Corporate brainwash is no longer in fashion, we had to change and learn from the new generations," she said.
"We see more and more our graduate intake based on IT skills rather than just economic skills," Hassan adds.
At the same time, automation replaces a lot of employees into unqualified work, says Bogdan Octavian Marin, senior manager, Consulting, Deloitte.
"They are only replacing repetitive work, but the decision is still to be taken by human personnel, it is similar to the IBM Watson diagnose system, where people still have to take the final decision. So, the human touch, the human decision remain," concludes Marin.