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Digitization – A Disruption in the Services Space

Digitization – A Disruption in the Services Space
Anoop Tiwari - Corporate Vice President – Digital Process Operations | April 5, 2019
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The digitization of workspace and operations, technically, dates back to the time when the commercial production of computers started. Keyboards and monitors started replacing pens and papers on the working desks.

The digitization of workspace and operations, technically, dates back to the time when the commercial production of computers started. Keyboards and monitors started replacing pen, paper and typewriters on the work desks. However, what was initially a value-adding proposition soon became an apparent threat for many as automation became mainstream due to advancements in computing technology. While the digitization of operations did render a substantial fraction of human workforce redundant at the local scale, it also paved the way for the globalization of service outsourcing. Even today, the equation between digital innovations and outsourcing services continues to have elements of both opportunity and disruption.

Shift in Expectation

With reports projecting BPO services at $344 billion, with a CAGR of 8.3% by 2026, we can be sure that outsourcing is likely to remain the path of choice for organizations to achieve operational efficiency and cost reduction. But the role of service providers will not remain the same as technological advancements like robotic process automation (RPA) are already challenging the relevance of outsourcing in terms of cost saving. Enterprises of all sizes are increasingly incorporating (or showing the inclination for) automated responding machines, virtual bots, and similar technologies that are redefining BPO practices.

It will not be an exaggeration to say that outsourced service providers have had their time as mere problem solvers and facilitators of enterprise cost saving. Emerging technologies are poised to enable organizations to retain a lot of repetitive work in-house and even withdraw some of the outsourced functions. It has, therefore, become imperative for BPOs to redefine their value proposition. The urgency is evident from a study revealing that more than one-fourth of the surveyed enterprises intend to reduce outsourcing by investing more on automation.

The R&D Imperative

Globalization generated a win-win scenario for every sector and market. On one hand, many organizations saw the opportunity to reduce OPEX by taking a chunk of their functions offshore, on the other, a slew of enterprises sprang up to cater to the demand. But ever since, BPOs have stuck to the original scheme of service provision and done little to reinvent their offerings. That is why 47% of outsourcing companies cite the lack of innovation and technical leadership as a major issue with their service providers.

Competition is intensifying with every passing year as more individuals and enterprises onboard the digital technology caravan. Amid this evolving business environment, outsourcing organizations are looking for service partners rather than service providers. Companies are showing an increasing preference for agencies that can complement their capabilities and play a supporting role in their journey through continuous digital transformation. Quite obviously then, they expect BPOs to be proactive on the R&D front and build centers and teams of excellence instead of just fulfilling the processes specified in the contract.

Companies are showing an increasing preference for agencies that can complement their capabilities and play a supporting role in their journey through continuous digital transformation.

Process Overhaul

The business landscape has gone through a paradigm shift with the emergence of RPA, machine learning (ML), natural language processing (NLP), and the Internet of Things (IoT). But BPOs and their clients continue to base their relationship on their age-old terms of engagement. The service methodology that was adopted by offshore agencies when these technologies were non-existent or just concepts has little incentive for their clients today. With RPA market estimated to exceed $4 billion by 2022 and 85% of all customer support communications expected to be conducted without human representatives by 2020, the time to transform is running out for BPOs.

Much like globalization initially seemed a threat, but enterprises across continents leveraged it to their advantage, outsourcing service providers need to harness emerging technologies to redefine their service approach. In this regard, the cultural shift from ‘meeting the client expectation’ to ‘exceeding the client expectation’ is essential for BPOs to remain the preferred choice for outsourcing. Customer-centricity has to be the essence of all processes and sub-processes for service providers. Sooner the agencies formulate a strategy for proactive onboarding of relevant technologies and delivering pre-emptive services, better their chances will be to emerge as a ‘service partner’ in the future.

The Human-skills Factor

It cannot be denied that digital technology performs tasks with greater efficiency and accuracy than humans do. But artificial intelligence (AI) or the technologies mentioned above need to be trained to work as desired. All advanced automation solutions available today are in their infancy and far from reaching the human-level emotional cognizance, a crucial aspect of offshore service delivery. That said, outsourcing service providers are already facing the skills-set crisis as their generic workforce lacks specialists who can lead the aforementioned transition hands-on. For instance, if virtual bots are deployed for outsourced services, human experts will be required to train bots to execute specific tasks. So, BPOs need to take the driver’s seat and steer digitization to their advantage rather than being driven by it. They must invest in training their existing professionals and focus on hiring domain experts to achieve the level of specialization their clients want them to exhibit.

If the past is any indication, it can be safely said that human significance and relevance will prevail in the service amid the incessant digital technology-driven disruptions. In fact, no study has backed the fear of machines taking over people’s jobs yet. While digital transformation will continue to alter the services paradigm, humans’ role in the grand scheme of things will rather evolve than turn redundant.

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