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Impact Of Robotic Process Automation (RPA) On It Services Business

RPA is an advanced technology which makes use of robots (automation program) in performing certain highly repetitive and high volume business process with great precision.

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Overview

Automation in manufacturing has helped in cost saving by way of reduction in labor and operational efficiency ever since its adoption on production floors. This was the result of strategic orientation towards advanced technology to improve profitability in an intensifying competition. After the success in manufacturing, the automation has made inroads to IT services especially back office support services viz. BPO and shared services.

Many of the off shoring corporate now demands RPA technology for their back office work. Leading vendors like Wipro, Capgemini, Infosys and TCS who were recruiting heavily, now have started accepting the change in the business model and started including robotics as part of the contract renewal negotiations.

In fact Wipro was in news recently for improving productivity at its internal help desk using machine learning and automation. This is considered to be the first step by Wipro in this direction. Based on the experience of automating the internal process, the company plans to build similar solution for its clients. Cognizant too has started working in this area and has already setup “Concept Labs” in IIT Madras. Couple of years back, Infosys did something similar; partnering with IPsoft for one of the fast growing service line viz. Infrastructure Management to improve productivity.

The contract with existing vendor would now be extended or renewed only if RPA is implemented in most of the business process if not all. It is not wrong to say that service automation technology or RPA is disruptive and transforming the existing delivery model of BPOs.

There is a growing concern making rounds in the industry circle and heavily debated that RPA would result in unemployment as cost saving is achieved by labor downsizing. This could be taken care of by redeploying and reallocating the human capital within the organization. Outlook of RPA market is very promising. According to Transparency Market Research, the market was valued at $183 million in 2013 and is expected to grow CAGR 60.5% from 2014 to 2020 to reach circa $5 billion by 2020.

Role of (RPA) explained: RPA is an advanced technology which makes use of robots (automation program) in performing certain highly repetitive and high volume business process with great precision. Process such as data entry, creation of online access credentials for new employees, general ledger account maintenance can be easily done by robots.

It thus eliminates human intervention in carrying out such mundane and manual tasks. It can work throughout the year without any break, analyzing and manipulating data efficiently; thus saving lot of money and time. RPA is getting wide acceptance in the IT services industry especially in back office operations where in low skilled and repetitive processes are carried out in large numbers.

This technology is based on the Standard Operating Procedure (SOP) which tells in detail the required sequence of steps to be taken by robots as prescribed by the rules and procedures. SOP is translated to automation program through codes. Robot then executes these codes and performs the tasks in the required sequence of steps. RPA units control the system the same way as humans in completing the processes.

One of the compelling reasons for RPA adoption is that there is no need to have IT department as it mimics human actions and carries out rule based tasks. Hence RPA is smart software that works with other applications using graphic user interfaces (GUIs). Leading service providers like Capgimni offers solutions based on automation which could carry out processes like data entry and validation, file and data manipulation, automated formatting, multi-format message creation, text mining, uploading and exporting, downloading and importing, currency/Exchange rate processing and Reconciliations.

Positive impact on IT services

Automation has impacted all the business segments falling under IT services umbrella. Most of the impact is easily visibly in back office operations where low skilled and rule based work are in large numbers as compared to any other segments.

Robot does the dull and mundane tasks consistently and in less time with almost full accuracy. In this way, it helps in reducing the cost working efficiently and with higher productivity thus helping ITes or BPO players in improving profitability. According to ISG, cost saving ranges 60% - 80% of the back office labor cost for the outsourcing company and one third of total cost of off shore Full Time Employee (FTE). At a time when BPO’s client budget as remained stagnant, RPA came to rescue helping to improve profitability of the industry.

RPA can be easily scaled up or down in response to the seasonal and consistently varying demand with same level of accuracy. Moreover, robots can over stretch and work thorough out the year without any shutdown. Automation has changed the way BPO service providers deal with their customers; in a more efficient and responsive manner thus enabling them to offer better customer service. RPA supports strong analytic capability, helps to maintain transparency and auditing process. Automation also supports local jurisdictions that don’t allow data transfer from host countries. By implementing RPA, BPO industry can now focus on high valued processes while leaving the low end processes for robots. RPA can be integrated to solutions and other offerings from IT services companies. RPA could be adopted in services like IT support help desks, data center and server support, network support, and other areas of IT infrastructure maintenance apart from testing. Data entry and data transfer from legacy systems to Enterprise Resource Planning (ERP) systems is also possible using robotics. Irrespective of the industry or function, RPA could be deployed to any process as it is process agnostic. What is important is to understand which process could be defined and repeated with no involvement of judgment.

Needless to say that RPA has started impacting the BPO industry and is all set to do so in big way in years to come with further technological advancements. There are service providers who are adopting this technology aggressively while there are others who are more defensive. These companies worry that they might be left behind and loose the business if they don’t change.

The Concern

The biggest benefit of RPA is also the biggest concern for the industry. The reason behind some of the service providers being defensive is that RPA might result in layoffs. The BPO industry is estimated to employ more than 1 million professionals and considering the fact that RPA could take up 20-40% of the processes, there is going to be an impact on the job scenario. They argue that automation would replace jobs and affect the economy.

But history has proved that new technology gives birth to host of new job opportunities. For example, special skills would be required to configure robotic team, manage exceptions and continually improve the performance of robots. To make this happen, there is a need to encourage these displaced employees to adapt to the changing technology quickly and acquire the new skill sets. They can also be redeployed to higher value addition activities in case RPA has completely taken over all the work from the employee.

Moreover, it is important to accept the fact that not all the process could be taken up by automation. It depends on picking up the right candidate that qualifies for automation. If a small portion of automation frees up an employee from mundane work, he can concentrate on other tasks. This would also result in employee satisfaction. Hence it requires a disciplined approach towards adopting automation.

Outlook

The existing technology could take up only repetitive and rule based business process known to be low end. But as the technology matures and further develops there is going to be larger impact touching the high value added activities. Enhancements could be in the area of autonomic and cognitive computing. Autonomic would help system to be managed, configured and optimized on its own without human intervention while cognitive computing would enable it to be judgmental and make decisions. This would be possible if artificial intelligence could be combined with RPA and will take several years.

Companies who do not want to off shore or want to bring back their operations, RPA is a viable option. While for those who still want to continue off shoring, RPA would result in increased cost savings.

Conclusion

While RPA is a boon to IT services industry considering the positive impact in terms of cost, profitability and operational efficiency, the concern about downsizing of labor could be tackled by way of reallocation and redistribution of human capital. Automation is here to stay and would continue to change the business model and delivery model of IT players especially BPO. It being a disruptive technology with increasing acceptance in the industry would compel other players with defensive approach to quickly adopt the change in order to stay in the business.


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