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The Homecoming Revolution


The Homecoming Revolution

While RPA is a familiar term to most in the industry and is projected to have high annual growth rates for the coming years, the drivers of adopting RPA are changing leading to the evolution of the labour arbitrage markets.

Four out of five C-level executives are demanding Robotics Process Automation (RPA) as a fundamental part of their operations and growth strategy1. Yet, despite strong management buy-in, RPA is still largely underutilised in many organisations. Leaders across business operations and IT are facing significant challenges at the onset of their automation journey, due to lack of requisite talents or skillsets, proper planning, and above all, a clear articulation of the objectives and rationale for change. In the article below, we present our views on the shift in the key motivators for automation and the impact of intelligent automation on the global labour outsourcing market.

Rise of the Bots

RPA is no longer a buzz word but a rapidly growing industry. Over the next 3 years, the industry is estimated to reach $1.2 billion at a compound annual growth rate of 36%2 (Fig. 1), driven by renewed focus on productivity and cost reduction globally. RPA is a key enabler for organisations not only in terms of cost savings, but also performance improvement, ease of use by business personnel, and a fundamental shift towards value-adding, decision-focused activities. RPA allows organisations to achieve these benefits by automating activities that humans perform to reduce the labour required in repetitive, complex and/or high-volume rule-based processes.

36% compound annual growth rate

Nearly half of all BPO centres have indicated that automation tools are a critical component of their client engagements3, due to enhanced visibility of operations, analytical insights and performance monitoring achieved through RPA technology.

Cost Reduction — No Longer in the Driving Seat?

Historically, cost reduction was the foremost priority of CXOs with around four-fifths of organisations employing some form of initiatives on cost savings4 which were realized through standardization programs, consolidation efforts, and near-shore or offshore outsourcing to third party delivery centres. However, as we move into the age of AI and RPA, we believe that cost savings is no longer the centre piece of automation strategies. In line with our observations, a significant number of enterprises have expressed the ambition for their automation strategy to deliver better quality of operations (52%), greater workforce agility and scalability (49%), and superior data accuracy (48%). Only a minority of respondents are seeking short-term cost savings (21%) or workforce optimization (12%)5 (Fig. 2). The above shift in mind-set ties in well with the fact that the potential gains from conventional offshoring cost reduction strategies are largely exhausted.

The 5 common motivators that drive automation

Labour Arbitrage — A Thing of the Past?

Historic cost reduction strategies, gained purely through labour arbitrage, represent a rudimentary and increasingly unsustainable form of value capture that will eventually be commoditized if insufficient attention is paid to the more fundamental issue of improving business processes.

Here RPA comes to the rescue. The rich functionality of RPA, which is application and data systems agnostic, coupled with the high adoption rate by business personnel, makes it a partic­ularly compelling recommendation for organizational automa­tion strategy.

Compared to offshoring, companies would not need to worry about losing institutional knowledge or, perhaps more important in this age of rapid market change, flexibility. Such a wave could drastically reduce the relevance of the outsourcing market in the developing countries with the effect felt the strongest in mature outsourcing locations such as India and the Philippines (Fig. 3).

Number of services workers in Philippines, UK, India and US

Secondly, contrary to the hype that RPA will substantially reduce the need for people, we believe that it leads to the evolution of jobs from low skilled workers performing process-driven tasks that require minimal abstract thinking, towards medium and high skilled workers performing tasks that require experience and expertise (Fig. 4).

Number of services workers that are highly, medium and low skilled.

Beyond Lift & Shift

Half of today’s global organisations want to get out of the «lift and shift» limbo and are expected to undertake a wide-scale transformation of their business processes within the next two years through greater use of technology and higher skill levels to capture new and more sustainable business outcomes7.

As the silos dissolve, so too will the organisational constructs such as front, middle, and back office. This will help service providers not just become true partners to their clients but also service them by being right next to them from their respective onshore locations. This is where RPA adds most value today, by providing the building blocks for smart digitizing of business processes.

It is evident that the days of labour arbitrage-based outsourcing models are gone; replaced by onshore RPA centres of excellence driven by efficient operating model definition and targeted, intelligent automation.

Synpulse's 5-Step RPA Methodology

With our experience, expertise and delivery model, Synpulse can help your organization establish an in-house RPA Centre of Excellence with a defined RPA Implementation Roadmap.

In addition, we can help your firm implement an RPA pilot within four to six weeks by employing our structured 5-step approach (Fig. 5).

Author acknowledgement

This article is co-authored by Utkarsh Sinha (Associate Partner) and Yash Shah (Senior Consultant).

To understand more about the article and its insights, please approach the contact person at the end of this page.

References & Footnotes

  1. Hexaware, The State of Automation and AI — Oct 2017
  2. Ibid
  3. US Daily Review, The New Wave of «Insourcing» Labor — Jan 2016
  4. HfS Research, Outsourcing Contract Practices in the Age of Intelligent Automation — Oct 2017
  5. Hexaware, The State of Automation and AI — Oct 2017

Utkarsh Sinha
Associate Partner
 Utkarsh Sinha
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