Why Uganda is an up-and-coming IT outsourcing option

Strong English language capabilities, low costs and attrition, and a stable and supportive government give Uganda potential as the latest offshore outsourcing alternative in Africa.

A number of African nations have been working to build their IT service capabilities over the last decade with some degree of success. Here are three examples:

  • South Africa, for example, has made a strong push as a destination for outsourced IT serving both the domestic and global market. The country has a particularly well-developed Westernized market structure which, combined with its rich talent pool, has made it “a highly credible destination” for Web services, application development and applications maintenance, according to Craig Wright, a managing director for business transformation and outsourcing consultancy Pace Harmon.
    Financial center Johannesburg ranked No. 21 (ahead of Sao Paulo in Brazil, which gets much more attention as an IT service destination) on Tholons’ 2015 Top 100 Outsourcing Destinations list. However, concerns about white-collar crime and personal safety persist.
  • English-speaking Kenya has made strides securing lower-end business process outsourcing work like contact centers. A number of multinationals, such as IBM, have set up shop in Nairobi and Indian providers exploring expansion there as well. But the country “has struggled to get much traction on higher-end technology because of low availability of a trained labor force, particularly with deep technical skills and inadequate infrastructure and power supply,” says Wright.
  • Morocco’s strong French and Spanish language skills and time zone and proximity to European cities have made it particularly attractive as a low cost location for EU firms. Suppliers like CapGemini and Atos have service centers in Casablanca. However, the country ranks No. 34 on A.T. Kearney’s Global Services Location Index.
    In contrast to shrinking populations in India and the Philippines, Africa’s population is growing, meaning more individuals will be entering the workforce. Foreign direct investment (FDI) boomed to $60 billion, five times the continent’s 2000 level, according to the World Bank, making Africa the second most attractive destination in the world behind North America, according to the World Bank.

The positives for Uganda as an outsourcer

But the most interesting player for IT services today may be Uganda. “It has a strong infrastructure with a powerful and reliable hydroelectric power source from three damns on the River Nile,” says Wright. “Uganda has also benefitted from Google’s Project Link.” The company’s continental high-speed fiber optic network project kicked off in Ugandan capital Kamapala.

The national government is stable (current president Yoweri Museveni has been office for nearly three decades) and has established an initiative to develop an upper middle class in what has been a largely agrarian society. As a former British protectorate, Ugandans are taught English in school, with it being the single common language among the more than 50 tribes in the country. “Other strengths of Uganda for outsourcing include the stable geo-political environment, the creation of incubator units for new IT and BPO business, incentives for growth, and cyber laws to protect IT and BPO investors.”

The challenges for Uganda as an outsourcer
“The challenge for Uganda is similar to that throughout Africa as only 22 percent of university graduates have STEM-related degrees,” says Wright. High-volume offshore outsourcing destinations typically see more than 40 percent technology-related degrees. There is also some continued fallout from former president Idi Amin’s decision to expel the country’s Asian minority population in 1972. “This has certainly limited any influence from the Indian providers,” Wright says. “Also, there is a large religious missionary presence in the country that has influenced the culture and limited the acceptance of progressive lifestyles and views.”

However, the National Information Technology Authority, Uganda (NITA-U), the Ugandan Investment Authority, and the country’s ambassadors are working together to raise awareness of the regional strengths capabilities and invite global delegations to the country with the goal of attracting corporations that will build out the country’s IT and BPO capabilities, shape future educational programs, and provide infrastructure support. The country has also set up incubators for IT and business process service business and other growth incentives.

“Anyone considering English language-based services in Latin America or the Philippines should consider Uganda,” Wright says. “There is a strong European and American influence leading to good cultural alignment with Ugandans.” Service desk, call centers, web development, and applications development and maintenance are all viable services available at a lower cost than in South Africa, for example. While salaries for software developers are higher in Uganda than the Philippines and India, attrition rates are less than 5 percent.

However, notes Wright, “owing to its landlocked location and the East African road challenge, Uganda would not be ideal for data center work or anything capital intensive.”

Source: CIO.com-Why Uganda is an up-and-coming IT outsourcing option By Stephanie Overby

7 tips on communication when you use outsourcing

With several business functions that can be outsourced, one of the most common ones is IT. In order to be successful, though, businesses must partner with the right IT solutions company.

Businesses must evaluate their potential IT outsourcing provider against critical criteria, which includes their credentials, security and compliance standards, and training programs among others. One of the most important criteria that a lot of businesses fail to consider is the provider’s technical communications infrastructure.

Communication between the company and the IT outsourcing provider is essential in ensuring that the two parties can work collaboratively. Good communication guarantees that results are delivered as expected, issues are resolved efficiently, and problems are avoided or limited.

Small signs of outsourcing doom
A white paper released by SourcingFocus.com shared results of a study, stating that 28 percent of 1,000 respondents pointed out poor communication as the top reason for the failure of an outsourcing project.

To avoid setting themselves up for failure, businesses must choose the right IT partner. One of the most important steps is to assess their potential partners’ communications infrastructure during the negotiation stage.

Below are small warning signs that you must look out for:

1. The IT outsourcing provider takes too long to reply
Whenever clients communicate with their outsourcing provider, it is only natural to expect to receive a timely response. Aside from a rapid response, check to see if it was comprehensive and personalized, not just a one-size-fits-all type of reply.

Double check if their operations staff also respond appropriately and according to your standards.

2. The IT outsourcing provider refuses to talk and prefers to do everything through email
It’s hard to meet with providers personally if they are based offshore. However, they must be at least willing to conduct conference calls with you to interact and hold open discussions.

Doing so will enable you to gauge the communication skills, attitudes, and work culture of the people you’ll be working with. Be wary of providers who only prefer to communicate via email and are unwilling to actually talk.

3. There are significant language and communication barriers
Choosing a partner based offshore can present issues on distance, time, cultural differences, as well as language barriers that can hinder effective communication.

Talking to the provider’s team will enable you to gauge whether they can listen patiently, understand discussions, and explain themselves well too.

4. There are no clear communication channels
To avoid wasting time and resources, the provider must have clear communication channels in place. Communication using email, instant messenger, and teleconferencing are some of the most common channels nowadays.

Bandwidth and connectivity must definitely not be an issue. Providers need to have a technical communication infrastructure that includes secure and world-class computing and networking capabilities and a database management system.

5. There are no standardized formats for communication
Standard formats are necessary to keep things organized and well-accounted for. They also help facilitate faster and better understanding, avoid confusion, and lessen the time needed to get things done.

6. The IT outsourcing provider does not proactively communicate with the client
Businesses want to be secure in the knowledge that their partners will communicate with them regularly without having to ask them. A structure must be in place and include a schedule and frequency of communications to be sent to you.

7. There are no escalation mechanisms
In business, issues and disputes that need to be escalated will always be present. Escalation and dispute management is one of the processes required for effective relationship management.

Having escalation mechanisms in place will prevent finger-pointing, ensures that issues will be handled through structured frameworks, and will be resolved reasonably within the standard time frame.

Trust, cooperation, and success between the business and their IT outsourcing provider can be achieved, if proper communication exists between them throughout the entire project lifecycle.

Knowing which warning signs to look out for during the negotiation phase will help businesses avoid choosing the wrong partner.

Source: techinasia-7 tips on communication when you use outsourcing

Big data expert claims death of IT outsourcing is imminent

Tom Davenport – the Harvard Business School professor who is seen by many as responsible for the term big data’s rise in popularity – has caused a stir on LinkedIn after claiming that “companies have stopped outsourcing IT” and the rest will soon follow.

While the big data expert and author acknowledges that “IT outsourcing still drives about 60% of the entire services sourcing industry”, he goes on to say that the “practice is in decline for all but the most commoditized IT services”.

His belief is that the rise of digitalisation, big data analytics and cognitive technologies has made IT simply too precious a resource to outsource, proposing that “even in the heyday of outsourcing, some companies realized this”. He adds that automation, along with the rise of as-a-service and cloud-based tech, are also contributing to the demise of IT outsourcing.

Davenport adopts a narrow perspective to say the least. Firstly, his argument neglects all but the largest companies. The benefits that IT service providers, proficient in the exact fields he mentioned – digital, big data analytics, cognitive technologies – can bring to smaller organisations that are not financially capable of expanding in these areas are massive.

Furthermore, it seems a tad naïve to argue that your Accentures, IBMs and Wipros no longer have anything to offer buyers of IT outsourcing – even the largest ones. Certain ITOs will need to adapt their services in order to stay in the game in the build up to 2020, but they will always be able to primarily focus on IT-related fields, incorporating new digital services as and when they come. As always, IT vendors will be able to take over particular operations they specialise in on behalf of the buyer, allowing that client to concentrate on core tasks that are responsible for bringing in revenue.

As one high profile industry expert commented on Davenport’s post: “No sane organisation outsourcers everything in IT, and few sane organisations outsource no IT at all”. New trends and technologies are not going to change that fact.

Source: SourcingFocus-Big data expert claims death of IT outsourcing is imminent

EMEA Outsourcing Activity Hits Record High

Strong IT Outsourcing activity drives growth in UK, Germany and France

Information Services Group (ISG) (NASDAQ:III), a leading technology insights, market intelligence and advisory services company, today reported that outsourcing activity in the Europe, Middle East & Africa (EMEA) region hit a record high in the first half based on the volume of contract awards, and achieved its strongest first-half performance by contract value since 2008.

The Q2 2014 EMEA ISG Outsourcing Index, which measures commercial outsourcing contracts with an annual contract value (ACV) of €4 million or more, found that first half ACV across EMEA totaled €5 billion, an increase of 32 percent year-on-year. The number of contracts signed was up 25 percent for the same period.

With more than half of all global outsourcing value awarded in EMEA, the region continues to dominate the global outsourcing market.

Commenting on the latest findings, David Howie, partner, ISG, said, “EMEA continues to maintain its leading position in the global outsourcing market. The region’s increased contract volume and value in the first half was driven by a rise in demand from continental Europe, most notably France and Germany. Looking ahead, we’re seeing a great deal of transaction activity in the market that should come to fruition in the second half of 2014. Taking the year as a whole we would expect ACV in the region to comfortably exceed 2013 levels.”

The United Kingdom market maintained its steady performance, with ACV of €1.4 billion, an increase of 6 percent compared with the first half of last year. This occurred despite a slight drop in contract counts to 83, from 92 the previous year.

Germany saw year-on-year ACV growth in the first half of 2014, with around €740 million in contract awards compared to €530 million in 2013. This growth was driven by a return to strong contracting activity with almost twice as many contracts awarded: 59 compared with 30 in the first half of 2013.

France had it best-ever half year performance by both contract value and volume. The €930 million of ACV awarded was boosted by a number of mega-relationships signed in the first half and resulted in France becoming EMEA’s second-largest outsourcing market for the period, behind only the UK. Although the presence of large deals can temporarily boost market values, France also saw a corresponding increase in the number of contract signings. The 40 contracts awarded in the first half was the highest ever, and more than three times the number recorded in the first half of 2013. This has been driven in part by increased innovation as French businesses embrace new sourcing options such as Software as a Service (SAAS) and cloud-based solutions.

For the quarter, EMEA ACV remained flat compared with the strong first quarter of 2014 but finished 50 percent ahead year-on-year. The region benefitted from a steady IT Outsourcing (ITO) performance. Though modestly down sequentially, this was the strongest second quarter ever for ITO award value (€2 billion) and counts (111) in EMEA. Meanwhile, Business Process Outsourcing (BPO¬) continued its lackluster performance across the region, with values continuing to hover around the €500 million mark for the quarter.

“Overall, we’ve seen a good performance across EMEA this quarter – and not just because last year’s weak second quarter makes this year’s results shine. The market is moving in the right direction, and the first-half year-on-year comparison is testament to the market’s strength,” said Howie. “Solid performances in volume and value across most industry sectors give us confidence that this is not simply a blip.”

ISG presented the Q2 2014 EMEA ISG Outsourcing Index during a conference call for media and analysts. To listen to an audio replay of the call and view presentation slides, please click here.

Source: sourcingfocus-EMEA Outsourcing Activity Hits Record High

Outsourcing: The advantages and disadvantages

Does IT outsourcing really deserve its bad rap?

The notion of outsourcing has sometimes been given a bad rap.

At its most basic level, outsourcing takes a task that is normally carried out by staff working within an organisation and instead uses an external provider to deliver this process. The rationale for outsourcing is based on many factors but the two common drivers are to reduce the cost of a particular task and to gain a level of predictability around its delivery.

The complexity of IT makes it a great target of outsourcing, and according to outsourcing analyst NelsonHall, IT outsourcing (ITO) contracts agreed in 2014 totalled £3.44bin in value. And in the last few years, outsourcing, and not just across IT, has grown considerably with 2014 experiencing a 15 percent rise over the previous year.

Part of the increase is a response to the recent financial crisis and in the public sector especially, the massive cuts to public sector spending is forcing central and local government to look at ways of get more from slimmer budgets.

The heart of any outsourcing deal is the contract. Essentially, any existing internal processes will have a number of metrics that need to be delivered and an associated cost in full time employees, equipment, property, training and a whole myriad of factors that are required to deliver to that metric. In an IT world, that might be supporting a number of IT end users, applications and network devices. In a non-IT world that could mean collecting rubbish from residential properties or taking billing queries in a call centre.

Where outsourcing excels is in the ability to circumvent some of the costs that organisations have little control over. Wages are a major factor. Consider that average UK call centre worker is paid about £23,000 per year,  a comparable call centre worker in New Deli, India earns barely a quarter of this amount and expects far fewer benefits in kind such as holiday, sick pay and maternity leave.

The other issue is staff hiring, retention and skills training. Specialist IT skills such as application development are expensive to gain and develop in-house, especially if organisations are just working toward a project that has little ongoing development.

The last factor that favours outsourcing is flexibility. Although most contracts are based on multiple year commitments, many have clauses to allow customers to increase supply, with suitable remuneration, which allows organisations to scale up based on a graded scale if for example demand increases. And if, in theory, the outsourcers fails to deliver on the deal; the customer can cancel the contract and in some cases get compensation.

It is in this last point that some of the theoretical benefits of outsourcing often fall down. Particularly in the public sector, the large outsourcing firms of the like of BT, Fujitsu, Capita et al tend to have better legal and technical minds working up contracts then public sector buyers.  Which means that terms are often less competitive than they could be and the costs and complexity of ending a contract early may well outweigh the cost of just accepting an underperforming deal.

In addition, there is both complexity validating that the Service Level Agreements that underpin outsourcing agreements are actually being met. The very act of measurement can be a costly exercise in its own right.

Lastly, the reputational aspects of outsourcing are sometimes questioned. Although many large financial and service providers outsourced call centres overseas in the mid 2000’s, in recent years, many of these early adopters have brought centres back to UK operators and in some cases, even back in house, to show a sense of patriotism in the face of the perception that outsourcing deprives UK workers of jobs.

In response to a slight backlash, a growing counter trend is insourcing. The idea is not new and is essentially the extended use of contractors and re-tasking processes to internal resources that may be underutilised. Insourcing has grown in lock step with a number  of tends such as zero hours contracts which circumvent some of the employment rights that give workers protection and costs to employing full time staff – as well as the issues around skills shortages.

Insourcing is not always bringing in more resources on a contract bases. In some cases, it may mean transferring a process from one area of the organisation to another that is better equipped to deal with it. For example, relocating end user IT support from satellite offices to a central IT help desk with additional resources may be dressed up as insourcing.

For the IT industry and the channel, the separation between insourcing, outsourcing, contracting, body-shopping, which is essentially acting as a recruiting agent, and other derivatives can be relatively slight. The main delimiter is who has the responsibility for the employed staff, adherence to the corresponding legal employment legislations and how the project or processes is delivered and paid for.

Yet, actually working out savings is hard. Capita, a major IT outsourcer has stated that “We would expect customers to be saving at least 30 percent on a multi-year outsourced IT engagement. It really depends on how they adopt utility computing but cost savings and service transformation are what makes outsourcing compelling.”

Yet this 30 percent saving is hard to pin down with independent evidence or non-partisan imperial studies thin on the ground or pre 2008. Even within the public sector with oversight from bodies such as the National Audit Office, definitive evidence that tally’s up both successes and a failure to provide a baseline is scant.

With new technologies such as cloud and SaaS providing an enabler for more outsourcing, the growth is likely to continue. With government promotion of its G-Cloud supposedly encouraging ICT suppliers from the SME sector; getting into the outsourcing and insourcing field is easier than at any point in history – especially as continued squeeze of the public sector forces more innovative ways of delivering services for less.

The one bit of advice for any VAR thinking of offering these services is show evidence. Even a small project that generates a tangible benefit should be documented and publicised with the help of the customers. The old fashioned case study backed up with hard data is the single best tool for winning more business. Offering better contract terms if a customer will agree to such a study is a good tactic to help bring these benefits to the fore.

Source: channelpro.co.uk-Outsourcing: The advantages and disadvantages by Will Garside 

EU Regulators Express Their Take On Safe Harbor Ruling

The Article 29 Working Party (WP29) issued on 16 October 2015 what it called a “robust, collective and common position” on the consequences of the recent decision of the European Court of Justice that declared Safe Harbor mechanism for transfers of personal data to the US invalid. The WP29 suggested that the EU and the US reach agreement before the end of January 2016 on an appropriate “political, legal and technical solution” for data transfers to the US.

The WP29’s statement follows in the aftermath of the European Court of Justice’s decision in Maximillian Schrems v Data Protection Commissioner. Our Legal alert of 7 October 2015 discussed the ramifications of this judgment and suggested EU model contracts as a temporary and Binding Corporate Rules (BCR) as a more permanent basis for structural data transfers between the EU, the US and elsewhere. The WP29’s statement confirms that both EU model contracts and Binding Corporate Rules can indeed continue to be used.

The WP29’s statement warns about the potential of coordinated enforcement by data protection authorities (DPAs) after the end of January 2016. This coordinated enforcement would likely initially focus on Safe Harbor based transfers. Because of the differences in individual statements of various national DPAs, the extent of actual enforcement will likely vary from country to country. The WP29’s statement further indicates that also the use of alternatives for Safe Harbor, such as model contracts and BCR discussed above, will become subject to more scrutiny and potential enforcement. When employing these instruments, it is therefore important to ensure that their use results in actual data privacy compliance and not just the signing of documents.

Given the broad scope of the WP29 post-Safe Harbor guidance, we advise corporates to map and assess the compliance of both their internal and external data transfers globally.

See also the full text of the statement by the WP29.

Highlights of the WP29’s conclusions

The question of massive and indiscriminate surveillance is a key element of the ECJ’s analysis. This surveillance is incompatible with the EU legal framework. Transfers to third countries where the powers of state authorities to access information go beyond what is necessary in a democratic society will not be considered as safe destinations for transfers
The WP29 is urgently calling on EU member states and European institutions to open discussions with US authorities in order to find political, legal and technical solutions enabling data transfers to the US with the assurance that fundamental rights will be respected. According to the WP29, an intergovernmental agreement providing stronger guarantees to EU data subjects, such as a new Safe Harbor agreement, can be part of a solution
Transfers that are still taking place under the current Safe Harbor framework after the ECJ’s judgment are unlawful. EU DPAs might investigate data transfers on a case-by-case basis, for instance on the basis of complaints or on their own initiative
If by the end of January 2016 no appropriate solution is agreed between EU and US authorities, the DPAs will take action, which may include coordinated enforcement action
The WP29 will continue to analyse the impact of the ECJ’s judgment on other transfer tools. The WP29’s statement makes clear that EU Model Contract Clauses and Binding Corporate Rules may continue to be used
According to the WP29’s statement, businesses should reflect on any potential risks they may be taking when transferring data and should consider putting legal and technical solutions in place in a timely manner to mitigate those risks and which also respect EU data protection laws.
Will EU DPAs give businesses a grace period to align their processes with the ECJ’s ruling?

The WP29’s statement indicates that until the end of January 2016 national DPAs may investigate and enforce any specific data transfers to the US or elsewhere based on any adequacy mechanisms. At least one European DPA (UK’s Information Commissioner) recognised that companies would need time to align their data transfers with law. On the other hand, the German DPA in Schleswig-Holstein has already suggested that companies which fall under its jurisdiction terminate contracts (also using EU Model Contract Clauses) for data transfers to the US. The Schleswig-Holstein DPA backs this guidance up by referring to potential enforcement actions.

Beyond Safe Harbor: real compliance is the key

Following the ECJ’s decision, we advised companies in our previous Legal Alert to analyse which of their personal data transfers are based on Safe Harbor. In doing so, a distinction can be made between:

data transfers through US based cloud and outsourcing providers, which can temporarily be based on the EU Model Contract Clauses, and
intra-group data transfers, which can be based on BCR or the EU Model Contract Clauses for simple intra-group transfers.
In addition to due diligence on data transfers based on Safe Harbor previously advised, we recommend that companies extend their efforts and assess material data flows to other non-adequate countries. More specifically, we recommend that companies:
analyse data flows to non-adequate countries, both intra-group and to third parties, and investigate the ways to bring those in line with data protection laws
elaborate short-term strategies for achieving compliant transfers on a case-by-case basis
review and regularly update data processing policies and practices to ensure that these policies are robustly implemented in practice.
The above adds agility if there are changes to the adequacy status of other data transfer mechanisms or adequate countries. And we recommend staying abreast of developments in this area, monitoring national DPAs relevant for your business operations and engaging in conversations with them in case of uncertainty.

Some additional background

The EU is currently working on a general data protection regulation (GDPR) that will harmonise data protection laws throughout the EU, have extra-territorial effect and introduce strong mechanisms for protecting personal data. The final text of the GDPR is expected to be adopted in 2015 and to come into force within 2 years. In anticipation of the GDPR, EU DPAs have been taking an increasingly active role in enforcing data protection law and pursuing violators.

The ECJ has followed this trend by a string of groundbreaking cases. In 2014, the ECJ invalidated the EU Data Retention Directive for massive and unjustified collection and storage of personal telecom data. The same year the ECJ extended European jurisdiction over Google Inc. and gave a new dimension to the right to be forgotten. Less than a month ago, in Weltimmo (C 230/14), the ECJ recognised a right – and a duty – of national DPAs to investigate claims of individuals regarding violation of their rights under data protection law regardless of the applicability of the national law. In Schrems, the national DPAs were reinstated in their authority to investigate and act on the claims on non-compliant data transfers outside the EU, even if there is an adequacy mechanism established by the European Commission.

Source: mondaqEU Regulators Express Their Take On Safe Harbor Ruling by Richard van Staden ten Brink, Geert Potjewijd and Wanne Pemmelaar

Robotic process automation: The new IT job killer?

Robotic process automation has higher-value IT tasks in its cross-hairs but could be the best antidote to outsourcing yet

A quiet revolution with a potential impact on the IT workforce reminiscent of outsourcing may be under way in the form of robotic process automation.

Geared toward automating a variety of business and computing processes typically handled by humans, RPA will stir passions at organizations that deploy the technology, with its potential to slash jobs, shake up the relevant skills mix, and if implemented strategically, stave off the specter of outsourcing.

The reason: Thanks to advances in software and artificial intelligence, automation has its sights on higher-value tasks than ever before — and it’s already having an impact at organizations currently deploying these systems

What exactly is robotic process automation?

At its core, RPA is “robotic” software that organizations configure to capture and interpret the actions of existing applications employed in various business processes. Once RPA software has been trained to understand specific processes, it can then automatically process transactions, manipulate data, trigger responses, and communicate with other systems as necessary. The technology is designed to reduce or eliminate the need for people to perform high-volume IT support, workflow, remote infrastructure, and back-office processes, such as those found in finance, accounting, supply chain management, customer service, and human resources.
RPA software is composed of multiple components. First, for collection, they employ a variety of tools for grabbing digital data, which can include screen scrapping, digital image recognition, or the ability to access a server or be linked to a website. They also make use of rules engines similar to those found in business process management tools.

“This is the basic requirement, that it works at the graphical user interface layer and doesn’t need much, if any, IT support,” says Cathy Tornbohm, vice president BPO (business process outsourcing) research at Gartner. “RPA tools can be built from combining tools that perform the various elements of these tasks.”

On the one hand, RPA promises huge cost savings and the elimination of tedious tasks for IT infrastructure workers. On the other hand, it threatens the very survival of many of the jobs held by those same infrastructure workers.

This time around, automation is after more than manual data-entry positions.

Eating into IT jobs

Not long ago, RPA was “a total mystery” to most organizations, but its potential is now grabbing the attention of IT consulting and advisory firms, outsourcing providers, and enterprises alike, says Frank Casale, a longtime outsourcing expert and founder of the newly formed Institute for Robotic Process Automation (IRPA).

Frank Casale, founder, Institute for Robotic Process Automation“I would say most IT infrastructure support jobs will be eliminated over the next three years.” — Frank Casale, founder, Institute for Robotic Process Automation
“This is a flash trend driven by a combination of really powerful process automation software and artificial intelligence, and following a lot of trial and error” by vendors in the market, Casale says.
IRPA touts the technology’s potential to significantly reduce risk in regulatory reporting, thanks to improved analytics and increased data accuracy. But its estimate that RPA could save companies 20 to 40 percent in labor costs is sure to raise eyebrows, signaling RPA’s clear potential to wreak havoc on the IT workforce.

“I would say most IT infrastructure support jobs will be eliminated over the next three years,” Casale says. “I’ve already seen [deployments] where there was 60-plus percent labor automation.”

This includes jobs related to IT help desks, data center and server support, network support, and other areas of IT maintenance. While the technology does not currently replace functions such as application development and maintenance, that’s not to say future RPA technology won’t be able to handle some of those tasks, Casale says.

If that sounds ambitious or even unlikely, it still underscores the ongoing evolution of automation toward higher-value jobs.

RPA is most likely to replace data entry and data rekeying or data assembly and formatting tasks, which are rules-based, Gartner’s Tornbohm says. “Almost any type of computer-related process which is rules-based [and] which a human performs today could be affected at some point in its lifecycle, where [RPA] could mimic what a human does,” she says. “It has affected IT in many ways, often in software testing.”

Earlier advances in automation eliminated “blue collar jobs, ones we cannot even remember today, like tape changers,” notes Chris Boos, CEO at RPA provider Arago. “RPA moves the focus of automation up the value chain. At the same time, demand for IT experts is growing for even higher-value jobs, because most companies are struggling to keep up with high-tech development, and this is why RPA is a relief to most IT people.”
Robotic process automation in practice

A.J. Hanna, senior director of operations support, Ascension Health“Our goal with RPA is to be able to take on additional work without the need to add staff.” — A.J. Hanna, senior director of operations support, Ascension Health
Health care provider Ascension Health deployed an RPA system from Blue Prism in early 2014 when it needed a way to avoid time-consuming manual processes associated with its move to a new ERP platform.

“There is work that we refer to as ‘swivel chair’ activities, where we transfer data from one source into the ERP or one of the support systems,” says A.J. Hanna, senior director of operations support at Ascension. “Despite the implementation of the standard ERP, there is still a large volume of local policy variability that has to be addressed.”

The use of RPA didn’t result in the elimination of jobs at the company, but the possibility “certainly exists” in the future, Hanna says. “The impact to frontline processing staff is the greatest potential change to our workforce,” he says. “A large part of our focus is trying to find ways to be able to absorb the additional workload that we know is coming” without having to add staff.

As the company moves more into the automation of rules-based activities, “We anticipate that it will provide staffing reduction opportunities,” Hanna says. “Each of these opportunities will have to be viewed within the context of the known increase in workload volumes that will be coming in 2015 to determine potential impacts to staffing levels.”

Danny Wootton, innovation director, CGI“It hasn’t necessarily been about cost reduction, but more about better service and improving the effectiveness of our people.” — Danny Wootton, innovation director, CGI
While Ascension anticipates the potential for staffing reductions, “our goal with RPA is to be able to take on additional work without the need to add staff,” Hanna says. “Any reductions that may come from the use of RPA would be handled through normal attrition.”
Another company, IT services provider CGI, less than a year ago began working with three RPA providers — Thoughtonomy, Celaton, and Innovise — for various aspects of process automation. The two main drivers for the project were to achieve increased efficiency across IT and business processes, as well as customer service improvements, says Danny Wootton, innovation director at CGI.

“It hasn’t necessarily been about cost reduction, but more about better service and improving the effectiveness of our people,” Wootton says.

CGI has seen reduced efforts across a range of activities, from simple password resets to more complex logic-based activities such as payroll and help-desk problem resolution. Like Ascension Health, the firm at this stage hasn’t seen RPA affect the makeup of the IT workforce. “But it may well be something we need to think about in the future,” Wootton says.

The silver lining

Experts say RPA doesn’t represent all gloom for tech workers. For one, the technology itself will provide opportunities because organizations will need people who are skilled in implementing, managing, and maintaining the programs.
“There is going to be a need for new skill sets in lower and middle management, for people who are able to work with RPA platforms and understand how to manage them,” IRPA’s Casale says. He has talked with people who worked in IT support and were displaced by RPA systems who received training and went on to become experts in process automation.

In addition, companies could move some of the displaced workers into more interesting and challenging types of jobs — either in IT or other areas of the business.

“Absolutely will [RPA] free up time to do more important and more demanding jobs in IT,” Arago’s Boos says. “The demand for experienced IT people is so incredibly high and cannot be fulfilled by the current supply from universities and other education programs. Especially on the experience side, moving people up the value chain is most important, and RPA will be a major enabling factor here.”

Ascension Health has been able to free up some workers to focus on more complex activities, Hanna says. The company’s goal is to cross-train or up-skill as many operations workers as might be displaced by the use of RPA, Hanna says. “In some ways, we see the use of RPA as having a greater potential to retain levels of staffing that you might not have if you outsourced the entirety of the work to a traditional BPO,” he says.

Because there will always be exceptions that “fall out of the parameters covered by the robot, an organization might keep the staff where previously they would have been outsourced,” Hanna says.

CGI has been able to shift some of its IT people to other business activities, Wootton says. “We see RPA changing the type of activities our people work on, by automating many of the repetitive tasks, freeing up time for more value add activities [and] ultimately providing our people more interesting and involving roles,” he says.

Prepare for some turmoil

Regardless of how RPA plays out within organizations, it’s likely the movement will touch on passions around the possibility of job loss or the need for new skills. Companies will need to address these challenges in order to make a smooth transition to a more automated IT support infrastructure.

It certainly won’t be the first time there have been significant shifts in IT workforces within organizations. “We’ve seen this movie before with the emergence of the Internet, outsourcing, and with all forms of disruptive technology that have forced the reallocation of jobs,” IRPA’s Casale says.

But RPA could create turmoil on a fairly large scale as more organizations adopt the technology. “There are some natural resistances to the implementation of this type of technology, mostly around the potential impact to people,” Hanna says.

No doubt RPA will continue to touch on passions, given the potential for workforce upheaval. But those at the front lines of the technology say the sky is not falling for IT professionals.

“In many ways the RPA movement has been more readily embraced than traditional outsourcing,” says Sean Tinney, global head of innovation and transformation at Sutherland Global Services, a service provider that has helped companies in a half-dozen industries deploy RPA.

“An RPA solution opens up more opportunities on or near shore than a traditional sourcing model, as well as creates new roles both for the sourced and retained organizations, in order to manage a fundamentally changed environment,” Tinney says. “In our experience, the passion around RPA has been solely positive and quite often readily embraced.”

Source: infoworld-Robotic process automation: The new IT job killer? by Bob Violino