Outsourcing firms: It’s time for a strategy rethink

Robots, automation and artificial intelligence have begun to take centre stage in the strategy of most large corporations.

Robots, automation and artificial intelligence have begun to take centre stage in the strategy of most large corporations. As a result, outsourcing companies servicing them out of India have to factor their impact on their own growth plans. Many of the contracts coming up for renewals and the new proposals under discussion are very often tied up with outcomes with significant lowering of costs on account of the expectations around reduced workforce deployment among other factors.

Starting with the focus of outsourcing in the initial days on labour arbitrage, then moving to the recent years of value creation with process maturity and innovation, now large corporations are beginning to increasingly consider automation both onshore and offshore. This is resulting in the deployment of robots onshore replacing human involvement in certain tasks and seeking automation and optimisation of processes offshore. As a result, outsourcing companies are beginning to rethink their own resourcing strategy.

The question that is being raised in some quarters is whether automation and robotics would mean less business to the outsourcing industry. Industry chieftains have reiterated that a close study of automation over the centuries would reveal that it has by and large led to expansion of the industry and creation of jobs multifold rather than shrink the workforce. Technology has created more jobs than it has destroyed, as per the report of Deloitte based on the analysis of 140 years of data in England and Wales which highlights that automation has led to job creation rather than making working humans obsolete.

Automation in the banks and other public sector businesses was resisted two decades ago but automation has helped the banking and financial services expand substantially and service their customers with more products and offerings which have resulted in multibillion dollar business for the IT services industry. Today financial inclusion is being focussed upon and the confidence of making this a reality stems from the central role technology would play in this endeavour. Outsourcing industry has managed to reinvent itself every 3-4 years with the change in technology on the strength of its ability to spot the opportunities and get its talent pool equipped with the relevant skills. Roles such as social media managers, chief listening officers, user experience design specialists, data scientists did not exist until recently and they have become critical to the survival of businesses. It is anticipated that the outsourcing industry would be readying itself once again to meet the demands of the digital transformation and for the requirements of new functions.

In order to address the demand for lowering of costs through optimisation of resources, the resource intensive outsourcing companies would have to review their resourcing and talent development strategy across all layers. At the entry level, the question being asked is would the current level of recruitment of around 100,000 freshers per annum be sustained in the coming years? The answer to this question lies in understanding the changes that are sweeping across the outsourcing business. The customers of outsourcing companies are in the middle of digital transformation migrating most of their systems to digital platforms with the view to delivering new experience, flexibility and ease of access to their customers. As a result, in the near term legacy systems would require maintenance support and the new systems would require to be built around cloud and digital ready platforms.

Automation and optimisation over the years have resulted in leaner teams for application development, testing, tech support and maintenance of systems. Hence the traditional areas of deployment of large number of freshers as coders, testing professionals and tech support executives are likely to see a drop. However, the demand for fresher talent would continue but in the context of digital applications development, the demand for skills at entry level are going to be different from the current day context.

The industry would require a combination of technical and mathematical skills along with creative design skills, understanding of human psychology and talent in arts. As a result, universities would have to bring about a fundamental change in the admission criteria to undergraduate programmes, curriculum design and the methods used for delivering education and skills to the students in order to make them relevant for the industry. On the other hand, for those who are already part of the industry, in order to remain relevant, would have to quickly equip themselves with the skill sets in demand with respect to design for multi device programming architecture, user interfaces, migration of legacy applications to cloud technologies, analytics and the tools thereof.

Outsourcing companies who have partnered with businesses for long periods of time have the advantage of insights drawn from the business domains and therefore would stand to gain through new opportunities such as customer relationship management, analytics, data modelling and security which would be leading to sticky long term scaling possibilities. Machine to machine learning and information drawn by sensors would mean man has to keep pace with the machines and find ways of learning together in some cases and learning ahead of the machines in many other cases to help them learn better.

AI, which was considered a distant possibility for integrating with the day to day management of the business ten years ago, has come to be acknowledged for its critical role in decision making and hence the opportunities for the analytics business have been at a galloping pace. Robots which were designed primarily for supporting niche manufacturing purposes or military applications, have entered into services sector and have assumed formless roles as well as with the case of Google cars.

In view of the rapid changes taking place across all sectors as a result of these technologies, exciting times are ahead for those outsourcing companies who manage to reengineer themselves quickly to rebuild capabilities at all levels. Success would depend upon the ability and speed of the professionals in the outsourcing industry to acquire new capabilities for interpreting and managing man—machine interfaces where the roles will be redefined with new metrics for efficiency, productivity and outcomes.

Source: financialexpress.com – Outsourcing firms: It’s time for a strategy rethink

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