Mumbai: Disruption has become the byword in the information and business process outsourcing industry. While in the IT services industry, it is happening in the clients’ business, in the BPO sector, a large number of jobs handled by humans are being done by robots, says Akhilesh Tuteja, partner and national head-technology and business process management at consultancy firm KPMG. Edited excerpts from an interview:
How different are the disruptions in the IT services industry and in the business process outsourcing BPO industry?
Both the IT services and the BPO industry are being disrupted, but the fundamental difference is that for the BPO industry the disruption is happening in the core business model of the industry, while for the IT services industry, the disruption is happening in the clients’ businesses.
For the BPO sector, robotics is the main disruptor, as today a large number of human jobs can be replaced by robots (software codes), for example—instead of a human creating an invoice, a robot can do it. This is happening now, because artificial intelligence was not as efficient five years ago. Today speech recognition technology is far more enhanced and effective. A lot of human jobs can be done by robots and that is a large part of the Indian BPO industry.
How is the Indian BPO sector dealing with these challenges?
We haven’t come across one Indian BPO firm that is not running pilot projects, proof of concepts or a trial on robotics/automation. Every one of them is in some way trying to work out their own solution.
I believe that if robotics has to happen then it will happen in India, because Indian BPO companies are smart, fast and creative enough to do this better than anyone else in the world.
We must remember that most Indian BPO companies are also big IT companies and also most of the large pure BPO companies have an IT back arm. They are all working in their backyard to build robotics technology. The way forward is that some will buy, some will build while some will adopt a hybrid approach.
Re-deployment of people once robotics takes over large parts of work will be a bigger challenge for them and they are all trying to address that. Companies are trying to go beyond transaction processing and looking at analytics. And that is an area where people will have to add skills to stay relevant. Don’t think that the firms will lose customers but there will definitely be de-employment as more robotics gets employed.
How can IT companies cope with the disruption being created by start-ups? Should they look at competing with start-ups or collaborating with them?
On the IT side the big companies are in trouble because clients want to do things differently from what they have been doing, like moving from main frame server to new cutting edge technologies, so there will be a skill mismatch etc. Fintech start-ups are going to big banks and asking them why they need to work with a big mainframe system when they can do stuff on a mobile app.
While the customers will move towards newer technologies, the buyer can’t change technology overnight. I think it will be 5-8 years journey, disruption will be slow, but it can’t be ignored.
Big guys can’t have the same amount of innovation capability as startups, because you also have a big ship to run, so most innovation will come from the outside.
So the way forward to them would be to collaborate with start-ups, which sounds easy but doesn’t happen too much. Second is buy out startups. And the third is to operate two companies within your organization—a large IT firm and a second smaller one, both of which are run independently.