The business process outsourcing (BPO) industry has matured a lot. Global outsourcing now turns its focus to delivering knowledge-dependent services that require employees with the right training, experience, and credentials.
Of course, hundreds of BPO companies that focus on delivering volume-based work will continue to prosper as the demand for low-cost customer service and tech support people services has not abated yet. But, the game has changed for some.
Low Level Jobs May Be at Risk
Companies that need a hundred or more people to work the phones to generate leads or to close as many sales as they can will continue their partnerships with offshore outsourcing companies. Do you need a hundred telemarketers or customer support representatives? These BPO companies can recruit and train people en masse, and charge you per batch of employees they successfully retained after six months.
But, they'll always be pigeon-holed in serving high-volume work that requires low level skills. Even their non-voice accounts demand a large number of email and chat support reps furiously typing scripted responses into their desktops everyday.
This does not seem to be a sustainable model of outsourcing. Some jobs, such as email and chat support, can be outsourced to Artificial Intelligence (AI) trained to spit out human-like responses to certain questions.
It's been predicted that millions of workers in Southeast Asia could lose their jobs to automation in the next 20 years. Labor arbitrage has been reduced. The gap between the wages paid to employees of outsourcing companies and the salaries received by onshore workers seems smaller compared to the income gap 10 years ago.
Offshore workers receive higher incomes now that they have more leverage in providing technically skilled work for their stateside employers. This reduces global labor arbitrage, and shifts the purpose of offshoring from taking advantage of low-cost labor to harnessing the more valuable skills of a larger talent pool.
Beating Back the Threat of Automation
Advanced AI may affect the way the global outsourcing industry functions in the future, but the presence of robotic process automation or RPA will not eliminate jobs that require human workers. For example, an autonomous artificially intelligent machine called Emma may be very capable of writing an article with logical precision, but as Sarah O'Connor quickly discovered Emma has some flaws:
Emma was indeed quick: she filed in 12 minutes to my 35. Her copy was also better than I expected. Her facts were right and she even included relevant context such as the possibility of Brexit (although she was of the dubious opinion that it would be a "tailwind" for the UK economy). But to my relief, she lacked the most important journalistic skill of all: the ability to distinguish the newsworthy from the dull. While she correctly pointed out the jobless rate was unchanged, she overlooked that the number of jobseekers had risen for the first time in almost a year.
While writing jobs may not be eliminated altogether by automation, jobs at call centers may be at risk. Some companies have been known to use telemarketing automation to gather information from prospects. Clicking the link will take you to a page where a couple of recorded calls with a suspiciously fake telemarketer named Samantha West can be found. The AI sounded so life-like, it's creepy.
To reduce the risk of losing the country's foothold on outsourcing, a technology firm in the Philippines spurred the development of an Intelligence Augmentation (IA) platform that will help BPO workers transition from doing "simple, repetitive, and low value tasks to complex, analytical, and higher value tasks" at more competitive rates than their onshore counterparts.
The Emergence of Knowledge Process Outsourcing
A new breed of service providers emerged in the new millennium. These providers have begun shifting from doing low-level tasks to performing highly specialized work for their clients. They are technically known as knowledge process outsourcing (KPO) companies.
Outsourcing will continue to thrive as industry players move on from providing low-key work to high value services:
But there are indications that the industry is already expanding into the next level of outsourcing: knowledge process outsourcing (KPO). KPO comprises back-office services such as health care processing and coding, legal transcription, IT outsourcing, and animation and game development. Additional services such as data analytics, business and financial research, mortgage servicing, software development, legal process and patent research, and engineering comprise many rich seams of potential KPO employment opportunities that are already attracting the attention of multinationals and OFWs.
Automation cannot be stopped, but not all jobs can be done by artificial intelligence. This is exactly why the global outsourcing industry needs to evolve quickly and push for the upgrade of skills among outsourcing employees. The same can be said of any workforce in the world. Now, it's a race towards whose workforce has a greater number of skilled workers that are qualified to take on jobs that produce higher value work.