The Advent of Automation and AI: What’s Next for the BPO Industry?

For almost every industry, the impact of automation and artificial intelligence (AI) has become a significant talking point as we enter the dawn of a long-anticipated future. But how might these burgeoning technologies affect business process outsourcing (BPO), and what will it mean for the clients?
Headquartered in Bangalore, Karnataka, Indian multinational Infosys provides business consulting, information technology and outsourcing services around the world. We caught up with Madhusudan (Maddee) Hegde, Head of HiTech & Manufacturing at Infosys BPO; Binod Choudhary, Business Head of Energy, Media, Telecom, and Utilities, and Head of Infosys BPO operations in the Americas; and Claudio Elsas, the company’s Country Head in Brazil, to discuss the near-term impact of automation and AI on the BPO industry.
Nearshore Americas: In the BPO industry, what has been the biggest changes in client expectations over the last 12 months?
Maddee Hegde: An interesting way to look at this is to contrast it with expectations from two years ago. Back then, process expertise and service providers’ experience in Lean Six Sigma dominated the conversation. Technology dialogue in BPO was largely focused on enabling technologies like workflows and dashboards. These are still important, but clients have realized that technology has a multiplier effect as opposed to an additive effect resulting from process improvement methodologies.

The dialogue today is on elimination of work through robotics and then going beyond those efficiencies to deliver on self-healing through artificial intelligence (AI) and machine learning. Customer experience is becoming more key, with the customer here being defined broadly as any set of stakeholders across any set of processes that are being serviced. These topics are limited to the impact on a current set of BPO processes and not the larger disruptive impact of digitization to the core business itself, since that’s a conversation that transcends BPO.
The implications of this change are multifold: firstly, the traditional pyramid of labor with a large base of transactional full-time equivalents (FTEs) managed by leads and operational managers really feels like a relic from another century. Labor arbitrage as a driver is passé and this has an impact on the way talent will be looked at in the near future. Second, providers with their own technology, for example robotics software, are able to extend these licenses to their clients and impact processes that may not even be outsourced eventually. Third, the value in an engagement is therefore no longer measured by SLAs being green, but by business insights brought to the table by the service provider. This isn’t just about Big Data, but is driven by clients asking a more fundamental question: “If you run all of my transactions, aren’t you in a position to share insights about my business?”
Nearshore Americas: Binod, taking a cue from Maddee’s point on elimination of work, what implications and impact will this have on human talent?

Binod Choudhary: The big change that we see coming is the need to define the word talent. It used to be about domain knowledge and solving current problems, but it’s beginning to shift to a more soft description of understanding the customers’ needs, imagining the next problem and solving those problems. We have embraced Design Thinking in a big way, with a significant number of our employees now trained in it. Needless to say, the need for domain knowledge is still there, but it has to be coupled with skills that are more analytical, such as the ability to ask the right why and then find a data-led answer. There is a growing need and demand for such resources and skills.
There is also a growing need to leverage such capability from nearshore. For many years, it seemed like such skills were only abundant in offshore locations with a cost arbitrage. Given the power of technology, such work is no longer labor intensive, so there is an inclination to leverage nearshore capabilities as they enable a better cultural fit and speed of action.
Nearshore Americas: While technology moves toward a more automated future, how is domain playing a role in terms of knowledge management?

Claudio Elsas: Tech is inherently the savior for ensuring we can better capture and manage knowledge, which will be key for next-generation BPO services. In this new scenario, BPO providers should differentiate themselves with their capabilities in order to execute services with higher levels of automation and quality. Furthermore, the creation of functional and industry relevant robotic process automation (RPA) that can be reused by clients and industries will be essential for success in this market.
The other aspect is to better understand client business scenarios, as this knowledge will help us to improve their results. As an example, MANA is our valuable knowledge based AI platform. Machine learning together with deep knowledge of an organization is a strong tool to help our clients find new opportunities for innovation and growth.
Maddee Hegde: Claudio and Binod bring up interesting points that we have encapsulated in our AI-KI-DO framework. While the framework has broader applicability across our service lines, it enables us to renew our BPO services to drive more agility for our clients. From a BPO perspective, work is largely centered on transactions. The AI part that forms our platforms enables us to process data, automate, and add intelligence to the resolution. So, once the routine work is automated, the judgment-based work and industry context become important which is part of the KI or knowledge where we capture process and industry nuances. This in turn, enables us to help our clients in multiple ways, whether it’s enabling them to provide confirmation on compliance procedures, enabling standardized work, or driving adherence to quality.
This is truly about a lot more than just BPO. For example, in the aviation sector we have used this to drive knowledge-based engineering where we have captured product and process knowledge and embedded it to enable clients to design similar systems more efficiently. Therefore, AI and KI substantially help in driving efficiencies for our clients, freeing them up to focus on growth and innovation. And this brings us to DO, which is about design thinking, or enabling our clients to look at new areas and to reinvent themselves.
Nearshore Americas: How can Infosys clients obtain a broader and more comprehensive view of Big Data and business insights?
Claudio Elsas: In terms of next-generation BPO services, the ability to operationalize the organization’s data assets and transform it to deliver business results is a great challenge. The capability to manage a big amount of data real-time helps clients to understand their business and uncover opportunities to improve, grow and innovate. We have the Infosys Information Platform (IIP) which is an open source platform and enables us to deliver high-value insights rapidly and in a cost effective manner.
Maddee Hegde: Simply put, I think the combination of faster compute capability and cheaper storage combined with open source technologies will enable service providers to deliver business insights. This was not a possibility when large complex data warehouses and traditional business intelligence (BI) systems had to be leveraged. This is adding significant velocity to clients’ decision making, which is a key outcome of this shift.
Nearshore Americas: Brazil is well-known for its complexity, but what are you seeing in the country’s current business climate, and which solutions is Infosys bringing to the market?
Claudio Elsas: Brazil is facing its worst recession since the 1930s and companies are looking for a strong improvement of productivity, cost reduction and compliance. Companies that successfully achieve this target will not only keep their business profitable during the crisis, but will also be prepared to benefit from the next growth cycle. In this context we have created two specific service offerings for this market: The first is a tax and compliance solution that includes a complementary software for SAP ERP (Infosys Fiscal Engine), as well as tax and compliance outsourcing services. The second is Master Data Management Outsourcing, which combines the SAP MDM solution with our next-generation BPO services.
Nearshore Americas: Is the company concerned that all this AI and automation might actually cannibalize its business?
Maddee Hegde: It is inevitable that the historical linear link between growth and FTEs will be broken due to the advances in technology. We’re certainly not going to be the Luddites here and we have proactively approached clients to show how we can deliver more value. The short-term dip is comparable to a trampoline effect; there is always a dip before you jump up. Once clients see the impact we’ve had on driving automation in the processes we work in, applying it more widely across other areas of the organization is a distinct possibility and the logical next step. As well as this resulting in us expanding our footprint, we foresee new services like analytics becoming more integrated into our clients’ business.

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