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    BPOs need to take this call from future

    Synopsis

    The $150 billion BPO industry is largely built around delivering incremental efficiency with 'some' expertise and 'modest' investment in tools, and often combine it with cost advantage.

    By Vikash Jain

    The outsourcing model and players is less understood and often seen as futuristic. Like all disruptions, as digital reaches the point of inflexion, the changes will hit like a tsunami.

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    The $150 billion BPO industry is largely built around delivering incremental efficiency with 'some' expertise and 'modest' investment in tools, and often combine it with cost advantage. With the advent of big data, digital technologies, automation, cognitive computing and Internet of Things, this will get dramatically challenged.

    Taking an example of a car accident, traditionally, a car owner would contact the insurance call centre to register his claim, which is followed by multiple checks to process the claim.Let's re-imagine this -the connected car alerts the insurance company when the accident occurs.

    Telematics provide all the relevant details for claims processing and for repairs that are scheduled at nearest workshop using Google Maps. The insurance company knows of the trip through Facebook, and offers a replacement car and insurance ­ sent to the mobile as a value added service. Warning via the navigation systems can alert other vehicles about the accident, proactively reducing potential additional claims.

    No human interactions and possibly no manual operations except for the workshop repairs, which also has robots. This process is seamless, allowing the insurer to cross sell, reduce further claims and delivers great customer experience. This might seem farfetched today. But by 2020, there will be in excess of 150 million connected cars in the world. This re-imagined world will require less than 10% manual effort.

    For the BPO players, this poses real risk of revenue compression as volume of effort shrinks dramatically .

    This changes the paradigm of customer service as well. The traditional trainable undergraduate operators will be replaced by experts with advanced skills. More importantly, the number of individuals required will be less than 5% of the current headcount, albeit each costing 5-20X.

    A recent study by BCG for an Asian country estimated that, over 70% of the jobs will be significantly impacted and 35% will get automated via robotics and AI. Routine jobs such as book keeping, accounting and general clerical roles will be the hardest hit, the jobs that form a significant part of the BPO industry's business today. However, as these jobs get impacted and eliminated, new jobs that require substantively different skill types will emerge.

    These advances throw up many issues that require deep attention. At the very outset, customer value proposition needs to be business value vs pure efficiency. Again a cliché but let's face it, this industry still counts FTEs. This leads to the second theme ­ this will not be about pay-per-FTE or widget. With digital, these associations will be difficult to track so focusing on impact and outcomes will be important. This brings us to the third theme of how companies manage operations and risk. The world of dedicated resources will need to give way to scaled operations that use common capabilities and platforms across customers.This has huge implications on how BPO companies will need to think about investments, operations and risks.

    This disruption is very real. Not doing anything will possibly lead to tombstones that say ­ "too big and successful to change".

    (The writer is a partner with The Boston Consulting Group)

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