Offshore vs RPA, a tectonic shift in technology’s impact on Business Process Outsourcing

By Allan Watton on

Offshore va RPA

Traditional Business Process Outsourcing (BPO) looks to reduce costs for a client by migrating their more repetitive tasks to resources located in more cost-effective regions of the world. We are talking about outsourcing to the likes of India (where around three million people are engaged in work generated by the BPO sector) and the Philippines (where this number is currently around a million people), to name a few. However, there is a new kid on the block set to disrupt this £230bn global sector – Robotic Process Automation (RPA), a discipline in its relative infancy but, due to the ease and speed with which it can be set up, its responsiveness to change and its cost being up to three times lower than offshore solutions, signs are that a significant change is about to hit the outsourcing sector that few are even aware of.

What is RPA and what does it do?

Robotic Process Automation facilitates the automation of repetitive rule-based tasks such as answering technical queries, processing documents, filing accounts and so forth. It is advanced software which not only can be provided with a set of processes to follow but can also adapt to optimise performance, to ‘learn’ in order to improve its efficiency and accuracy. Much of the talk about ‘bots’ in the digital arena in recent times, in fact, refers to RPA. These bots are intelligent software solutions that, once in commercial form, require no programming skills to adapt to your business needs and are today quietly becoming the biggest threat faced by traditional BPO firms, because of the massive potential they have to take on ever more complex business process outsourcing tasks.

Traditional BPO firms are huge entities firmly focused on massive manpower-led solutions. If you need your back office tasks outsourced you might expect your relatively costly UK-based team to be ‘replaced’ by a workforce in India, saving around a third on costs in the process. However, experience tells us that such solutions are not perfect by any stretch of the imagination as there often needs to be lengthy governance and planning stages involved, as well as an integration of international systems to ensure the resulting data is ‘joined up’ across the organisation. All this leads to greater expense and an erosion of the savings you initiated the project to achieve in the first place. Relationships of this kind are naturally large, can be unwieldy and necessitate employing a lot of people. Because of employment rights and the internal bureaucracy involved, it is hard to make sweeping changes quickly and it is rarely a project that can be managed in-house.

RPA, on the other hand, is alleged to cost up to nine times less than it would to employ an equivalent number of staff in the UK or the US, and three times less than traditional offshore solutions, making it immediately attractive.

Examples of the sort of work RPA has already mastered, provided by Robohub – a news hub for everything robotic – include the automation of:

• Fraudulent account closures, branch risk monitoring and new loan application opening, among other things, creating a £175m annual reduction in bad debt provision for a major global bank.
Answering 62,000 IT support calls a month, for a US media giant, solving two out of three issues without human intervention.
• The receipt and processing of up to 3,000 claims, correspondence, complaints, underwriter reports and other documents a day for a UK insurance company, reducing the manpower required for this task by around two thirds.

RPA works through being ‘trained’ by an existing system user, where it ‘learns’ to do repetitive rules-based tasks. These same users can, through flowchart-style software, make changes to its workflow to bring about immediate behavioural changes. This software works by reading the screen electronically (without the need for a physical VDU) where it interacts with the user interface just like a person would. This is attractive, as it negates the need for sophisticated programming and integration because it simply sits on top of what is already there.

RPA offers greater savings, swifter implementation and more responsiveness

When taken together it is easy to see the appeal. Why save 30% by outsourcing overseas, when you can save 89% by running bots in a datacentre domestically? The latter option comes with the ability for department staff to make immediate changes to workflows and bot behaviours on a self-service basis, rather than drawing up new, detailed governance processes for approval which might take weeks if not more to take effect overseas.

Barriers for RPA to break through

Robotic Process Automation is, therefore, a force to be reckoned with and one that the BPO sector should sit up and take serious notice of. It is, however, not yet at its peak for a number of clear and obvious reasons:

1. Technological limitations. RPA is still an emerging technology so it is not yet a perfect solution for all circumstances; according to some experts it is only presently able to automate 20–40% of the processes traditionally handled by BPO. However, for a sector that is only a few years old that is a sizeable chunk of activity.
2. Fear of job losses. This is a major issue, as with most technological advances employers must face nervousness on the part of their workforce that they may be replaced. Many organisations already using RPA claim that their headcounts have not changed because they have instead given the same staff more meaningful and value-adding work.
3. Governance. While the bureaucracy involved in making changes to traditional outsourced relationships is lengthy and sometimes inflexible, it usually comes with minimal risk as sign-off procedures and authority is usually well documented and managed. Yet, when bots are responsible for thousands of tasks, errors made through self-service provisions could wreak widespread havoc. Given the minimal need for the involvement of IT teams in RPA, who do you call when it all goes wrong? It is likely that the models that oversee RPA implementations will need to evolve to account for these risks as they come to light over time
4. Lack of awareness. Despite early successes and much promise RPA is not widely understood, yet this is something that must change as budgets tighten and the search for ever more efficient cost-saving options are investigated.

BPO resistance

With Robotic Process Automation being a rising competitor in their market, one which is likely to grow in strength as technology marches forward, you would think that the traditional outsourcing market might have made some dramatic moves to counter or absorb RPA, but it would seem not.

Maybe it is the sector’s lack of awareness, their investment in large personnel number solutions or an infrastructure that simply cannot quickly adapt to market change, but there is no evidence of wide-scale adoption of RPA. This may well be a mistake; the larger players should certainly be gathering the required skills and know-how in preparation for when it becomes more mainstream or they risk being left behind by those that are ready. As budget cuts begin to bear down on local authorities here in the UK, one cannot help but wonder as to whether they too may look to transition to ‘lean’ teams that oversee an army of RPA bots who can respond to enquiries and handle large volumes of menial administration work with greater rapidity, accuracy and frugality.


Bots incorporating artificial intelligence to rapidly learn what is needed and improve their own systems to produce optimised results may seem like science fiction, but they are already among us. Enfield Council recently ‘hired’ its first bot, Amelia, to handle incoming enquiries, and, alongside the examples highlighted already, many more organisations are following suit.

Such technology does more than just offer a faster, cheaper solution for repetitive tasks though. Existing staff can be redirected to more value-adding roles, new positions can be created to oversee and manage these bots as their usage proliferates, and with this the infrastructure to teach and develop the necessary skills. Also, as bots become ever more advanced, the gap between what RPAs can do and what BPOs have traditionally monopolised will shrink, requiring firms to adapt to keep up or risk being left behind. Now is not time to bury heads in the sand, but to embrace the inevitable change that Robotic Process Automation offers.

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