Automation: The Path To Outsourcing 4.0
Mankind wants to be creative. We want to dream, debate, play, have fun and experience magic in everyday life. Instead, we are stuck with the mundane. We are doing dishes, mopping floors, making utility and credit card bill payments, and buying groceries. Naturally, given we are also inventive, we have automated these dull and boring tasks in the form of washing machines, dishwashers, autonomous vacuum cleaners, standing instructions to our bank accounts to make automated payments, and even have systems to order groceries and essentials without lifting a finger (“Alexa, add an N95 mask to my Amazon cart”). Automation in the consumer space is alive and exciting. Have you seen the new breed of autonomous vacuum cleaners? They use LIDAR, the technology that autonomous cars depend on for navigation. Many of these cute house cleaning robots have been flying off the shelves—wait times for some is now over a month—ever since the COVID-19 enforced lockdowns. No one wants to sweep and swab when a fully-programmable, 100 per cent dependable robot can do it while you sleep. The popular belief is that automation will also take away jobs. For example, you may never re-employ your house help once you use the LIDAR –armed, fully-autonomous vacuum cleaner. That is exactly the fear that prevents automation from being implemented in the enterprise. It could replace you and me. So is automation a boon or a bane?
Let’s settle that question: Automation is what will save us from boredom and give us the time to be creative. Automation doesn’t take away jobs. It makes way for better ones. James Bessen, the Executive Director of the Technology and Policy Research Initiative at Boston University School of Law, in his book Learning by Doing -- The Real Connection between Innovation, Wages, and Wealth provides us with an excellent example of automation improving job profiles. Ever since ATMs were introduced about 45 years ago, the number of human bank tellers in the US has almost doubled, from a quarter of a million to half a million today #hallelujah!
It is interesting to see how automating the simple role of a bank teller actually panned out. As Bessen explains in his book, ATMs helped lower costs and, in part, made it easier for banks to open new branches. Branches increased by 40 per cent during the same time period. More branches meant more tellers. Only this time, the tellers had to upskill. Their future as cash handlers was doomed, taken over by heartless, automated ATMs. Tellers became subtle salespeople for new products, driving relationships with customers by helping solve their problems and pointing them to loans, investments and credit cards. This requires cognitive intelligence, reskilling, empathy and creativity. QED.
With COVID-19, it is time to consider automating everything that can be automated, using robots (or hard bots) in manufacturing, health care, transportation, warehousing, agriculture, CPG, retail and other industries, and Robotic Process Automation (RPA or soft bots) in knowledge-intensive functions such as invoice processing, customer service, recruitment, payroll management, data extraction, application testing, IT infrastructure management, etc.
With the trend of Work from Home (WFH) and a distributed workforce gaining traction in the wake of COVID-19, IT service providers are finding it difficult to quickly provision, manage, secure, monitor and support employees for their customers. Many service providers are putting automated processes in place to make the transition from office to home smooth, fast, flawless and dependable. In this case, automation is a welcome immunity booster for businesses.
Here is one way the automation scenario could play out. Advanced nations, where labour is expensive, will be the first to make massive investments in automation. These are also the nations that have historically moved a variety of processes, ranging from manufacturing to customer support, to low-cost geos. The investments in automation will initially be geared towards building co-bots or collaborative bots that make life simple for employees by taking over mundane tasks. Imagine every employee in your organization having access to specialist bots built specifically with their function in mind. First, this would improve employee productivity. I am guessing this improvement would be in the range of 12 to 14 per cent, which is quite a significant upside. Second, these organizations will attract millennial and centennial talent that loves workplaces that put advanced technology at their disposal. And third, it would bring back processes moved to low-cost geos, improving overall employment.
Chances are you are nodding your head, side to side, more than a little incredulous, saying, “This doesn’t seem right!” By here is the funny thing--there is nothing new in these postulates! We have known these facts for long, but have refused to look them in the eye. We need to think of handing over routine and mundane tasks to a low-cost “country” called “Automation”. Further, we need to think of automation as a revolutionary step in outsourcing. So revolutionary, that we call it Outsourcing 4.0. And this time, thankfully, the automation bots will belong to the enterprise! So, in reality, it will be more like insourcing.
As I said earlier, we have known many of these realities for some time. Recently, Apple CEO Tim Cook revealed that the reason Apple sends its manufacturing to China is not that labour is cheap, but because China has advanced its manufacturing capabilities. It now functions at the “intersection of craftsman kind of skill, and sophisticated robotics and the computer science world.”
I am convinced that we need to create a generation of bots with specialized skills to not just assist industries to bring down costs and improve productivity, but also provide employees the time to be creative. Bots, both hard and soft, will become a new type of “citizen”, a distinct demographic, with special skills in manufacturing or banking or education or whatever.
The number of hard industrial robots (per 10,000 workers) could become a reasonably reliable indicator of how safe the workforce of a country is from physically taxing work, exposure to dangerous environments, how well it can weather a storm like COVID-19 and how resilient it is. Countries with a high density of robots, such as the Republic of Korea and Singapore, are the ones to keep an eye on. Their robots will be super intelligent and, perhaps, more polite and pleasant to work with.
The ratio of soft co-bots (or collaborative bots) to employees in an organization will determine not just productivity but will become a key factor in attracting young talent, firing innovation and providing time to employees to be creative.
There is an additional dimension to automation. Digital technology has been fueling development for several years now. Technologies like IoT and Machine Learning are gathering momentum. They will put an immense amount of raw data into the hands of businesses making it possible to generate refined intelligence to enhance products and productivity.
Several other—and perhaps more important—factors are catalyzing automation, moving it to the top of the agenda for enterprises. These include the fact that the advantages of cheap labour have been on the decline; compute power is cheap; COVID-19 is forcing enterprises to think about how to insulate their businesses from cataclysmic disasters, and the new generation wants an increasing amount of technology at its disposal.
The future of automation is unfolding fast. Don’t take your eyes off it. It will change our world.
