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RPA Changes How We Outsource

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Editor Coda
2017/10/23

Shared services organizations are experiencing a significant shift. The catalyst is RPA.

 

Never in the history of shared services has a framework, model, technology or approach, been adopted with such momentum. Two years ago, in 2015, the percentage of shared services at a proof of concept stage (PoC), or in full implementation of RPA, was represented by a single digit. Last year, this had climbed to 20-25%. This year the number is over 40%*. sharedserviceslink predicts that, by the end of 2018, 55-60% of shared services organizations will be piloting or implementing, or will have fully implemented RPA.

This radical change is leaving outsourcers a little shell-shocked. How can they survive under the RPA landslide? If RPA can save 30-50% of costs (and sometimes up to 90% according to Deloitte), why would shared services companies, or decentralized companies outsource? How can outsourcers credibly offer themselves as an RPA partner and an outsource partner, and still make sure they’re not the complete losers in this development?

BPOs are changing. In the past few years they have partnered up with RPA providers, and are making sure they have a strong proposition to win new business. Their robots are trained and ready to go, saving companies time investing in their own PoCs, and offering the ability to move to ‘full production’ quickly. This means they might have a chance to win against the captive RPA model.

But what about existing business? How are BPOs making sure the companies that signed a contract, say, 3 years ago, get to enjoy an RPA-based outsourcing service? This is where there is friction, namely because BPOs have yet to figure out how they will fold in existing clients. 

BPOs need to be clear on how to placate exiting business and upgrade their contacts so RPA is part of the package. Existing clients study their legacy BPO contracts, see no scope for RPA within them, and get frustrated. BPOs have often been accused of lacking real, required focus on process re-engineering.  Until now, BPOs have nearly always won the cost-savings argument, but some have found themselves a little weak on the process re-engineering argument. BPOs are famous for deploying the classic ‘lift and shift’ model. RPA is of course about both cost reduction and process improvement, and companies with existing BPO contracts want both. They are, however, restricted by the contract in place with their BPO which fails to talk about the re-engineering part – which means RPA won’t feature in the BPO relationship or in their future, unless they do something radical. And simply put, radical is coming – a rebellion is brewing.

Frustrated and angry shared services organizations who are being denied the fruits of RPA by their existing BPO providers are talking tough. They are ready to cut-short contracts and go to tender early, before the renewal or contract break date. They see their competitors moving quickly with RPA deployment, and they are rightfully panicking.

BPOs need to recognize this, and find a way to be proactive about folding in RPA and process re-engineering into their established contracts and relationships. If they don’t, they will only increase the levels of agitation, and risk losing a customer for the long term. BPOs must be creative about shaping the commercials, even if they are already halfway through a contract term.

*US sharedserviceslink Survey – October 2017
 

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