The impact of IT automation on the outsourcing market

There’s no doubt the job market is changing faster than ever – hindered economic conditions, the fast pace of globalisation and flexible working practices have brought in challenges no organisation could have predicted ten years ago. Now, against the backdrop of Britain’s decision to leave the EU, the future of work is front of mind once again. But it’s the unstoppable development of technology that has been fuelling one of the biggest changes in the job market in decades, not just in the UK but also on a European level. Many experts fear it has the potential to not only challenge but also put an end to the very existence of the jobs we’re used to doing today.

It’s true that evolving technology has always had a significant impact on jobs. Electric streetlights displaced lamplighters, personal computers replaced typists. But the growth of automation and artificial intelligence raises questions about the need for human employment in a far greater range of sectors and roles – including those with cognitive skills. In fact, Boston Consulting Group predicts that by 2025 as much as 25% of all jobs will be in one way or another replaced by smart software. Academics from Oxford University claim 47% of US jobs could disappear within the next decade, while the Bank of England goes as far as to say 15m UK jobs are threatened by robots, with those working in administrative, clerical and production tasks most at risk.

So what does this mean for the outsourcing industry? According to the Bank of England study, the probability of automation stands at 40% for technical occupations and as much as 75% for sales and customer service occupations. That’s alarming for the industry, given customer support and service desk roles form a large proportion of services outsourced today. With such significant changes coming their way, there’s no doubt outsourcing companies will need to adjust their business models in order to stay relevant.

It’s not all necessarily bad news though. Rapid growth of automation presents outsourcing companies with an opportunity to capitalise on the trend and with a chance to reorganise their workforce. One way to do that would be for outsourcing service providers to move employees towards more business critical tasks, thanks to the automation of underlying services. Taking this a step further, outsourcing service providers could incorporate automation as part of the outsourced service itself. Providers could build automation into their operating model – with significant financial benefits to the customer and strategic benefits to the outsourcer. This will have to be done cautiously of course, so that the new smart technology rolled into existing accounts doesn’t inevitably cannibalise them and will require a careful evaluation of the impact on revenue and margins.

There might also be an additional unexpected upside to this new technological revolution – the creation of a number of new jobs that will benefit the outsourcing community. Outsourcing service providers will just have to think carefully about the impact automation, redistribution of resources, and new jobs and services will have on their business – and they will have to do it now. Although it will be some time before smart machines take over, the industry needs to start considering its options, so that when the time comes, it is not caught out. The 2016 Whitelane Research UK Outsourcing Study found that almost a third (31%) of organisations surveyed will outsource more in the next years – so the opportunities are there. The question remains, when intelligent technology does come around, will the outsourcing industry be ready to embrace it?