Investment Banking

Digital Spring in the World of BPM

December 2018

Read Time: 5 minutes

Circa 1927 – May 26th.  Henry Ford watched the 15 millionth Model T roll off the assembly line, at his factory in Highland Park, Michigan – a stupendous result of his ingenious assembly line production system.       

Cut to 2013.  I had visited a top Chinese BPM company. Ensconced in a remote Chinese countryside, it was an epitome of a super low-cost operations. I witnessed contingents of young uniformed agents furiously typing away, in colossal halls, while supervisors walked the aisles troubleshooting and monitoring agent productivity. It was mass production at work in the BPM industry. 

Henry Ford would have been proud.

At that time, BPM operations the world over, were not too different. The factory model was reaping rich dividends for both clients and providers. Production capacity, agent to supervisor ratio, error rates and cost efficiencies were the key ingredients  of success.

But, that was then. 

Enter intelligent automation.

In an increasingly digital world with smart algorithms, bots and AI tools have made their way into BPM organisations. Digital resources now compete with human resources to complete incoming tasks. Orchestration tools intelligently analyse the nature of work and available capacity, before deciding to pass it on to a human or to a machine, for processing. Work packets gets passed between machines and humans seamlessly. 

Voice recognition software monitors quality of interaction between humans and the external world and has the ability to escalate matters and intervene in real time, if the conversation appears to be going south. Long gone are the days where supervisors would walk the aisles and troubleshoot.

Production Capacity or Thinking Capacity?

Traditional mindsets are wilting. Outsourced BPM operations today are less about cost centre management and more about revenue generation. Production capacity is being replaced by thinking capacity, as a measure of scale. Rule based work is making way for judgement based work. The epicentre is fast moving away from efficiency of operations to effectiveness of outcome and is heading in the direction of creating better experience for the end clients. The call centre, that since long ago had morphed into a multi-channel contact centre, is now intelligent enough to toggle the interaction with live customers across multiple channels, and increasingly requires less and less human intervention. 

Sympathy for humans and empathy from machines

As AI makes deeper inroads in our quest for intelligent automation, the final frontier seems to be empathy. If one were to ask Siri if Alexa was better, one of the answers offered is “I am I’ve had more time to perfect my bad jokes”. Depending on its mood, it (or shall we say, she?)could even respond with “I offer no resistance to helpful assistants.” 

While automation is depleting the amount of voice related work, there seems to be a surge in work pertaining to training of digital assistants. Language training of digital assistants is the new voice work for call centre agents ! According to Nasscom, out of the 1.4 million employees in the Indian BPM industry, nearly 800k might have to be retrained to partake in the digital revolution.

Humans have to evolve as machines join the workforce.

The digital divide

According to Innosight, the average age of companies, in the S&P 500 list, has reduced from around 35 years in 1980 to around 24 years in 2016 and is expected to go down to around 12 years by 2027. Nearly 50% of the companies on that list today, are expected to be replaced in the next decade. The age of creative destruction is upon us.

The churn at the top will also manifest itself in the BPM world. Outsourcing service providers, that largely used technology for workflow management, would have to inject strong elements of digital interaction, robotics, platforms and analytics, into their offerings. Companies proficient in lift and shift models of yore, would have to develop institutional muscle around consulting and process re-engineering, to enable digital transactions. Business models are changing to foster deeper relationships with end clients - value sharing models, co-creations of IPs and development of solutions that enable everything as a service.

As business models anchored around network effect and demand side economies of scale become more pervasive, laggards risk digital exclusion, and likely fatality.

The twain shall finally meet

Today, the analog way of doing business is undergoing a sea change. In the manufacturing world, concepts like rapid prototyping are being replaced by digital twins. The double entry system of book keeping in the plain vanilla world of accounting is being replaced by blockchain technologies, which is essentially a system of technology enabled, triple entry book keeping. The inefficiencies in the traditional marketing methodologies are making way for Just in Time marketing, that embrace digital channels and respond in real time. The list goes on.

Indian IT and BPM industry have co-existed, for decades, without the promise of convergence really playing out. However, in a fast digitalizing world, technology platform driven outsourcing services are becoming the norm and industry and technology consulting skills are becoming critical differentiators. While analytical superiority and agility have become the difference between success and failure for the end clients. In such a world, the traditional barriers to convergence, between IT and BPM, would crumble at an increasing pace. In the world of digital twins, IT and BPM services would form the digital cousins, which will join forces to deliver the true value that new age clients expect

Author: Amit Singh, Co-head, Enterprise Technology and Services Practice, Investment Banking, Avendus Capital

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