Outsourcing has really evolved since its inception. During its early stages, outsourcing served a cost-saving function, moving manufacturing jobs to lower-cost, developing nations. So, the channels between the developed world and developing economies (e.g., India, China, Mexico) opened up.
But outsourcing hasn’t been limited to assembly-line work. Now, outsourcing includes long-term, high-expertise projects like managed services (e.g., IT). Outsourcing is also more strategic than before, sometimes providing business consultancy for the host company.
Outsourcing continues to evolve every day. We’ll consider two major trends in the industry, the increasing presence of artificial intelligence (AI), and impact sourcing, the practice of strategically hiring to elevate under-resourced communities or provide social good.
As the outsourcing industry continues to grow, it’s worth noting the industry’s global economic impact. Globally, there has been increased BPO growth especially in these sectors: BFSI (banking, financial services, and insurance), healthcare, and retail. More small and medium-size enterprises (i.e., up to 250 workers) are offshoring their processes.
Depending on who you ask, the industry is worth somewhere in the range of hundreds of billions of dollars in annual revenue. In 2015, one trade association reported that the IT Services-Business Process Management (IT-BPM) industry generated US $166 billion in revenue worldwide. By 2022, they estimate, revenue is expected to increase to US $250 billion. Yet another firm published a paper in 2016 reporting, “In aggregate, the services exports market has been growing 10-15 percent per year for over a decade.”
Where are IT-BPM jobs concentrated? At present, Asian Pacific countries contribute 73% of the global BPO workforce, with India and the Philippines providing the majority of jobs. Both these countries provide not only lower cost labor, but are also well-equipped to provide high quality services. Among the reasons for India’s and the Philippines’ success in outsourcing are a strong education infrastructure, Western-compatible cultures, and English language abilities. It’s been a win-win arrangement. Both India and the Philippines have boosted their economic growth through exporting IT and BPO. Meanwhile, 61% of the demand for these outsourcing roles comes from North and South America.
Since the first wave of outsourcing, companies have realized that computers are great for “cutting down costs across a breadth of industries, simply because computers help automate and mechanize tasks that are strictly regular and rule based – like accounting for instance.” This brings us to considering outsourcing in a more technologically advanced world.
What does the next wave of outsourcing look like? As more and more technology becomes automated, artificial intelligence (AI) technologies will become more common. For instance, we can speak into an iPhone to ask Siri how today’s weather in Honolulu is, or what nearby restaurants serve gluten-free, vegan pizza.
At the time of this writing, Google Assistant has been developing AI that can call a nearby salon to book a haircut for you (using a voice call, in peppy American English, with a few “um”s thrown in to sound more realistic). The outsourcing industry will need to prepare to keep up with this complex, fast-changing technology landscape.
When you think “automation” or “AI,” do you feel slightly apprehensive or skeptical? You wouldn’t be the only one. As the founder of a virtual personal assistant company called x.ai, Dennis Mortensen, says, the Google’s assistant feature is an “impressive technical breakthrough… that obviously triggered a new wave of anxiety about dehumanization for many.” It concerned some people that the virtual assistant sounded too human.
Some critics might warn that the outsourcing world will be doomed once automation replaces human customer service agents. It’s true that certain jobs, especially the inherently repetitive ones (ex. data entry or even outbound sales calls), may eventually be supplemented or replaced by AI. However, there will also be an inevitable growth of corresponding human jobs to manage these technologies. Highly trained humans will be the ones to manage and troubleshoot AI. After all, there’s a tremendous level of human expertise needed to develop and maintain AI in the first place.
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