Client News

The ‘Bots Are Coming: Outsourcing summit tackles impact of automation on local industry

(Manila, Philippines) – Will robots replace people in IT just as they have in manufacturing? Since late last year, industry observers have marked the entry of “robots”—software that automates IT management processes—that cuts the time needed to perform repetitive tasks and eliminates the risk of human error. While analysts’ opinions remain divided on the effect of robotics automation on the demand for outsourced IT work, the local outsourcing industry maintains that demand will continue to be robust as local players pursue bigger market shares.

In October 2012, global business and IT services industry analyst HfS Research, examined the technology offered by US company Blue Prism, one of the first to use robotics automation. They found that robotics automation can help enterprises reduce costs at a greater rate than labor arbitrage through outsourcing and concluded that increased efficiency in managing low-level IT processes and decreased risk of human error outweighed the advantages of outsourcing.

Technology firms such as IBM—the world’s largest computer services company—sold its call center unit in early September to Synnex Corporation. Industry watchers are predicting that IBM will continue to divest itself of its software services and back-office businesses—areas which require increased hiring to increase revenues. Instead, the company is expected to focus expansion on its software business where, in 2012, revenues grew from 27% to 45%.

Is this a sign that the local outsourcing industry should be prepared to be edged out by robots?

“The local industry is not at all threatened,” said Jose Mari Mercado, president and CEO, Information Technology and Business Process Association of the Philippines (IBPAP). “Historically, technology has always tried to catch up with human activities, especially in enterprise IT. While technology has already automated certain processes, the amount of work that requires human intervention remains huge.”

The HfS study also pointed out that not all IT processes are suited for automation. Most benefits can be derived from automating back-office processes that are rules-driven and which do not require human judgment, processes that are short-lived and seasonal, or low-level IT processes that cannot be or are too risky to be sent offshore for political, security, business or regulatory reasons. Many analysts predict that robotic automation will be confined to these tasks for a long time and will not likely take over enterprise IT.

“The pace of uptake is pretty fast, but it’s the classic large market adjustment issue, and the associated potential risk and buy-in associated with any change needs to reach a critical mass,” agreed Ovum Australia principal analyst Jens Butler in a recent interview with TheAge.com.au.

For CIOs, reaching a critical mass means addressing bigger issues such as standardization of IT infrastructure as a prerequisite to automation. Deciding what components of the infrastructure have to be standardized—and how to standardize them—can be a time-consuming and costly process. And enterprises have a general aversion to additional IT investments.

“As a strategy, the local industry understands that maintaining our competitive edge requires moving up the value chain. Our local players have started tooling up toward higher value outsourced work instead of being stuck doing low-level IT processes. It’s a long process, but it will definitely cushion the impact of new entrants—be they robots or other outsourcing players,” added Mercado.

“We are also very interested in seeing how automation may be setting the direction of the outsourcing industry. The upcoming International Outsourcing Summit (IOS) 2013, to be held from October 6 to 8, 2012, will set up a more intensive discussion on industry-readiness for autonomics and its possible implications on local outsourcing businesses,” said Gillian Joyce Virata, IBPAP senior executive director.

The session, which is only one of several timely and interesting discussions, will be presented by Joey Gurango, founder and chairman of Gurango Software Corporation and president of the Philippine Software Industry Association, and moderated by Alfredo Ayala, Managing Director and CEO of LiveIT Solutions and Chairman Emeritus of IBPAP. Panelists include: Prabhakar Bisen, Country Head at Cognizant Technology Solutions, Phils., Inc. and Global Delivery Lead, Insurance Business Process Services; Larry Bivins, CEO at Synergy; Abid Neemuchwala, Global Head for Business Processing Services at Tata Consultancy; and Madhukar Tata, Delivery Lead – Business Transformation Services, Infosys BPO.

For more information on the 5th International Outsourcing Summit, you may visit www.internationaloutsourcingsummit.com.

About the International Outsourcing Summit
The annual International Outsourcing Summit (IOS), organized by the Information Technology and Business Process Association of the Philippines (IBPAP), is the premier gathering of experts, clients, and companies from the information technology and business process management (IT-BPM) industry aiming to address global issues and trends in the industry. The fifth annual International Outsourcing Summit, under the theme “Unlocking Possibilities, Creating New Vistas.” takes place October 6–8, 2013 at the Makati Shangri-La in Metro Manila, Philippines.

For more information on the Summit, visit www.internationaloutsourcingsummit.com.

About the Information Technology and Business Process Association of the Philippines (IBPAP)
The Information Technology and Business Process Association of the Philippines (IBPAP) is the enabling association for the information technology and business process management (IT-BPM) industry in the Philippines. IBPAP serves as the one-stop information and advocacy gateway for the industry. With approximately 300 industry and support-industry members, including five associations—the Animation Council of the Philippines, Inc., Contact Center Association of the Philippines, Game Developers Association of the Philippines, Healthcare Information Management Outsourcing Association of the Philippines, and Philippine Software Industry Association—IBPAP plays a pivotal role in sustaining rapid growth of the IT-BPM industry by working to ensure an enduring supply of high-quality labor, supporting service innovation, and providing country visibility.

IBPAP assists investors in setting up operations easily and quickly in the Philippines. Relevant research, introductions to key government and industry officials, and a series of briefings at each step of the investment process ensure a seamless development process. Ongoing support is provided through a wide variety of initiatives, including programs for HR development, business development, and knowledge sharing and networking opportunities.