We would be remiss if we did not note that this weeks Economist has a special series of articles on outsourcing and offshoring. The general theme is that after rush to send a variety work to cheaper locations, many firms are reconsidering and bringing some work back home. The rationales range from underestimating the impact of long lead times and the difficulty of coordination across continents to a belief that doing work in-house allows for greater flexibility. On the whole, the report is well worth reading. One article, however, stood out for me. It looks at the increasing use of automation in service centers (Rise of the software machines, Jan 19).
IPsoft is a young company started by Chetan Dube, a former mathematics professor at New York University. He reckons that artificial intelligence can take over most of the routine information-technology and business-process tasks currently performed by workers in offshore locations. “The last decade was about replacing labour with cheaper labour,” says Mr Dube. “The coming decade will be about replacing cheaper labour with autonomics.”
IPsoft’s Eliza, a “virtual service-desk employee” that learns on the job and can reply to e-mail, answer phone calls and hold conversations, is being tested by several multinationals. At one American media giant she is answering 62,000 calls a month from the firm’s information-technology staff. She is able to solve two out of three of the problems without human help. At IPsoft’s media-industry customer Eliza has replaced India’s Tata Consulting Services. …
A small British start-up, Blue Prism, has developed a software-development toolkit that allows people within a company to create their own software “robots” to automate business processes. … An onshore information-technology worker may cost $80,000 a year and an offshore one perhaps $30,000, wrote James Slaby, HfS’s research director, in a recent report. But Blue Prism’s robots cost at most $15,000 a year. They can perform only routine, rules-driven tasks, but there are plenty of those about.
So this is going beyond a simple interactive voice response unit that you might use when calling your bank to transfer funds or check balances. Those are all transactions that require no real judgement. There really is no nuance in whether I have enough money in my savings account to cover what I want to put in my checking account. For these robots to really be useful they must be doing something that requires a little more judgement. That is, the decision might be ultimately be rules based but there must be some latitude in how the rules apply or how they are interpreted.
There is then the question of who these are able to serve. Using one of these robots for an internal service as in the case of IPSoft makes a lot of sense. One can train employees about the capabilities and limits of the system. The firm can then cheaply expand service capacity while employees can get their basic questions answered. That is harder to do with customers. They may not have the patience for training and may be inclined to quickly opt out of the system. On the other hand, if these robots really are robust enough to serve customers, there is a real opportunity with this technology.