Robotic Automation Emerges as a Threat to Traditional Low-Cost Outsourcing

Why outsource when you can automate? For most organizations, the answer is IT bureaucracy. Budget bottlenecks and IT’s ability to convolute any process improvement with massive waterfall technology implementations, even when the need is immediate, make automation a challenge. Yet automation looms as the right solution for the majority of rules-driven processes that are being outsourced today.

HfS Research has spent some time examining a new technology called robotic automation, pioneered by UK-based vendor Blue Prism, that enables non-engineers to automate certain business processes quickly and cheaply. The technology appears best suited for processes that are highly rules driven, and the requirement for which is too tactical or short-lived to justify development by IT organizations that favor service-oriented architecture (SOA) and tools like business process management (BPM) suites. Beyond breaking through the IT development bottleneck, the use of software robots to handle routine business processes has another attraction: it allows enterprises to reduce their reliance on offshore outsourcing. The economics are eye-popping: while an onshore FTE costing $80K can be replaced by an offshore FTE for $30K, a robot developed with the Blue Prism toolkit can perform the same function for $15K or less – without the drawbacks of managing and training offshore labor.

This paper examines Blue Prism’s robotic automation technology (the first entrant we’ve identified in what we expect will eventually become a crowded vendor market), places it in the context of traditional IT-driven development process and complementary use of outsourcing, and draws on interviews with early adopters to illustrate its benefits. We examine the compelling business cases that have driven the adoption of robotic automation so far, some limitations on its use, and the challenges of implementing it in the face of internal skepticism and resistance. We conclude with some thoughts on its long-term ramifications, as we believe that robotic automation has the potential to be a highly disruptive and transformative technology for both buyers and the outsourcing industry as a whole.