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Published On: May 14th, 2021|Comments Off on Right-shoring vs. Offshoring, and thinking about cost|Tags: |3.7 min read|748 words|Views: 2259|

What is the difference between Right-shoring and Offshoring?

In April 2021, Conectys VP of HR and Communications Christina Mihai appeared on the Talkpush Recruitment Hackers podcast with an episode entitled “How Conectys kept the office fun during the lockdown.” We did, and we’re proud of that — see also our post on cultivating joy in the global workplace — but Christina made a bigger point about where Business Process Outsourcing (BPO) is headed during this podcast appearance. In talking about “right-shoring,” she noted:

“In the last few years, clients have been shopping for right-shoring. This is not offshoring like it was like 20 years ago, but right-shoring to strike the balance between the lowest cost. In a BPO, typically 80% of the cost is human cost — or has been human cost, until lately. Now, technology is kicking in and that’s changing a bit, but yeah. So you have to strike the balance between the lowest cost you can find, language talent, and the right quality.

We know that we need to service the needs of the end-users. And that means that some people want really, really high quality — not just, you know, low cost.

So if you are the BPO partner of high-end luxury brands it doesn’t matter so much if you cut the cost by 10-20%, you have to maintain the quality so that the end-user of our client company feels that they’re getting the value of customer service.”

We love Christina at Conectys, and this is an amazing point she made on this podcast. For years — for generations, really — BPO was a cost play for many companies. One of the core terms around BPO was “cost arbitrage,” in fact, which allowed BPO to grow as a concept globally.

Over the last five-10 years, though, things have changed dramatically. Buyers want more from their vendors. Technology is everywhere, and sometimes it’s hard to vet. Is this new shiny thing good or fast or will it work properly for my end users? While a buyer needs to be aware of the cost, cost-only evaluations can be a race to the bottom. Where’s the quality in the end product and consultation, services, proprietary elements, reach, scale, involvement of tech, etc.?

It’s a much bigger picture in BPO these days. And into that bigger picture in the last five years, you’ve increasingly seen Robotic Process Automation (RPA) enter, and companies that develop those solutions get investor windfalls. It’s become a big chunk of business globally, but definitely within BPO.

So what exactly is RPA, and how can you think about it around cost? 

Defining RPA – what is it?

RPA is the technology that allows anyone today to configure computer software, or a “robot” to emulate and integrate the actions of a human interacting within digital systems to execute a business process, such as elements of customer experience. RPA robots utilize the user interface to capture data and manipulate applications just like humans do. They interpret, trigger responses, and communicate with other systems in order to perform a vast variety of repetitive tasks. Only substantially better: an RPA software robot never sleeps and makes zero mistakes.

As a result of said definition, these are the processes that RPA typically hands best:

  • Highly manual and repetitive processes: Think about high-transaction volume or processes that occur daily. Accounts receivable and invoicing fall here, often.
  • Prone to human error: What are some of your processes most prone to human error, that then causes additional work for others? Some HR functionality typically applies here.
  • Rule-based processes: Think of processes that follow a specific set of “if-then” type rules, and can easily be turned into a template. When decision-making is based on a series of standardized rules, that process makes sense as an automation contender.
  • Low exception rate: These would be processes with a low number of various scenarios. Exceptions create complexity, and a project can often be completed by partially excluding exceptions with low volumes.
  • Standard readable electronic input type: Excel, Word, XML, ERP, CRM, readable PDFs. There is now RPA work being done with unreadable types, including OCR — but that does require an assessment of what’s necessary to make it readable.
  • High volumes: high-transaction volume and high frequency.
  • Mature and stable processes: Think of well-documented processes with known operational costs. Again, billing often falls into this bucket. Vendor selection RFP could as well.

Next up (next week): How to think about RPA and cost.

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