How Business Process Automation Compares With Outsourcing
Business Process Automation (BPA) and outsourcing share many similarities. Both are intended to take difficult, redundant and time-consuming tasks and use a lower cost alternative to execute them. Organizations that use BPA or outsourcing enjoy the benefits of reduced costs and improved efficiency. The difference between the two is that BPA relies on technology and artificial intelligence and outsourcing relies on people.
Let us explore business process automation and outsourcing to better understand how the two business practices relate to each other.
Business Process Automation vs. Outsourcing
Business process automation especially Robotic Process Automation is a type of artificial intelligence technology that turns repetitive tasks into hands-free operations. It depends on software robots to complete jobs similar to how a human operates, except more quickly and effectively, saving businesses time and money. Outsourcing, on the other hand, is a practice that is used by businesses to reduce costs and improve efficiency usually exploiting labor arbitrage opportunities by moving lower order functions within a business to a location with lower wages. All sorts of jobs are outsourced, including manufacturing, customer service and computer programming.
Businesses and corporations use BPA and outsourcing to help their operations run systematically. Without these services, businesses would have to handle the tasks using in-house employees. This would cut into the time needed to address higher order customer facing or revenue generating functions of the business.
Both process automation and people based outsourcing yield the following benefits
- Reduced costs. It costs less to use technology or hire an individual overseas than it does to employ a full-time candidate who requires pay, benefits, taxes and real estate.
- Freed up time. Rather than spending time training employees or asking them to complete tasks outside their job description, mundane tasks are handled by robots or overseas individuals. This frees up time so that employees can focus on higher order, customer-facing, revenue-generating tasks.
- Improved efficiency. By focusing on the core competencies of your business, efficiency, productivity and competitiveness are all enhanced. Production is streamlined and shortened.
Differences Between BPA (or Robotic Process Automation) and Outsourcing
Though RPA and outsourcing share many similarities, outsourcing has limitations that RPA does not. The biggest challenges are a lack of security, a loss of internal knowledge capital of a business processes and slow response times. Offshore outsourcing also results in productivity losses due to time zone differences. With the shortcomings of outsourcing, more organizations are switching over to business process automation utilizing Robotic Process Automation especially in conjunction with Artificial Intelligence and Machine Learning.
RPA excels in the areas that outsourcing does not. It allows businesses to maintain control over their processes, manage a higher level of security and improve speed and efficiency. Some roles, like customer service that require a more hands-on approach and require human interactions may be a better fit for outsourced work. However, with the time and cost benefits achieved with Process Automation using RPA (including ML and AI), as well as lower implementation costs, faster implementation timelines and greater ROI with software Robots, we are seeing RPA gain a stronger foothold in the enterprise as well as the SMB market.