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Washington (AFP) – Are robots coming for your job?

This is an interesting article I noticed on the web – there is a lot of discussion in the IT world of the effects of automation particularly on clerical work processes. This is nothing new. This debate has been going on for years but before we were wondering why despite all the investment in automation was clerical work productivity fairly static. It may be that this is an idea whose time has come at last.

Although technology has long affected the labor force, recent advances in artificial intelligence and robotics are heightening concerns about automation replacing a growing number of occupations, including highly skilled or “knowledge-based” jobs. Just a few examples: self-driving technology may eliminate the need for taxi, Uber and truck drivers, algorithms are playing a growing role in journalism, robots are informing consumers as mall greeters, and medicine is adapting robotic surgery and artificial intelligence to detect cancer and heart conditions.

Of 700 occupations in the United States, 47 percent are at “high risk” from automation, an Oxford University study concluded in 2013 and a McKinsey study released this year offered a similar view, saying “about half” of activities in the world’s workforce “could potentially be automated by adapting currently demonstrated technologies.” Still, McKinsey researchers offered a caveat, saying that only around five percent of jobs can be “fully automated.”

Another report, by PwC this month, concluded that around a third of jobs in the United States, Germany and Britain could be eliminated by automation by the early 2030s, with the losses concentrated in transportation and storage, manufacturing, and wholesale and retail trade. But experts warn that such studies may fail to grasp the full extent of the risks to the working population. “The studies are underestimating the impact of technology — some 80 to 90 percent of jobs will be eliminated in the next 10 to 15 years,” said Vivek Wadhwa, a tech entrepreneur and faculty member at Carnegie Mellon University in Silicon Valley.

Dire consequences

“Artificial intelligence is moving a lot faster than anyone had expected,” said Wadhwa, who is co-author of a forthcoming book on the topic. “Alexa (Amazon’s home hub) and Google Home are getting amazingly intelligent very fast. Microsoft and Google have demonstrated that AI can understand human speech better than humans can.” Wadhwa calls the driverless car a “metaphor” for the future of labor and a sign of a major shift.

Warnings of dire social consequences from automation have also come from the likes of the physicist Stephen Hawking and tech entrepreneur Elon Musk, among others. Hebrew University of Jerusalem historian Yuval Harari writes in his 2017 book, “Homo Deus: A Brief History of Tomorrow” that technology will lead to “superfluous people” as “intelligent non-conscious algorithms” improve. “As algorithms push humans out of the job market,” he writes, “wealth and power might become concentrated in the hands of the tiny elite that owns the all-powerful algorithms, creating unprecedented social and political inequality.” Harari points to the Oxford study, estimating a high probability of job loss to automation — cashiers (97 percent), paralegals (94 percent), bakers (89 percent) and bartenders (77 percent), for example.

Others disagree.

Boston University economist and researcher James Bessen dismisses alarmist predictions, contending that advances in technology generally lead to more jobs, even if the nature of work changes. His research found that the proliferation of ATM machines did not decrease bank tellers’ employment in recent decades (looks like the author has not been to a bank recently! REM), and that automation of textile mills in the 19th century led to an increase in weaving jobs because it created more demand.

“Robots can replace humans in certain tasks but don’t entirely replace humans,” he said. But he acknowledged that automation “is destroying a lot of low-skill, low wage jobs, and the new jobs being created need higher skills.” Former president Barack Obama’s council of economic advisors also warned last year that most jobs paying less than $20 an hour “would come under pressure from automation.”

‘Tax the robot’

Although the net impact of robots remains unclear, tech leaders and others are already debating how to deal with the potential job displacement. Microsoft founder Bill Gates said last month that he supports a “robot tax,” an idea floated in Europe, including by a socialist presidential candidate in France. But Bessen, a former fellow at Harvard’s Berkman Center, said taxing robots could be counterproductive.

“You don’t want to be taxing the machines because they enable people to earn higher wages,” he said. “If you tax machines, you will slow the beneficial side of the process.”

Read original article at: Robots and effects on Jobs

US addiction to outsourcing might cost it the Robot revolution

The US’s addiction to off-shoring might cost it a seat in the next revolution of manufacturing.

As robots are rushing to take over human jobs, the US is finding that its own manufacturing base is not taking advantage – mostly because it off-shored its manufacturing ages ago.

Roboticist Matt Rendall said that robotic job displacement will reshape global manufacturing and since America, which has outsourced much of its manufacturing and lacks serious investment in industrial robotics, it will be relegated to a third world country.

In the future, it will be the robot makers which will have the key role in determining how automation expands across the globe.

As the CEO of manufacturing robotics company Otto Motors, Rendall is building fleets of warehouse bots that could eventually replace the many fulfilment workers who are hired by companies like Amazon.  He said that the robots were coming.

“After the Great Recession, there was a fundamental change in people’s interest in automation. People started feeling the pain of high-cost labour and there’s an appetite for automation that we haven’t seen before.”

Rendall believes automation will, in the long-term, improve society and help humans live better lives, but there are changes afoot in the global manufacturing scene that could leave American industries in the dust.

“China is tracking to be the No. 1 user in robots used in industrial manufacturing and the country is driving “an overwhelming amount” of growth.

But China is responding to automation by embracing it instead of shying away from it. This is in stark contrast to industrial advances of the previous century, like Ford’s assembly line, that helped transform American industries into the most powerful on the planet.

The risk is of course is that if the US does not do something fast then that crown will leave it being a nuclear powered also ran on the world stage, dreaming of days when it used to be great.

 

Article source: http://www.techeye.net/uncategorized/us-addiction-to-outsourcing-might-cost-it-the-robot-revolution

Robots threaten $4 billion worth of upcoming Australian outsourcing deals

by

Paul Smith

Australian outsourcing deals worth up to $4 billion are ripe for disruption in the next three years from a growing move towards robotic process automation and cloud-based options, a leading global consultancy has said.

David Snell the local boss of sourcing advisory firm Alsbridge, which has recently set up operations in Australia and New Zealand, said increasingly intelligent automation software would render thousands of workers on traditional outsourcing deals obsolete in coming years, and advised businesses to reconsider their plans, rather than simply re-signing on the dotted line to renew deals.

Mr Snell said some of the biggest outsourcing agreements coming up for renewal over the next 12 to 18 months include deals at Elders, the Australian Taxation Office, Perpetual, the Department of Defence, Australia and New Zealand Banking Group and Qantas.

He said more than 120 ANZ enterprises have large outsourcing contracts, worth approximately $2billion, due to expire during the next three years, with an additional 500 smaller contracts taking the pool to around $4 billion.

Article source: http://www.afr.com/technology/enterprise-it/robots-threaten-4-billion-worth-of-upcoming-australian-outsourcing-deals-20161111-gsn89i

How to integrate disruptive technologies into IT outsourcing …

In the era of digital disruption, the ability to successfully implement new technologies such as mobility, big data and analytics systems, cloud computing options, or robotics for competitive advantage is critical. In some cases, going to an existing IT service provider may not be the best way to do so. However, in many cases, there are advantages to working with incumbent supplier. Doing so may enable IT outsourcing customers to leverage existing contractual commitments and terms to accelerate the contracting process.

Business and IT leaders may want a trusted partner to manage their entire technology environment. By expanding the scope of an existing deal, the customer can retain integrated performance standards and service levels for the entire environment and maintain streamlined governance processes. It also may be a way to minimize any transition or termination costs.

[ Related: The secret of digital disruption in one tweet ]

The challenges of integrating disruptive tech into an existing contract

However, the integration of disruptive technologies into an existing sourcing arrangement can present a number of new challenges, says Linda Rhodes, partner in the Washington, D.C. office of law firm Mayer Brown. “The contractual rights and protections available to the client in important areas — such as control rights, approval rights, audit rights, intellectual property ownership rights and post-termination rights—are likely to be different in many respects,” Rhodes says.

Process robotics: The economics of digital labor shakes up …

The economics of process robotics promises to shake up the outsourcing sector, creating a new dialog among vendors, business executives and CIOs.Process robotics, also known as robotic process automation (RPA), aims to take over the manual effort involved in carrying out a range of IT and business process activities. With this technology, software robots can be configured to handle tasks traditionally assigned to humans. Repetitive, rules-based business processes, such as payroll processing, fall into this category. On the IT side, RPA can automate help desk requests, such as password resets. RPA’s envisioned reach extends beyond high-volume, transactional activities to judgment-based processes that have previously demanded human discernment. So-called cognitive RPA systems, built upon artificial intelligence, seek to take on the latter process type.

RPA’s potential to replace human labor has put the technology on a collision course with offshore outsourcing, a practice based on labor arbitrage. While the actual labor savings stemming from RPA depends on the nature of a given process, the technology is thought to deliver greater cost reduction than outsourcing.

“For the majority of processes, especially transactional ITO/BPO [IT outsourcing/business process outsourcing] processes, it is significantly less expensive,” said Dave Kuder, principal, business model transformation at Deloitte Consulting LLP.

Marc Mancher, principal, federal business model transformation at Deloitte Consulting, said offshoring outsourcing, at first glance, offers cost savings of 50% to 60% or more. But costs must be factored into the equation. Infrastructure expenses such as networking and the cost of the retained IT organization (the group that manages the outsourcing vendor) dial back the labor arbitrage savings by 20% to 30%.

RPA software, however, presents “a little different equation,” he noted.

Mancher provided the following example: An outsourcing vendor can handle a transaction-based process with each employee on the task costing $50,000, including benefits, etc. An RPA deployment dedicated to that process might cost $50,000. If the software robot can do the work of three to eight people, the savings would range from 60% to 80% after costs are accounted for. Those costs include RPA software licensing fees and break/fix maintenance, which could, depending on the circumstances of a given process, degrade the savings by 10% to 15%, Mancher noted.

That said, RPA still comes out ahead.

Sarah Burnett

“There are ongoing costs, but the arbitrage is greater than offshoring,” Mancher said. “And the steady-state costs are less than the retained organization.”

Sarah Burnett, vice president of research at Everest Group, agreed that RPA can be less expensive than outsourcing.

“We have estimates that show, in specific scenarios, if you deploy RPA in finance and accounting, you can save 60% to 67% on onshore costs and 20% on offshore costs,” she explained.

A new outsourcing conversation

Despite the savings it offers, Burnett contended that RPA is not a direct replacement for offshoring.

“Often it is used to automate processes partially and outsourcers can use it in offshore locations to reduce the cost of service delivery further,” she said.

But while offshore outsourcers may not end up a dying breed, the arrival of RPA is changing the outsourcing discussions between vendors and customers.

“The automation paradigm is really changing the outsourcing equation,” Burnett said. “With automation, organizations can deliver services in-house cheaper, and so change the mix of in-house and outsourced services.”

In addition, customers can demand more variable pricing — pricing based on transaction volume-based models, for instance — as opposed to the input-based pricing characteristic of outsourcing deals.

With input-based pricing, customers are charged on the basis of the number of full-time equivalent (FTE) units the outsourcing vendor provides, noted Amardeep Modi, senior analyst at Everest Group.

Amardeep Modi

Businesses, in general, are moving away from labor-only contracts and toward transaction-based pricing and pricing models built around business benefits, noted Cathy Tornbohm, a research vice president at Gartner. Those arrangements are more open to automation. At present, about 60% to 70% of back-office finance and accounting BPO contracts are labor-only contracts, while payroll BPO contracts are already typically conducted on a per-transaction basis, she added.

Labor cost reduction has been the traditional driver behind finance and accounting BPO deals, while businesses have tended to view payroll BPO as purchasing a business service as opposed to buying access to a particular number of FTEs, according to industry executives.

Meanwhile, contracts in sectors such as banking, insurance and healthcare offer up a mix of pricing models, Tornbohm noted.

Cathy Tornbohm

Mancher, who doesn’t see offshore outsourcing vanishing entirely, agreed that economics of RPA will open new conversations between outsourcing providers and their customers. Political pressure, as well as cost savings, will contribute to the discussion. He said the business case becomes leaner for offshoring if there is growing political pressure to keep work in the U.S.

“The political pressure may sway the business case to bringing the work onshore, because the financial benefit [of offshoring] to the company isn’t there,” he said.

Outsourcing vendors to feel RPA impact

As pricing philosophies shift and customers become more aware of automation’s benefits, outsourcing vendors will need to adopt RPA.

“What we are seeing is that most of the vendors are internally implementing process robotics or RPA software products to take cost out of their environments to be more competitive,” Mancher said.

Xchanging, a CSC company, is one vendor that has adopted RPA. The business processing, technology and procurement services provider has found that a software robot that replaces at least three FTEs in an offshore operation, or one FTE onshore, to be “a far more economical proposition” than assigning a highly skilled and experienced worker to repetitive or mundane tasks, said Rajesh Nair, group head of Xchanging’s Robotic Process Automation Practice.

Rajesh Nair

“In Xchanging’s case, RPA has been proven and continues to prove beneficial for both onshore and offshore operations,” he said.

Nair said Xchanging’s return on investment (ROI) has been upward of 200% in the first year and continues along that path, with more RPA deployments being delivered this year and expected in the future.

“Service providers have to invest and modernize their offerings and be prepared to offer new pricing models,” Burnett said.

Some outsourcing firms, however, may feel they have cause to avoid RPA. They fear that RPA, because it is less expensive than human labor, will compel them to bill less for their services.

“We have already heard a lot about automation leading to ITO/BPO service providers’ revenue cannibalization,” Burnett said.

But Nair suggested vendors that wait too long on RPA will end up in far worse shape.

“ITO/BPO firms who are holding back right now because they see RPA as a threat to their existing revenues would find it difficult to win more clients in future — even if they build their RPA capability overtime,” Nair said.

That’s because the BPO RPA market will have matured in the next 18 months. At that point, “the big BPO players, with their might of existing clientele and experience, would’ve already swept away most of the big-ticket opportunities that exist.”

A business-led initiative

While vendors may exhibit some RPA hesitancy, the corporate IT department may also balk at the emerging technology.

“IT, as a profession, has not been an early adopter of this,” Mancher said of process robotics. “It is not from the CIO; it has been business-driven.”

The business side has brought process robotics to the attention of IT, but IT has been skeptical of implementing the technology, he said. But RPA could help IT departments integrate systems that they would otherwise not have the time or resources to accommodate. For example, if one company merges with another, there will be a need to move data between different systems. Some systems could take years to integrate, but, with RPA, an organization can take on the work much faster.

Indeed, RPA makes integration more economically feasible than previous methods, industry executives said.

Tornbohm said that’s because RPA uses a system’s existing user interface pathways, so the approach “doesn’t always require complex integration, complex IT projects or major business change.”

RPA’s integration dimension brings up another point: The technology is not all about labor cost savings.

Deloitte Consulting has built nine process robotics prototypes for five U.S. government agencies. Mancher said the conversation with federal agencies doesn’t revolve around labor arbitrage.

“There is no desire to impact the employment of one federal worker,” he said.

The key drivers in the government sector boil down to unfunded mandates and human resource constraints. The Administration or Congress may require agencies to pursue new initiatives, but those agencies must do so with existing resources — or perhaps fewer resources in light of attrition due to retirements, Mancher said. Process robotics can help agencies handle unfunded mandates and seasonal spikes in demand.

In addition, personnel who were diverted from the core agency mission to take on a back-office role in support of unfunded mandate can be returned to the front lines and perform critical government services.

“It’s a different value proposition,” Mancher said.

 

Shawn Wiora

Shawn Wiora, CIO of Creative Solutions in Healthcare Inc., a company that operates skilled nursing and assisted living facilities, said he sees RPA playing a role in such fields as healthcare claims processing, which he described as a highly manual activity, and cybersecurity.

As for the latter, Wiora said a business’ cybersecurity organization tries to keep tabs on the alerts and alarms generated by multiple IT security systems, few of which talk to one another. Process robotics, however, has the potential to automate the task of screening a multitude of alerts to zero in on the ones that security personnel need to spend time pursuing. Wiora pointed to the example of Maxxsure, a company that helps organizations score the risks associated with various cyber threats. Wiora is on the Maxxsure board of directors.

The growing number, increasing sophistication and mounting cost of cyber attacks compel companies to push more resources at security. Wiora noted that the IT security department has become one of the fastest-growing, and highest-payroll, areas of a corporation.

“Human intervention is not sustainable,” he said.

Article source: http://searchcio.techtarget.com/feature/Process-robotics-The-economics-of-digital-labor-shakes-up-outsourcing