A financial incentive is a key driver for new business initiatives and investments. Future of Work technologies have a lot of potential to reduce costs, but they also have many additional benefits, called non-cashable benefits. Despite their name, it is possible to drive additional revenues through these to maximize the gross profit.
RPA vs Outsourcing
Today, Robotic Processing Automation (RPA) is one of the most mature Future of Work technologies. It is great for managing rules-based, data-heavy and repetitive tasks and integrates with existing systems – even legacy applications, without the need for a drastic overhaul. A conservative industry estimate is that an RPA robot costs one-third of an offshore employee and one-ninth of an in-house employee. RPA can also process many routine tasks faster and more accurately than most humans, allowing for significant reductions in overhead/FTE costs.
We have found that the typical ROI for RPA is between 300-800% over 5 years, with an average payback point achieved in under 18 months. The savings are not always back-loaded - in some cases of drastic process optimization, we have seen returns within as little as four months.
While BPO has helped many businesses achieve savings in the past decades, there are several underlying flaws with the offshoring model. For instance, it moves work to cheaper locations across the globe, resulting in work that is disconnected from the in-house processes (as discussed in the previous blog). Aside from this potential inefficiency, there is a high rate of attrition (offshoring roles traditionally have high growth and low salary), as the offshore labor market has become saturated over the years. So, while it may have started off as a cheap solution for most businesses, it tends to not remain economical due to increasing operational tensions, competitive labor markets and high inflation rates.
Who is Losing Out?
When there are larger costs for your resourcing solutions, it is the customer and employees who ultimately take the biggest loss. While labor arbitrage through offshoring may generate net savings, customers tend to suffer from lower-quality or less responsive services. This is an inherent trade-off to moving work hundreds of miles away. Additionally, employees tend to encounter issues with miscommunication, which can lower the quality of employment satisfaction. This is where a comparison between existing outsourcing models and RPA comes into the spotlight. Labor arbitrage through RPA tends to generate even larger savings, but without the bulk of the downsides listed above. In fact, RPA is increasingly recognized for the non-cashable opportunities it provides to a business.
Cashing in on the Non-Cashable Benefits
We like to represent the benefits of RPA under Mary Lacity’s “Triple Win” model. Automating processes that consist of routine, manual tasks can benefit not only the company, but also the employees and customers. The following are some examples of the common benefits we’ve seen among our clients:
- The economics of RPA means that you are guaranteed to get hours back to your business. Time spent doing repetitive tasks can now be shaved off or dedicated to more valuable work.
- Processes done by robots are always more accurate and faster than those done by humans. This provides a competitive advantage and improved output quantity and quality.
- RPA takes the robot out of the human, so employees can look forward to more enjoyable and purposeful work
- Employees learn new skills such as administrating robot workforces or working alongside assisted automation
- Optimized workflows translate to faster turnaround times and improved service quality for customers. We often see improved customer satisfaction levels from RPA
- Customers also enjoy service consistency and round-the-clock availability
High cash benefits are possible not only through the large ROI of Future of Work technologies like RPA, but also indirectly through non-cashable benefits. The benefits far outweigh those seen in traditional outsourcing models and provide promising solutions for both the business and the customer. These non-cashable benefits may be more difficult to quantify, but can ultimately make a significant business impact.
This is part 7 of a 13-part blog series by leading experts at Symphony Ventures. We share the most important business considerations in the Future of Work and explain how to best prepare for digital transformation.
Be sure to read the previous blog: Killing the Front-Office, Middle-Office, Back-Office Model