By Ashok Balasubramanian, Head, Services Transformation Group, Syntel, Inc.
Syntel, Inc. (NASDAQ: SYNT) is a Michigan based integrated technology and business services provider. The company has a current market capitalization of $ 4.32 billion.
The IT and outsourcing industry have continuously evolved from the day Internet connected the world, making access to information and digital services a global reality. The first wave of outsourcing was driven by cost cutting measures and fueled by labor cost arbitrage that drove businesses to execute more of the work from offshore.
That model has run its course, however, and a change in approach has been coming for years. Businesses are now looking to work smarter rather than cheaper. Offshore-based Agile development, right shoring and other outsourcing industry innovations have helped create these expectations and the resultant shift in the industry.
Now, we stand on the brink of another big change in the outsourcing landscape: the race for automation.
The new generation of Cloud providers has demonstrated that mammoth data centers can be run at nearly zero downtime with dozens of support engineers, not hundreds. In addition, digital disruption is pushing enterprises to reinvent themselves at unprecedented speed or risk being eliminated by digital startups.
It looks like the perfect storm - a tremendous need for businesses to transform themselves through technology, and proven technologies that can enable this transformation. Some analysts' estimate that automation technologies can achieve cost savings of as much as 60 percent savings and reduce headcount by around 50 percent.
So what's the problem?
If we look back at the last major paradigm shift, we observe that the industry successfully navigated the move to higher offshore ratios by cannibalizing short term revenues. This worked well for the most mature outsourcing users, but not for everyone. Similarly, there will be winners and losers in the race to automate - meaning that the most nimble will disrupt the industry yet again.
The Intelligent Automation Paradigm
Enterprises have always leveraged automation in isolated pockets - anything from simple scripts to restart applications to more complex workflows that automate BPO processes. Two key shifts are taking this to the next level:
The first is hyper-converged IT. The application, middleware, infrastructure and management layers are all becoming software defined, which in turn has achieved a higher degree of converged automation, or rather sophisticated orchestration. Second, advances in Big Data analytics and IoT have revealed a wealth of operational data. We're seeing strong advances into operational insights that help us improve the quality of services and add a new level of intelligence to automation.
This powerful combination of robust, scalable automation and insights that aid self-learning have the potential to take outsourcing into the early stages of what can eventually become AI-grade automation.
Immediate Uses of Outsourcing
Technology has always been an essential part of business transformation, and automation in outsourcing is no exception to this rule. The need of the hour is to develop new business capabilities and provide an "always-on" platform for digital consumers. Because we are talking about an outsourced solution, it goes without saying that this all must be delivered in a cost effective manner.
Let us explore three areas of automation that have strong potential in the outsourcing industry:
Leveraging older screen automation with new intelligent automation can eliminate agent-driven KPO in favor of a more robust, intelligent, automation-driven process. It is essential in this case that the automation is built on open standards and does not impose any lock-in.
This is very critical, since the automation will result in knowledge transfer from the agents to the system, and must seamlessly transition across technologies. It is also important that process automation does not take place in silos, but allows for a natural path to optimization, as opposed to "vanilla" automation.
Driving faster time-to-market for innovation is critical in today's digital economy. There is significant scope for intelligent automation across the entire DevOps value chain, including environment deployment, code build, quality assurance, governance, validation, application deployment and other areas. An intelligent platform will not only reduce time-to-market, but will also improve quality and reduce development efforts.
However, in light of complex enterprise development, quality assurance processes and environments, a DevOps automation solution must be organic and technology agnostic, so it embraces existing technologies and processes while delivering the desired transformation.
Similar to DevOps, there is significant opportunity for converged automation across application and infrastructure operations. The opportunity in this area is much larger, due to the massive scale of today's enterprises and the high business value of "always on" IT.
We have already seen private cloud driving basic automation in enterprises. There is huge potential to carry this though to all layers of application, middleware and infrastructure to provide a truly scalable and always on IT that detects and automatically remediates IT failures.
Again, it is critical that automation is not implemented in silos, but via an enterprise-wide platform. The best case is an automation platform with the ability to scale to meet multiple needs and processes, and can also learn from operational insights and deliver preventive remediation, as opposed to reactive remediation.
A Game Changer
In the past, global enterprises focused their efforts and investments on serving more and more customers. Today, the digital revolution has changed everything. A generation of tech savvy consumers is creating new demands that will force enterprises to adapt or be surpassed. The focus in not on "how much", but on "what, "when," "where," and "how good is it".
Smart enterprises are learning to change the rules of the game from a focus on scale to a focus on outcomes, and intelligent automation is one key lever that will enable this transformation. For the outsourcing industry, there are also tremendous opportunities and significant risks. For outsourcing providers, the choice is clear: help their clients embrace the new digital reality or be left in the dust.