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IT Robots May Mean the End of Offshore Outsourcing

By Stephanie Overby, CIO
November 16, 2012 12:40 PM ET

CIO - Robots vacuum floors. They pick and pack boxes in warehouses. They win at Jeopardy. And soon they may take IT and business process work away from offshore outsourcing providers.

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Take U.K.-based startup Blue Prism, which makes a software development toolkit and methodology designed to enable business users to create software robots to automate rules-driven business processes.

Blue Prism calls it "robotic automation." James R. Slaby, research director for sourcing security and risk for outsourcing analyst firm HfS Research calls it "the newest labor option in the global business services toolkit" and "offshore killer."

"It's the automation of various business functions: taking work traditionally done by humans and implementing it in software. And that resulting software runs largely unattended to execute those functions, as opposed to requiring human interpretation and input of data," Slaby says.

It's best-suited for routine work that doesn't benefit from the value that the human brain provides, such as completing a benefits application that requires accessing three different systems, but no human analysis, says Slaby. "The routine kind of work you might entrust to low-level data entry clerks or entry-level IT staffers are good places to start."

[Related: Will Your Next iPhone be Built by Robots?]

The software robots "replicate the work of real human beings--trained in the same way and subject to the same systems controls as users to protect transactional integrity and physical security of customer data," says Pat Geary, Blue Prism's chief marketing officer.

Unlike technical scripting tool kits or "macros" for performing basic functions, Geary says Blue Prism's offering is focused on scalable enterprise process automation for "the world's largest back offices."

But it comes at a much lower cost that flesh-and-blood enterprise software development. "Traditionally, a project would have been scoped and then a solution designed, built, tested and deployed by developers and dedicated specialist IT resources. The governance required of these projects makes it uneconomic to service the 'long tail' of automation requirements," says Geary. "So in reality, the only option available to businesses was to outsource or offshore the workload, to reduce input costs."

Blue Prism says its robot full-time equivalents (FTEs) cost a third of offshore FTEs. And once the customers learn the system, which takes two to four months, they can scale up virtual FTEs instantly. Currently Blue Prism has 1,000 robots up and running at customers including Telefonica, Fidelity Investments and Experian.

People Today, Robots Tomorrow

Meanwhile, New York-based IPSoft, which calls itself an autonomic IT service provider, says that the "infrastructure of tomorrow will not be managed by people, but by expert systems."

The company's self-governing IPCenter has the capability to detect, diagnose, remediate and escalate events and incidents, to learn from what it experiences, and to assimilate that learning into a shared knowledge library. And the company is expanding into business process automation as well.

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