Robotic Process Automation (RPA) is the application of software and technology, using artificial intelligence, to carry out repetitive tasks quickly, tirelessly and accurately. It enables the creation of software robots that replicate human behavior, using a computer system’s user interface. It was introduced, not to replace humans, but to complement their efforts and ease tedious tasks. When the technology was first introduced, it was not fully accepted by industries and organizations. However, over the years, its wide-ranging benefits became clear.
The concept of automation has been around for some time. But, in recent years, it is going through a significant technological evolution, in the sense that emerging software platforms are reliable enough for use in large software enterprises.
A modern capitalist economy requires endless growth. Growth happens when organizations make more and more profits and expand over the years. This ever-expanding growth that powers business needs something vital for it to run: resources. Historically, businesses have been powered by people. Organizations hire people to work for them, which gives results from which the company earns profits. More the profits more will be the level of growth, in the economy as a whole. Simultaneously, the more productive employees are, the more profits will be generated for the company as a whole. However, the problem with any resource is that it is finite and exhaustive. In the business context, this resource is the people who are hired to work in the organization. There are only so many hours in a day that people can work and be productive. With this finite resource, the only solution that follows is the hiring of more people. However, since the resource is exhaustible, there is a limit as to how many people can be hired. McKinsey Global Institute and many other academic papers suggest that economies are approaching a scenario where growth targets will be too large as compared to the workforce. For a modern capitalist economy to continue growing, automation and AI are not a choice, they are necessary for a sustainable future.
Most predictions of the impact of new technologies on the workforce have been of a speculating nature, in terms of both how the technologies will evolve and how the labor market will respond.
A paper published in the year 2017 by the London School of Economics observed actual employment data over the last few decades. It examined the role of technology in economic recoveries, both in terms of economic growth, and the number of jobs. Data across 28 different industries, in 17 countries was explored over a period spanning 1970 to 2011, during which 71 economic recoveries occurred. When the numbers were compared, the researchers found no significant difference between the industries that were prone to automation, and those that were not. This discovery was consistent across nations, with the notable exception of the United States. This particular observation was confirmed by a second paper published by the National Bureau of Economic Research.This paper examined 19 industries over a similar time frame as that of the LSE paper, and came to the exact same conclusion, that industries investing more in robotic automation suffered lower employment levels, as each robot equated to around six human employees.
RPA adds value to the firm through increased optimization and cost effectiveness of the business processes. With businesses focusing on improving efficiency, cost reduction, compliance, and deploying employees on high-value tasks, RPA becomes a highly valuable tool.
In recent years, manual jobs are being replaced by automated ones, mostly robots. Just like the Industrial Revolution, the first ones to be replaced would be unskilled labor, as they can be easily automated due to their repetitive nature.A recent study by Citi and the University of Oxford’s Martin School found the automation potential of jobs to be around 38% in highly skilled, developed countries, with a much higher percentage of around 85% in the developing countries.
Let us now delve into the benefits of RPA. Banks, financial institutions, and insurance companies process a large number of operations daily. In such sectors, RPA can be used as a virtual worker by replacing manual labor, to perform lengthy and rigorous tasks. Robotic Process Automation allows modern banks to meet their high demands for audibility, security and data quality, while also improving operational efficiency. In order to remain competitive in an increasingly saturated economy, and with the more widespread adoption of virtual banking, banks have had to find a way to deliver the best possible services in the cheapest possible ways; all this while maintaining maximum security levels. RPA has also dramatically streamlined many banking operations along with a wide variety of back office processes. By shifting much of the tedious processes from humans to machines, banks have been able to significantly reduce the need for human involvement, which has had a direct impact on productivity and performance levels.
Bank employees have to deal with massive amounts of data on a daily basis. Banks around the world are considering adopting RPA, so as to reduce the manual processing of such massive amounts of data, to avoid errors. Processing data manually is an extremely time-consuming task. If bots were to be used for this process, the time taken would be reduced to half of what it took to process the data manually. Several processes in banks, like, customer service, accounts payable, credit card processing, fraud detection, report automation, and others, can be automated so as to free up manpower to work on more critical tasks.
By reducing the manpower needed for mundane and routine tasks, banks will be able to provide a higher and faster level of service with the same or lower level of employees.
The retail industry is another such industry that benefits greatly from the use of RPA. In the recent past, among many emerging markets, retail has been one of the fastest growing sectors. According to a report by eMarketer, the retail industry is expected to reach a mark of $27.7 trillion in global sales by the year 2020. Along with the growing opportunities, the retail industry is experiencing rapid competition among players. Along with adopting innovative practices to attract and engage more customers, the players in retail have begun employing newer automation technologies to smoothen their processes, and grow at a faster pace. In the retail industry, there are several processes involved, to bring a product from its stage of production to its stage of sale. From supply chain management to sales analytics, a retail chain includes a large number of processes, which were being performed manually up until a few years ago. With the introduction of innovative technologies like RFID, POS, and the most recent and most impactful RPA, retail industries are slowly diverging from human resources to automated ones.
Along with easing up the most basic tasks of the industry, like product scanning, data analytics and inventory management, RPA works on some of the administrative processes as well. This relieves manual labour from performing complex tasks such as advanced audit, better customer relationship management, cost reduction, better profitability, and others. The possible areas of RPA applicability in the retail sector include: inventory management, demand and supply planning, quota, invoice and contract management, freight management, returns processing, work order management and others.
RPA is basically a software (not a physical robot, although the software is referred to as one), that mimics a human, and can be used as a substitute to existing IT systems, removing the need to change underlying code, and also to reduce cost and ease the implementation. Results are often immediate, as robots can work without breaks. Moreover, growing Artificial Intelligence (AI) capability is enabling them to become even quicker and more productive and efficient.
Much research has been undertaken and statistics have been published on whether automation technologies will have positive or negative consequences. Automation provides time liberation and cost saving that will enable companies and their employees to focus on more creative, innovative and value-adding activities. However, automation has the power to completely eliminate the need for human workers entirely.
Considering the negative impacts of automation on the world economy:
· Firstly, as automation technologies rise, there will be a rise in unemployment. With the development of automation technologies and them becoming more human-like, it is highly possible that more and more individuals will lose their jobs. Obviously this will not happen at once, as it will start with the potential job loss for the menial back office positions.
· As individuals lose their jobs and wages decrease, it would lead toa reduction in people’s purchasing power. Without any financial stability or discretionary income, they would not be able to afford even the most basic of purchases.
· Since people would not be able to contribute to the world economy anymore, there would be a steady decline in the demand for goods and services. In the long run, this has the potential to lead to inflation, and eventually, economic collapse.
While the negative impacts of automation can be quite significant, the visible repercussions of automation will not likely manifest as severely as suggested. Despite the extreme criticism of automation, the economy also stands to greatly benefit from it. Some of these benefits include:
· While the new jobs that result from automation will look different from before, and require other skillsets and knowledge, individuals will be tasked with developing new automation technologies, and managing the implementation of these technologies within a business environment.
· Automation has the potential to eliminate routine, manual tasks. Individuals will be encouraged to employ more creative and innovative thinking, allowing them to fill more inventive roles. Companies can, thus, drastically increase the efficiency and quality of their services, thereby making a positive contribution towards the economy.
· Outsourcing and offshoring is a common practice, especially within enterprises that deal with a large number of activities. The development of RPA however, enables these companies to reshore their business practices. This practice of reshoring allows companies to reduce costs, and increase control & oversight.
The Economist suggests the economy has withstood similar developments in the past: “Every great period of innovation has produced its share of labour-market doomsayers, but technological progress has never previously failed to generate new employment opportunities...Though inequality could soar in such a world, unemployment would not necessarily spike.”
Despite the strong claims put forth by both supporters and critics of automation, the consequences of these technologies are not all bad, nor are they all good. Dr. Carl Benedikt Frey, the Co-Director of the Oxford Martin Programme on Technology and Employment, suggests that, ultimately, the future of automation is not as clear-cut or one-sided as expected: “Our research shows that countries and cities alike will experience very different [economic] impacts — both negative and positive — from increasing automation.”
Regardless of the nature of the support behind automation technologies, automation is becoming an inevitable reality. The presence of robotics, whether real robots or “invisible” software robots, is no longer science fiction, and artificial intelligence is smarter than ever before. Already, automation is starting to change the nature of jobs and the economy, and the economy is beginning to tangibly experience the impacts of automation through the shift of both occupational positions and business outcomes.
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