Offshoring is going to end at some point, but there are still big movements going on. Technological impact doesn’t cause things to move too much as most of the robotics automation implementations we see are being done within the existing service models. So, if I have a center in Germany, I put robotics in my center in Germany. If I have a center in Poland, I put it into my center there, I am optimizing the process and I’m not concerned about where it is.
The model and the location selection does not change too much, based on this technology impact. It could change in the future if this gets bigger. It could be that business cases are decided differently in the future but so far I haven’t seen anything in terms of major changes in location selection or decisions on how to place activities.
PM: Since you mentioned automation, what is your estimation for current levels of automation or process automation in shared services? Some years ago, you mentioned in an interview that between 20% and 40% would arrive at a level of robotics where you’d have 90% of the work or more automated.
TB: That was a broad average. Obviously you have different automation levels in different processes and different companies, but we are still at the level where most actually is not automated. In transactional finance you could have a higher level, you could be at 50%, 60% or 70%. Across all levels, you still have a lot of potential to automate more, otherwise we wouldn’t have all these millions of people doing the work. We’ve got almost 5,000,000 people sitting in shared services centers and we’ve got this 1,000,000 still left that can move, so we have got quite a lot of work still being done manually.
"Technological impact doesn’t cause things to move too much as most of the robotics automation implementations we see are being done within the existing service models."
KZ: That makes me even doubt the numbers of McKinsey, that 90% to 95% in the next ten years will be automated. It might depend on the basis that you calculate this percentage from; there might be some organizations which have automated 90% to 95% in ten years, but I doubt that the majority of all organizations will be up in that level in ten years.
TB: I would also doubt that these 5,000,000 jobs completely disappear in the next ten years. I think what always happens is that you eliminate a certain type of activity because of technology advancement. Then, at the same time, you generate one or two new activities. They might be completely different because they have to do with programming development or they might be something which is a neighboring area, so you move out of your existing activity into a slightly different activity.
I don’t think we’re going to move into a situation where we don’t need these people, but they’re going to do different things and these tasks are going to be changing quicker than before and that will also hit the world of shared services and GBS, so we just need to be more agile, more flexible. At least for the foreseeable future. Maybe it’ll end someday. I don’t think it can be faster and faster forever, because at some point we’re not going to be able to cope with that, but for the foreseeable future it’s going to be at an increasing speed. I agree with your estimates; people are not going to be all eliminated in a few years.
"I don’t think we’re going to move into a situation where we don’t need these people, but they’re going to do different things and these tasks are going to be changing quicker than before."
KZ: These are different things. One thing that we see in finance and accounting is that the international rules of how to do accounting are becoming even more complex, which somehow makes automation more difficult or even significantly more difficult. I think these trends of more transparency and more regulation might work against levels of automation.
Secondly, I have no idea if we will really continue on the path we've been following, where more and more things are harmonized on a global, or international, scale – or whether this trend is coming to an end and things will move to a more national level, which then gets into politics. I think the next ten years are not as foreseeable as these studies would lead us to believe us. So, from that point of view, flexibility is definitely required, but I think in directions that we do not even know about yet.
TB: I would second that. I think the only thing we know, is that we really don’t know much! Flexibility or agility is the only thing we can really build up to prepare, otherwise as we look forward, it gets more and more difficult. But I would agree, Kai, if we take your example and break it down to a simple picture: If you used to have 1 person working on the accounting rules and 1 person on the accounting systems and 8 people keying something in ... I think in future the ratio may be completely different. So, instead of 10, we’ll have 8, but not 0, people. Maybe 4 are programming, 3 are looking at rules, 1 is doing instruction handling and the rest is done by robots – a completely different mix. People are moved from keying to either higher level jobs in understanding the rules and translating them into technology, or programming, or exception handling, or overseeing the robots that do the job ... something in those terms. There’s still going to be work there, but not exactly what's there today.
KZ: We are currently building a foundation for the future, to drive more automation, to drive more standardization, moving onto one system, getting more transparency, getting more controls on the process. That’s where all our effort is focused. I believe the type of work we are doing and the way we are doing it will change. It will become more automated. Even though we currently don’t see it, the fundamentals are being built – the house is not yet there, but you get an idea of what the foundation is capable of carrying.