18 May 2017

RPA in Emerging Markets

18 May 2017

RPA in Emerging Markets

As the global economy diversifies and an increasing number of markets arise and develop, robotic process automation (RPA) will undboutledly find its way into new parts of the world and new business sectors. This is especially the case in emerging markets. These emerging markets include countries — Mexico, India, and countries in sub-Saharan Africa and Latin America, for example — that are quickly moving towards more developed markets and adopting new technologies.

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Despite the well-known benefits of RPA automation, there are often doubts surrounding the impacts of automation, artificial intelligence, and machine learning technologies on our growing world. As a result, some tech insiders suggest these worries should also concern businesses and workers in emerging markets. In order to get a better picture of the realities, let’s examine and dispel the arguments against RPA in emerging markets. In addition we’ll discuss how RPA is poised to act as a major player in the biggest emerging markets and how RPA will help these markets refine and streamline their business practices.

Why Not RPA in Emerging Markets?

In today’s digitized business climate, automation and robotic technologies are typically not new in developed countries, markets, and businesses. However, they are often new developments for emerging markets, which may not already have the infrastructure present to support these changes. Some argue that, in order to avoid “premature deindustrialization” within emerging markets, the introduction of these technologies and the implications thereof should be carefully considered for two main reasons:

  • Loss of the cheap-labor advantage: Some argue that automation technologies, such as RPA, would have a negative impact on the cheap-labor force, since these individuals will struggle to keep up with the development of increasingly cheap technologies. By replacing workers with RPA, it is suggested that this would cause growing markets to lose connection with the human labor force that has allowed for them to develop their global footing in the past years.
  • Favoring high-skilled labor: Some industry insiders believe the development of new technologies in emerging markets will favor a more high-skilled, educated workforce that will need to be capable of implementing and maintaining the technologies. In emerging markets, however, many workers do not have access to technology sectors and are limited to agricultural or manufacturing sectors. For these reasons, some predict high levels of unemployment for lower-skilled workers and, consequently, growing inequality between classes.  

The rapid development of automation technologies like RPA is already having large impacts on economies, both developed and developing. However, it’s possible emerging markets will be most negatively impacted, specifically because of the potential loss of low-skilled labor and a major shift to high-skilled labor. Automation, for example, could entirely replace the foundation these emerging markets rely on by replacing the need for these countries to provide low-cost labor to the global marketplace.

Automation Success in Emerging Markets

While these arguments likely have some truth behind them, the threats to emerging markets by RPA and other automation technologies are often over-exaggerated. A publication by The Economist suggests that: “Countries that take advantage of new technologies will exploit opportunities to leapfrog ahead, both technologically and economically...Despite the challenges, change is afoot.”
In fact, RPA and automation technologies can deliver sustainable success to emerging market companies, especially in the IT and industrial sectors. Based on a report from RBC entitled Global Megatrends: Automation in Emerging Markets, the ways that emerging markets can and will benefit from the development of RPA include:

  • Reduced costs: Over the last few years, the cost of labor has been rising in emerging markets, especially in Asia. In China, for example, labor costs have risen 10-15% in the past ten years due to an increasing labor shortage. Simultaneously, the expenses associated with RPA implementation and other robotic technologies have declined about 29%. In many emerging markets, this has resulted in a convergence of labor and automation costs. This means that for many organizations in emerging markets that are experiencing labor shortage, RPA is becoming an increasingly attractive alternative to maintain a workforce.
  • Competitive advantage: Global companies, both big and small, are making use of RPA to streamline activities and drive positive business outcomes. In order to be on a level playing field with bigger companies in developed markets, the emerging market can gain and maintain a competitive advantage by implementing RPA. With RPA, companies will be able to reduce the cycle time of transactions, meaning more activities can be executed more efficiently and quickly in order to keep up with transactional demands.
  • Increased capabilities: As RPA technology develops, it is allowing for the automation of more sophisticated activities within various industries, from healthcare to finance to manufacturing to automotive. Rather than automating merely simple, one-step activities, RPA can support these organizations and their employees in the execution of more complex tasks such as order processing, financial planning, fraud detection, IT support and management, regulatory compliance, data migration, and marketing activities.

In addition to transformations in developed markets, RPA is already making great strides in emerging markets, and it would appear it’s only a matter of time before companies in these emerging markets leverage RPA as a key driver in productivity and efficiency. After overcoming the initial challenges associated with deploying RPA, these companies can rest assured they will be able to take advantage of the benefits of RPA, regardless if they are RPA pioneers or not.

The Verdict?

Despite possible doubts regarding RPA’s impact in emerging markets, the discussed benefits of the technology  — cost reduction, a boost in operational capabilities, and the possibility to reduce the gap with competitors — point towards an increase in its future adoption. Rather than being just an option for increased opportunities of success, the adoption of RPA is becoming a necessity for companies. This is especially true for companies within emerging markets that want to attain and maintain successful business outcomes in a competitive global atmosphere. Because businesses within emerging markets often must rely on a small pool of human workers and limited fluid capital for technology investment, RPA is often the most affordable and flexible option for companies to increase business capacities and attain long-term success.

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by Nick Ostdick

TOPICS: RPA, Emerging Technology, RPA Impact, Emerging markets

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