BPOs to reduce hiring as automation and AI take over routine tasks

The Indian technology sector, which includes IT services companies, BPM, and hardware, employs about 5.4 million people, the largest in the organized sector

Business process management (BPM) (earlier BPO) companies are set to hire fewer people as automation and artificial intelligence (AI) take over routine tasks. 

With AI and generative AI (GenAI) becoming mainstream, businesses are restructuring operations, reducing the need for human intervention in basic processes. 

Industry executives, associations and even venture capital (VC) firms are yet to determine how much those numbers will come down as companies adopt a wait-and-watch approach and the impact of AI and Gen AI unravels over time. 

Still, all agree that industry is likely to be impacted the most by new-age technologies. 

The Indian technology sector, which includes IT services companies, BPM, and hardware, employs about 5.4 million people, the largest in the organised sector. 

BPM firm Hinduja Global Solutions (HGS) has observed that AI agents have not replaced humans at the base level but reduced the need for team leaders. 

“For every 18-20 people, we needed a team leader. Now that number has gone up to 30, because AI assists with knowledge mining, coaching, training, and education. It allows managers to oversee larger teams. This has resulted in a 15 per cent reduction in our workforce,” Venkatesh Korla, president and chief executive of HGS Americas, told Business Standard. 

As automation takes over more mundane and repetitive tasks, that number may go up to 35-40 per cent in the next few years, he added. 

For instance, HGS Agent X, the company’s AI-powered contact centre dashboard, has been developed to support 250 global languages, including Indian languages, with human-like accuracy. 

“It offers voice authentication, deepfake detection and can fully automate quality assurance (QA) by analysing and rating calls — a process that was previously handled by humans. This automation significantly enhances efficiency and accuracy,” Partha DeSarkar, executive director and group chief executive of HGS, had said in an earnings call with analysts last month. 

The concerns have also been raised by Andreessen Horowitz, one of the largest venture capital firms in the world. It said that “There is a clear opportunity with AI to productise and unbundle BPO." 

“The work BPOs do is important, but the experience of working with them is far from seamless. With AI, startups can now give customers the best of both worlds and enable enterprises to in-house their own customer experience. They allow back-office operations in a high-quality, scalable, and cost-efficient way,” it said in a blog last month. 

WNS, another BPM company, said while it will continue to hire as it wins more deals, the mix of hires will change, going forward. 

“As long as the total addressable market is increasing, we will continue to hire but the quality and kind of people we hire will be different from the past. We need to hire because we are winning new businesses,” said Keshav Murugesh, group chief executive of WNS. 

When asked if automation and AI will lead to job losses and lower hiring, he said, “Maybe. We will have to wait and see how it goes.” 

Murugesh said that general BPO jobs, such as contact centre companies, finance and accounting (F&A) and travel claims will get automated and need little human intervention. This is because “you do not need agents to approve those.” 

For example, existing jobs in the F&A segment, such as transaction processing executives, credit analysts, and audit and accounting executives will give way to cybersecurity analyst, fraud analyst and financial system architects, among others, according to a report by Nasscom and Indeed in October. 

“In an age of GenAI, companies that know and are invested in domain knowledge will not only be survivors but growers of the future,” added Murugesh.

 

Industry Speaks

 

*  AI agents have not replaced humans at base level but reduced the need for team leaders

 

*  AI assists with knowledge mining, coaching, training, and education, resulting in a 15% reduction in workforce

 

*  AI-powered contact centre dashboard offers voice authentication, deepfake detection which significantly enhances efficiency and accuracy

 

*  General BPO jobs such as travel claims will get auto–mated due to minimal need of human help