What happens when the economic reality is directly opposed to the media perception? ask Ronald Melmed, from Digital Archiving System (DAS).
Information technology has long been maligned as a destroyer of jobs and talent and for this reason South African companies have been slow to take up business process outsourcing (BPO) like accounts payable, despite the huge savings that can be realized by using scanning and software.
A lot of the reluctance comes from the perception that information technology and outsourcing kills jobs but, far more than most people realize, economic growth is now being driven by the computer, software, and telecommunications industries. The jobs lost to technology are met by a net increase in jobs elsewhere in a far more productive economy.
"The role of information is transforming the nature of economy,'' says Kenneth Arrow, a Nobel-prizewinning economist at Stanford University – and we see this particularly in the BPO field. The industry-defining McKinsey Report of the BPO sector estimated that the BPO sector in South Africa could be worth $800-million, create between 65 000 and 100 000 jobs and attract between $90-miilion to $75-million in foreign direct investment by 2009.
The potential of the sector has been identified at the highest levels of government, with Deputy President Phumzile Mlambo-Ngcuka of the belief that the sector will help South African become a “knowledge economy”, in line with the most advanced nations. It has been identified as one of the two main ‘special priority attention’ sectors – along with tourism – in the Accelerated and Shared Growth Initiative for South Africa (AsgiSA), the goverment's strategy to raise economic growth to 6% and halve poverty and unemployment by 2014.
BPO can transform the country with areas like the Eastern Cape becoming processing centres. BPO can be decentralized bringing economic growth to larger areas of the country and South African labour, although more expensive than say Manila or Bangladesh, has the advantage of fair labour practice, something essential for businesses with a social conscience.
Decentralised workers can be trained to service and support the very technologies that replaced them, but besides that the industries that depend on processing and moving information–such as financial services and entertainment–are prospering. And companies in every industry are using information technology to reengineer themselves and become more competitive.
Perhaps in the short run some jobs may be lost to labor-displacing technology, but huge savings at the bottom line translate into lower prices, company growth and more jobs, not to mention the jobs being created in the IT and telecom industries.
Two other positive byproducts of the Information Age are greater efficiency and lower prices. During much of the 1980s, economists worried that they could not find any impact of computers on productivity. But more recent research shows that investments in computers are worthwhile.
Economists Erik Brynjolfsson and Lorin Hitt of the Massachusetts Institute of Technology surveyed 400 large companies to gauge the effect of technology on output per employee. They found that the return on investment in information systems exceeded 50%.
"And most of these benefits are being passed on to consumers in the form of lower prices,'' says Brynjolfsson.
Princeton University economist Alan B. Krueger estimates that people who use computers at work earn 10% to 15% more than colleagues in similar occupations who do not use computers.
Still, even if some people are being left behind, the information economy is creating thousands of new businesses and jobs. Overall, the number of jobs in the software, data processing, and information retrieval industries has risen by huge percentages and these industries now employ more people than the auto industry.
Increasingly, there are more jobs than workers in Silicon Valley. In fact, there are so many jobs with more to come, that recruiting is big business. Employers and staffing outfits recruit worldwide for jobs in Silicon Valley which has generated literally hundreds of thousands of positions. Besides creating jobs, the information economy may even make it a bit easier to match workers to existing jobs making labour markets more efficient and helping to lower unemployment.
High-tech companies in turn create thousands of supporting jobs in: accounting, customer support, human resource management, manufacturing, marketing, sales, communications, education, training and quality assurance. The effect on work is less harmful than once feared. Far from becoming low-paid burger-flippers, many Americans are turning into computer jocks, with earning power growing by leaps and bounds – so why not South Africans?
Another area where automated BPO services can have a huge impact is in the data capture arena. With automated recognition and classification software you can replace up to 95% of manual keying, this in turn minimizes costly human error. In terms of efficiency, a computer program won't need a whole day to meticulously take down each line of information, won't get fatigued and won't start adding extra zeroes to figures or typing ‘b’s’ instead of ‘d’s’.
Apart from the human error component of information processing, there are of course those deliberate errors where for example your company is asked to pay for more than it received. Many times the discrepancy between goods received and invoiced amounts is accidental but occasionally it isn’t, either way software instantly spots these inconsistencies.
Inconsistencies can be quickly resolved with automated three way matching with the invoice, purchase order and goods received voucher. During data capture, the program can communicate with much larger data bases, and other sources. A person doing the same job can’t hope to go wading through mountains of data to check the integrity of the invoices.
Automated BPO greatly reduces fraud and human error and is fully auditable. Features can be built in so that no person sees whole document in its entirety, for instance credit card numbers get captured in fragments while the program consolidates them. This way no one gets to see the credit card details in full so there’s no room for fraud.
Other features like the pre-qualification of data can make sure the person who is invoicing you is in fact a supplier or client on your data base or that an id number is valid based on its modulus check sum.
Lastly, processing can be centralized because it’s done through recognition of images not off paper. With scanning done at regional sites and uploaded to central site for processing, massive economies of scales can be realized. Centres can even serve multiple clients. The list really does goes on, so instead of being afraid of what BPO can do to your company, why not explore what it can do for it?