What’s The Impact of Automation on Outsourcing? Derek Gallimore, Founder of Outsource Accelerator, Explains in Detail

There’s a joke going around about why you need a VA when you’ve got Alexa and Siri. The truth is, our VAs use Alexa and Siri too. It’s humans controlling the machines, not the other way around. I’ve read all the books and listened to all the podcasts about Super AI, singularity, and algorithms taking over the world. But focusing on that is like worrying about a one-in-a-thousand-year meteor strike. Sure, a meteor could wipe out the planet, but in the meantime, we continue with our businesses and day-to-day lives.

If AI, automation, and RPA become so widespread that they eliminate a significant number of jobs, it won’t just be an outsourcing issue. It will be a global issue. We know that automation could potentially eliminate four million driving jobs in the U.S. over the next few years, and it might take away 10 to 15 million jobs in retail checkouts and similar areas. This is happening worldwide. Yet, despite all this automation, if you go to car factories now, robots are doing what used to be done by tens of thousands of workers. This has been happening for decades, and yet, apart from COVID, we’re still seeing record-low unemployment rates. The economy moves forward, and people find new roles.

The world may not need baristas or coffee makers anymore—machines can handle that. We can even fly rockets to Mars. But baristas are still in demand because people appreciate the human touch. The industry is definitely considering all these changes, and business process outsourcing (BPO) is focused on making business processes more efficient, including through automation, machine learning, and AI. However, this doesn’t mean offshore staffing will be wiped out in the next 10 to 20 years. It’s still a massive industry.

Most businesses, especially small ones, have fewer than 10 to 50 people. Only 4% of businesses make it to a million dollars in revenue, and only 4% of those make it to ten million. When you’re a small, young, and growing business, you need to be agile. You need to be building, exploring, and testing. High-growth environments that are constantly changing aren’t suited to automation. You can spend a lot of time on automation and building processes, but if something changes, you’ll need to break everything down and rebuild it.

For small businesses, you need high-caliber, agile, innovative, and autonomous staff who can work quickly and efficiently to build processes. This aligns with the Silicon Valley lean startup methodology. Take Clubhouse, for example—despite being worth a billion dollars, there’s minimal automation because they’re changing week by week, month by month.

For larger, more established companies—like those Warren Buffett invests in, with 50-year histories and thousands of employees—automation works because their processes are stable and repetitive. For those businesses, you can automate the heck out of it, especially when you have 100 people in a room doing the same process over and over for years.

But for smaller, high-growth, and high-change businesses, you need competent, capable staff with a flat structure. These employees should work autonomously, alongside you, to add value and help push the business forward. Once the business stabilizes, then, yes, look for efficiencies and automation. But even then, it’s about finding the right balance. High-caliber team members should be the ones working to build efficiencies and optimizations together—it’s a group effort.

If super AI becomes a reality in about 50 years, it will change everything. In theory, it could solve problems like cancer, make gravity irrelevant, and allow us to fly to Mars every day. It would solve every issue under the sun. But when it comes to basic automation, we still have a long way to go. For example, in the Philippines, we have huge numbers of staff working on autonomous vehicle AI, specifically AI annotation. Tens of thousands of people are sitting in front of computers, looking at images, and identifying things like street signs, lamp posts, cars, and dogs. This is still human-driven work. While AI might learn eventually, the automation at the high end is still very basic.

A more consumer-facing example of automation would be chatbots. We all remember the chatbot craze a few years ago, but it was quite limited. Chatbots aren’t AI; they’re more like the old phone menus where you press numbers to get to a department. Chatbots were no more advanced than that, just in a different format. People got excited, but there was no real intelligence behind them.

That said, the industry is advancing rapidly. We work with a Silicon Valley startup that’s neutralizing accents and another one integrating AI into chat interfaces to analyze engagement levels, interest, and conversation structure. These are incredibly valuable tools. Even tools like Otter AI, which transcribes conversations in real-time, are making processes more efficient.

However, the reality is that the tools we use in the U.S. are also available in the Philippines. People there are growing up with the same technology and tools. The high-caliber people who know how to use these tools can help build a better business, whether they’re in the U.S., the Philippines, or elsewhere.

Another example of how things are always changing: We’re currently working with a multi-billion-dollar U.S. client who has an accounts issue. They’ve just changed their ERP system, and now they have thousands of outstanding invoices. This is a company that’s decades old, very sophisticated, highly successful, and high value, but this issue has cropped up and needs to be solved. It takes a good process, a solid team, and the right staff to help architect a solution and sort it out.

These kinds of issues will keep arising, and even 100 years from now, businesses will still be dealing with problems like, “Oh, my God, we’ve messed up the invoicing. We need to go back and fix that.” It’s amazing, really. Even after 2,000 years of business, we’re still dealing with the same invoicing problems.

Do both. Get your offshore team to automate and build those processes. Automation is extremely valuable, but it can also lead you down the wrong path if you’re not careful. So, definitely, do both. You want an efficient business with efficient processes, so eliminate all waste—whether people, computers, or anything else. That should always be a top priority.

However, with business growth, 50% of it is actually testing, exploring, and trying things that don’t work out. That process is inherently inefficient. We can only push efficiency so far before we risk stifling innovation. So, in short, the answer is: do both.

Bhutan is at the top of my list. It’s a small state that has previously been quite isolated, with very few foreigners allowed in. It’s now open, though that’s more complicated with COVID. I’m trying to get over there, as it’s a fantastic, mystical country full of monks who seem endlessly pleased with their lives. The people are down-to-earth, and the geography and scenery are incredible. It’s definitely a place I want to visit once we can start traveling again.

I’m actually googling it now, because I know very little about it, but it’s, it’s a Buddhist kingdom in the Himalayas. Do you need to know any more than that?

And it’s a very, it’s a very small population, and they’re all, they’re almost sort of communist, but kind of highly educated, happy population.

Well maybe, I don’t know, can I have super intelligence? and then I can build all the AI, and take over the world.

Yeah, you know, I read a lot of books and listen to them all. Chris Voss’s Never Split the Difference is a very good recent one. Yuval Harari, with Sapiens and Homo Deus, is fantastic. And Jordan Peterson’s 12 Rules for Life and his second one, 12 More Rules for Life, are also incredible books. Sapiens and Homo Deus are especially fascinating and touch on exactly what we’ve talked about today, like robots taking over the world and such. I listen to a huge number of podcasts—probably too many for my own good—and get incredible insights from them as well.

That’s great, isn’t it? When I, when I took up, you know, listening to podcasts, I thought I was super sophisticated and all that. But now I think kind of maybe, you know, my mom listens to talk back radio, and that’s been happening for 60 years, and maybe this is just kind of the old person’s talk back radio, you know.

Yeah, absolutely. I’m super excited about offshore staffing and outsourcing, and people should definitely give it a go. You can visit outsourceaccelerator.com to get three free quotes, explore around 750 suppliers, and also reach out to me for a chat. And when you request a quote, just mention that Shane sent you, and we’ll give you special care and attention. You can also email me directly at derek@outsourceaccelerator.com.