Editorial | BPO in a world of AI

This newspaper is encouraged by the confidence of the island’s call centre bosses that the island will continue to grow its share of the global outsourcing market.

However, given the rapid advance of artificial intelligence (AI) technologies that are increasingly capable of undertaking many of the mundane jobs that companies find economical to send offshore, we look forward to a clearly mapped and executable strategy for Jamaica to continue as a player in the global outsourcing industry, focusing on the sectors on which the island is pitching its claim over the short, medium and long term. This should be the priority in discussion at the industry’s annual conference starting today.

There is no question that call centre/business processing has been one of the few significant successes of the Jamaican economy over the past two decades. From a few thousand workers when it was launched in the 1990s, the industry now employs over 60,000, ranking only behind agriculture, with its swathe of mostly low-skilled labour, and tourism, which accounts for over 100,000 jobs.

The industry, according to government data, grosses over US$900 million annually. According to Wayne Sinclair, the president of Global Services Association of Jamaica (GSAJ), its growth has averaged 20 per cent a year.

Yet, as Mr Sinclair pointed out in pre-conference remarks last week, the global outsourcing industry is “at a crucial point”, as is Jamaica’s role in it.

Mr Sinclair, however, is confident.

“We have demonstrated best practices, provided high-quality service, and consistently delivered value to our international partners. Jamaica is well positioned to maintain and strengthen its role in this growing industry,” he said.

This confidence notwithstanding, there are questions to be resolved, including the ones we previously posed, and questions about the readiness of the Jamaican and training education system to meet the evolving demands of the industry. That is, if Jamaica does not intend to be displaced by competitors.

PRIORITISING SKILLED TALENT, AGILITY

The global services outsourcing market reached an estimated US$1.2 billion last year. It is projected to grow at a compounded rate of over eight per cent through to 2029, according to most industry analysis.

The segment in which Jamaica mostly operates, business processing, including taking on the back-office tasks of firms, is expected to grow by nearly seven per cent this year, reaching over US$121 billion – and US$162 billion by 2029.

At the same time, with the advent of generative AI, with its capacity to independently generate content and accomplish tasks, the nature of what companies want to outsource has begun to change. Many of the tasks that might be sent offshore, to cheaper markets, can now be done by AI. Firms are increasingly inclined to outsource jobs that require greater skills, while in-house staff undertake the more complex and creative jobs.

In its 2024 global outsourcing report, the consulting firm Deloitte noted that while firms (it surveyed 500 of the world’s top companies) continued to outsource “back-office functions ... at high rates”, they are “putting greater emphasis on extracting value from front-office and core capabilities” and were placing greater emphasis on “outcome-based delivery models” with their outside service providers.

“While cost reduction continues to remain a key driver for outsourcing, executives today are prioritising skilled talent and agility in their outsourcing decisions,” Deloitte noted.

COMPLEMENTARY STRATEGY

At the same time, some companies were simultaneously establishing so-called Global In-House Centres (GICs), quasi-independent operations set up to provide specific services, perhaps high-tech research, or some other specialised function. It is like outsourcing, except done in-house. Or the operation might be offshore.

Said Deloitte: “ GICs are also seeing high interest levels as a complementary strategy to outsourcing, allowing organisations to strategically keep critical knowledge in-house while maintaining a low-cost structure. The Build, Operate, Transform, Transfer (BOTT) model is an attractive option to enable service delivery transformation through GICs in a faster, flexible, and cost-effective way. Up-front investment in strategy for GICs and evaluation of the execution approach (e.g. BOTT) can allow organisations to maximise value from this endeavour.”

The bottom line: if Jamaica is keen on success in this emerging environment it has to trawl higher up the outsourcing food chain. This brings significant challenges.

As Mr Sinclair observed, the island, despite its promotion in the industry as a jurisdiction with high-quality workforce, has serious problems with education: a third of students complete their primary education essentially illiterate; at the secondary level, a third fail English in the regional secondary education exams; under 40 per cent are successful at maths; less than a fifth who write these exams pass five subjects, with maths and English among them, in a single sitting; fewer than three in 10 Jamaicans of the requisite cohort enrol in tertiary education. Further, Mr Sinclair reported that his industry has a high level of staff turnover, including, the anecdotal evidence suggests, a fair bit of employee swapping.

These are issues to be urgently analysed and addressed. Mr Sinclair reminded that there was a multisectoral task force on the industry. It must accelerate its work.