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Is nearshoring at risk of drowning under a wave of robotic process automation?
The Eastern Europe consulting market experienced a solid year in 2017, resulting in every market in the region growing faster than in 2016, and overall growth of 6.7%. Although the region still continues to lag behind Western Europe in the digital space, digital transformation proved to be one of the major drivers of consulting demand, as clients strove to reduce costs and drive efficiency. Digital initiatives accounted for 23% of the region’s consulting revenues in 2017, up 13% on 2016’s numbers.
Robotic process automation (RPA) established itself of as one of the main drivers of this consulting demand in 2017, as clients and consultants alike sought to improve back-office efficiency and explore how digital tools could enhance their businesses. RPA is of particular significance to Eastern Europe due to the region being a popular nearshoring destination. Some consultants we spoke to this year for our report on the Eastern Europe consulting market expressed concern about the impact RPA will have on nearshoring practices. Their main worry is that other parts of Europe may potentially begin to automate repetitive tasks that would have previously been sent to lower-cost destinations in Eastern Europe. When this is combined with rising wages in the region (especially in Poland), the perception is that the nearshoring market in Eastern Europe is under threat.
“For the first time in years, the nearshoring industry in Poland is not expected to grow.”
Magdalena Warzybok, Aon Hewitt
Despite these fears, the majority of consultants we spoke to in the region believe that RPA is, in fact, an opportunity for nearshoring service providers. Their view is that RPA will enable them to continue to deliver the same service, but at a much faster pace than they were previously able to. This will in turn free consultants up to work on higher-quality, value-adding outsourcing opportunities (such as risk management) for their customers. Many firms in the region are making large investments in robotics capabilities with this expectation in mind. There is also hope that it will force service centres to remain competitive from a cost perspective, combating the problem of rising wages.
It’s clear that advances in digital transformation will have an impact on the nearshoring market. Whether that impact is negative or not depends on the extent to which firms embrace the changes created by robotics, and use them to their advantage—speeding up manual processes, and using the time saved to focus on value-adding activities—creating opportunity in the midst of transformation.