4 months ago
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The impact of artificial intelligence technology on the local outsourcing sector is expected to be minimal in the medium term, says Anand Biradar, president of the Global Services Association of Jamaica, GSAJ.
In fact, the GSAJ head is advising that Jamaica should consolidate its position in the BPO or business process outsourcing industry, instead of focusing on the higher-end services, which he says will more easily be disrupted by AI.
“I think AI will disrupt a lot of other industries faster than the BPO industry. AI can disrupt an industry in which system complexity is low, and 80 to 90 per cent of our industry has complicated different systems, so for AI to disrupt the BPO industry it will take a long time,” said Biradar.
“In the next three to five years, AI will not reduce the growth of the sector in a decisive way,” he told the Financial Gleaner.
His comments come against the background of predictions that AI and machine learning will greatly impact the industry, which employs about 52,000 Jamaicans and has contributed to lowering the employment rate to 4.5 per cent.
It’s unclear what effect the doubling down on the status quo would have on local industry movements that are focused on going beyond call-centre services to incorporate new skills for more technical work – that is, knowledge process outsourcing, or KPO, which involves the contracting out of specialised work.
It was partly due to that push – transforming from traditional BPO to being a provider of so-called global services – that the new identity as a ‘global services sector’ was adopted, and a rebranded GSAJ came into being after its former name, Business Process Industry Association of Jamaica, was retired.
Up to two years ago, Jamaica’s BPO sector was said to be 80 per cent concentrated on traditional outsourcing services, while just 20 per cent were in a position to compete in the KPO sector, a point made by then President of the Inter-American Development Bank as he encouraged Jamaican firms to go after more of the high-end market.
Of note the new Caribbean Digital Readiness Survey 2024 carried out by the regional office of auditing and advisory firm Pricewaterhouse shows that sectors more exposed to AI are experiencing almost fivefold greater labour productivity growth.
‘AI exposed’ means AI can readily be used for some tasks.
The survey by advisory firm PwC Caribbean also showed nearly half of Caribbean businesses surveyed (47 per cent) see a return on their digital investments in delivering value or transformative effects, including, creating better customer experiences (65 per cent), improving decision making (54 per cent) and enhancing brand (47 per cent).
However, Biradar, who is business manager for Sagility in the Americas region, and also oversees the Jamaican operation, says areas such as media, content creation, marketing and clerical tasks are more likely to be disrupted by AI because of their lack of complexity. Sagility is a US-based, tech-enabled BPO company serving the healthcare market.
“If a call centre is supporting a bank – a bank has eight or nine different systems – because the information goes to so many different systems it is impossible for AI to disrupt it,” said Biradar.
He noted that two years ago, the view in the industry was that with the advent of ChatGPT, a chatbot that brought artificial intelligence into the mainstream, Jamaica would be moving to the higher-end of the global services industry, but the GSAJ president said that view has now changed.
“That (higher-end services) is not a safe path because looking at marketing and research, IT and software development, AI is disrupting those industries,” Biradar said.
Efforts at comment from Jampro bore no immediate results.
However, Biradar said conversations about the future of the industry are ongoing, with the GSAJ having met with government officials just last week.
Persons not in the industry would need to be educated about the complexity of AI and where it can and cannot disrupt, he said.
“It requires education, which is not a ‘one call or one meeting’ situation,” he affirmed.
“Going forward we hope the government is willing to listen and make the necessary changes so that the industry can thrive. AI has nothing to do with Jamaica, almost. For the industry to thrive in Jamaica, we have to continuously work on being competitive, compared with other countries that can perform the same job,” he said.
In the nearshore market, Jamaica is competitive against countries like Guatemala, Costa Rica and Colombia, but also needs to position itself to compete with far-afield places such as with India, South Africa and the Philippines that “do the same work at a much lower price point because their cost structure is lower,” he said.
Meanwhile, the GSAJ head does not see the number of employees in the sector growing any further, especially with Jamaica being close to full employment while competing countries have unemployment rates above 20 per cent.
“I’m not predicting growth because there’s no capacity in Jamaica for growth because of our unemployment scenario. Maintaining those numbers (over 50,000) is a win because there are many countries with high unemployment like South Africa where the numbers will grow,” he asserted. “We grew faster than anyone else in the last 10 years,” the GSAJ president said.
That too could upend last year’s predictions of Jamaica’s state marketing agency Jampro that the BPO market was expected to grow to 75,000 jobs in five years.
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