Breakdown: The Race Between AI and Nearshore Service Providers has Begun

Providers of nearshore services, as well as regional governments, have been suddenly pushed into an upskilling race with AI. 

With the technology being integrated into more service portfolios, portions of the workforce in the region will find themselves not only out of a job, but with a skillset which the market considers less valuable or, in a worst case scenario, obsolete.

Dreaming of the future: Nearshore services providers have spent the early months of 2023 experimenting with chatbots, natural language models, intelligent text generators and other AI tools. Though AI has yet to make a true splash in the industry, the early results are in, and they look promising.

• Teleperformance reported to investors that its own generative AI solution (TP GPT) reduces call length by nearly 40% and cuts down agent errors by 90% when plugged to their calls.

  • The French multinational estimates that this could allow it to automate up to 30% of its volumes in three years. 

• Concentrix’s aims to deploy “conversational” AIs which would sound more natural and affable to customers on call. Though more of a goal than a plan, the company is already dreaming of the technology’s industry potential.

  • “It’s going to be a matter of marrying the large language models with NLU [natural language understanding], with data models,” stated Leslie Walker, Associate Director of Human Factors at Concentrix, in an online presentation. “That’s where we’re going to see the contact center evolving and we’re going to get super awesome next gen experiences for customers.”  

Exciting advancements in #AI have taken center stage this year! How do you see your business using #ChatGPT?

— Concentrix (@Concentrix) February 17, 2023

What’s concerning: A considerable part of the Nearshore services’ workforce falls under the category of BPO service agents. Many of these services can be automated or are expected to be automated in the short to mid term.

• In Jamaica, 97% of the workforce in nearshore services –almost 60,000 people as of February of 2023– is employed in the BPO industry. Of that portion, 71% are women. 

  • In KPO and ITO, which require a more sophisticated skillset and which the market considers of higher value, the majority of workers are men. 

  • “As Jamaica pivots towards higher-value segments (such as KPO, ITO), it needs to deploy assertive strategies to carry over current BPO workers with upskilling and reskilling strategies that respond to these subsegment demands,” commented Fernando Pavon, Senior Specialist, Skills Development at the IDB’s Labor Markets Division, in a statement to NSAM.

• In Colombia, 75% of BPO workers have no college degree; 15% are young people with no job experience, according to BPrO, the country’s BPO industry association. 

  • Women represent 57% of the Colombian BPO workforce. Of these, about 25% are mothers and the main breadwinner in their households.

Fear of replacement: Jamaican union leader John Levy warned that the vast majority of BPO providers in the country have no “support mechanism” in place to protect their staff once the automation wave crashes.

• Foundit CEO Sekhar Garisa told the Indian press that AI’s advent would “take a toll on low-skilled professionals within the service sector in the future”, cutting down about 7% of “redundant roles” in the short term.

• Kaylie Tiessen, an economist at Canadian union Unifor, recommended that companies with ambitions of automation “consult the people who actually do the job to understand what skills they have been using to execute the task”. 

• In 2019, 42 countries signed the OECD’s Principles on Artificial Intelligence. The document includes a recommendation for governments to “equip people with the skills for AI and support workers to ensure a fair transition”.

  • Colombia, Costa Rica, Chile and Mexico were the only Nearshore countries which signed the document. 

Bringing nuance: It feels as if AI has stormed the building, but the technology has yet to make a proper arrival to nearshore services. 

• “It’s great, but it can’t give me the kind of precision that, as a consumer, I really need for my day to day,” said Leslie Walker, from Concentrix. 

• In a call with investors, Accenture’s CEO Julie Sweet described the company’s approach to generative AI as a “copilot to human beings”. 

NSAM’s Take: AI will need a lot of human handholding in its earlier implementations in nearshore services, which in turn will require a workforce with a different, more sophisticated skillset.

The upgrade won’t eradicate complete segments of the workforce, but the hit has the potential to be painful enough for countries where the BPO sector is a crucial source of employment for the inexperienced and those who lack a college degree. That’s the case for several Nearshore countries. 

Governments in the region are showing little signs of movement when it comes to upskilling their workforce in preparation for the true arrival of AI. Jamaica is one of the few that’s aiming to “graduate” BPO workers to higher-value segments.

Like it happens with much tech education in the Nearshore, the burden of upskilling for AI will probably fall on private companies.