Tim ZylaNearshore operators have been discussing how artificial intelligence could transform the industry for years. However, like many other industries that AI experts had promised would bring transformation, the widespread layoffs have yet to come.
The business process outsourcing market has ballooned in growth over the past 15 years, a trend that most analysts predict will continue in the short term. A report by Kimberly Tan, investing partner at Andreessen Horowitz, published this year shows the BPO industry has already surpassed a $300 billion market cap on a global scale and is expected to surpass $525 billion by 2030.
But the big question is: How will that increase in market share be accomplished?
Artificial intelligence will be part of the process, but the question on many executives’ minds is whether that growth comes from AI replacing or improving paid employees.
Jeff Pappas, senior managing director at Newmark, has spent over 25 years working with international BPO operators to find real estate suitable for their needs. He hasn’t seen a drop in the demand for office space. Furthermore, the clients he’s spoken with aren’t anticipating major industry shifts due to the continued advancement of AI technology.
“Within BPOs, there’s going to be some areas that are more affected than others,” Pappas said. “But there are certain areas where it’s just not going to affect anything — legal, customer service and sales — those are areas that rely on physical, personal interaction.”
What’s the Truth? What isn’t?
Finding verified information on how artificial intelligence has changed the landscape of global businesses since the AI boom of 2020 and 2021 can be difficult. Basic research through search engines produces blog posts and information showing artificial intelligence adoption rates as high as 50% among global industries. However, results from trusted sources show much lower market saturation.
A report from Goldman Sachs at the conclusion of 2024 suggested that only about 6% of American businesses have implemented some form of artificial intelligence into their operations.
Pappas said he believes AI will have an increased effect on the BPO industry in the coming years, but questioned whether or not that means eliminating jobs, or more specifically, in the real estate industry, office space.
“In contact centers, typically we’re looking at 50 to 80 square feet per person, while in the legal category, it’s probably 175 square feet per person,” he said. “We have all these different metrics to determine how much space an operation needs. If you use AI, we can do everything you want to do in 72 square feet instead of 80, so there’s an efficiency factor where artificial intelligence can squeeze things a bit more.”
Pappas said AI’s beauty is its ability to help business owners find cost savings in previously unexplored areas.
“You can’t squeeze blood from a turnip,” he said. “Pay is pay, taxes are taxes, insurance is insurance. But AI can look in other areas to help make adjustments that might be needed.”
Bringing in Artificial Quality
Critics of the global business process outsourcing industry have referred to its operations as a “race to the bottom,” citing the emphasis clients often put on cost-cutting measures over quality of service. However, that trend may face reversal as artificial intelligence becomes adopted across the industry.
Automated quality assurance programs are gaining popularity among BPO operators, who use the software to receive instant employee performance feedback. Other predictive analytics programs have allowed BPOs to forecast when higher call volumes will occur during the week, allowing management to alter staffing schedules as needed.
Using these types of AI can increase profits and quality of service while adding little overhead to maintain the momentum.
“We’re so people-heavy that AI coming in and changing everything quickly just isn’t very likely,” Pappas said. “Maybe we’ll see some changes, but we need people. And the (BPO operators) I’ve talked to — AI hasn’t really affected them yet.”
It’s refreshing to see AI being used not to replace people, but to *support* them—enhancing quality and efficiency without losing the human touch. At the end of the day, relationships still drive great service.