SOURCE: Boston Consulting Group

Boston Consulting Group

September 27, 2016 00:01 ET

Digitization Is Revolutionizing the Provision of Services

Service Providers Can Reduce Costs by up to 40% and Increase Customer Satisfaction by Using Service 4.0 Technologies; More Than Half of Call Center Capacity in Service Industries Could Disappear, According to BCG

DUSSELDORF, GERMANY--(Marketwired - Sep 27, 2016) - Digitization has major implications for the workforce of the service segment across industries worldwide. In Germany and Austria, for example, two countries whose industrial landscapes are representative of those of other advanced industrialized nations, digitization and automation will put up to 13% of all jobs at risk. According to Tapping into the Transformative Power of Service 4.0, a new report from The Boston Consulting Group (BCG), the disruption particularly affects banks, energy suppliers, insurers, and telecom providers. "Disruptive technologies, such as software robots and virtual agents, have been around for a while. Service providers now need to orient their IT infrastructures toward them as well as adjust their employee structures to changing needs," said Olaf Rehse, a senior partner and coauthor of the report.

Big Data Can Help Better Forecast Contract Terminations

Service companies are still lagging noticeably behind industrial companies in terms of digitization. "The current changes in service companies are roughly comparable to the third industrial revolution at the beginning of the 1970s," observed Rehse. Service companies could save up to 40% of their costs if they were to exploit their full digitization potential. They are currently making great strides in big data analytics. For example, by analyzing social data, companies can better forecast the likelihood of customers canceling their phone service -- about 50% better than they could without analytics. Cognitive computing allows companies to simulate customer decisions and aids virtual service agents in interacting with customers as naturally as possible.

Customer Requirements Are Changing

"Customers today expect intuitive, proactive, and personalized service all the time, regardless of the communication channel. That expectation can be met by using modern technologies that enable businesses to offer services that are more individualized, faster, and much less expensive," said Rehse. For instance, the decentralized monitoring of devices could allow service teams to register issues before customers do and troubleshoot them remotely. App-based solutions could also trigger service personnel to contact customers immediately.

Call Centers Are Becoming Less Important

The telecom industry is one of the most service-intensive segments. A profound change in technology and personnel structures is looming on the horizon. The drivers of current costs include a degree of automation that is much too low, processes that are much too complex and reactive, and a service offering that is not adequately focused on unique customer requirements. BCG experts estimate that in ten years, across the service industry -- but especially in the banking, energy, insurance, and telecom sectors -- companies will need only half the call center capacity that they require today. Even the need for technicians will wane rapidly.

New Tasks, Fewer Jobs

Across all industries, repetitive activities that require less skill will be the first to disappear. In the medium term, more-demanding job profiles in planning and steering will be at risk as companies adopt artificial intelligence and big data analytics. New jobs requiring skilled talent will chiefly be created in sectors such as development and data security. "However, overall, the service industry will see a net reduction in the number of employees needed in years to come," noted Rehse.

A copy of the report can be downloaded at bcgperspectives.com.

To arrange an interview with one of the authors, please contact Marike Bartels at +49 211 3011-3121 or bartels.marike@bcg.com.

About The Boston Consulting Group
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