13.08.2019.

Ingemārs Liakovičus

My Colleague Robot

About eight years ago, I was the CEO of a company where one of the products in the wide range of businesses spectrum was self-checkout machines. We met with managers of the leading retail chains and received a clear response from everyone that the period for return on their investments was unacceptably long and therefore there will be no investments.

Several years ago, the leading retail chains began to massively introduce self-service checkouts, and now they are widely used. Customers quickly learned to use them because the alternative was to stand in a long queue at few cash registers where customers were served by cashiers. Now, customers do not stand in a queue and a supermarket cashier monitors at least a dozen cash registers (or even more in the larger stores). Technology + Self-service = win-win for everybody. Although during this time salaries of cashiers and related costs have increased as well, I suspect that the main reason for this proliferation of self-service equipment is the profound lack of employees.

Now, some dry but very eloquent statistics. Unemployment rates in Latvia have fallen from about 17% in 2012 to 6.9% in the first quarter of 2019. Moreover, it is projected that in 2020 the rates will fall below the record low numbers of 2007. Here I would like to remind that the labour market has lost around 200 thousand working people since 2012 due to economic migration.

The average salary has increased from EUR 685 in 2012 to EUR 1,004 in 2019. Of course, these are only official figures, omitting various ways of cheating specific to Latvia, but the upwards trend is obvious, with the most dynamic wage increase over the recent three years.

And now the heavy artillery… If we look at the labour market by dividing the population aged 25-64 by 5-year intervals, there are an average of 120-130 thousand people in each five-year cohort (for example, 130 thousand in the 25-29 age cohort, 140 thousand in the 30-34 age cohort, etc.). In the cohort of 15-19- and 20-24-year-old inhabitants who are currently or soon entering the labour market, there are 80-86 thousand (!) people; then there will be a slight increase again (aged 0-4, slightly more than 100 thousand). The problem will only get worse in the next 15 years.

Source: Morten Hansen, Presentation at Digital Mind RPA Conference, 15.05.2019.

            Finally, the annual turnover per employee generated by Latvian companies, as commonly assumed to measure company efficiency, is at the lower end of the European Union (EU) spectrum, ahead of Croatia, Romania and Bulgaria only. This amounts to EUR 67 thousand per employee, well below the EU average level, which is around EUR 30 thousand more.

 Consequently, the conclusion is straightforward: recruitment will become more and more difficult, employees will demand higher and higher salaries, and companies will not be able to compete in this race without increasing income per employee at the same time. Income may be increased by raising prices, improving efficiency, or both.

              The good news is that the average Latvian company has done so little in terms of efficiency that there is a huge potential to improve the situation. One of the most effective techniques is a digital enterprise with maximally automated business processes. And regardless of the size of the company and the management expertise in automation, everyone who plans to survive in the race for talent and ability to pay their wages will be forced to think about this field intensely.

One of the automation tools that can make an invaluable contribution to increasing efficiency is Robotics Process Automation (RPA).

RPA is a line of process automation in which robotics software is trained and further performs what previously was done by people in IT systems. RPA robots can be entrusted with repetitive work that does not require intuition, empathy, emotions, and other abilities that only humans have. Robots help people and do their jobs, freeing up time for activities with higher added value. RPA can be widely used for data entry from system to system, data check and validation, and for various time-limited tasks. It is sometimes wiser to use RPA instead of system integration. Some of our clients see these robots as virtual employees: they have their own email account, their own password for other systems, and even a name.

The simplicity and power of this technology are very well known in the world, and its use is growing rapidly every year. There are also a number of companies in Latvia that are very successful in using opportunities of this technology, many companies consider introducing it, but others will do it in the nearest future.

With this introductory article we open a series of articles in which we will regularly share examples of RPA to promote imagination and success stories demonstrating the added value of RPA.

And remember, the young people joining your team will want to change the world rather than spend days on entering data into systems. We can help you become an efficient company and desired employer.

See you in the next articles and your offices!

Read more: How did our Robotics Process Automation story began.