Large language models to reshape BPO industry dynamics

ALABAMA, UNITED STATES — The customer support outsourcing industry is poised for a significant transformation, with large language models (LLMs) at the forefront of this change. 

Drawing parallels to the economic principle known as “Jevon’s Paradox,” Contact Center AI Association President John Walter predicts that the increased efficiency brought about by LLMs will not diminish the demand for human labor but rather reshape it.

Jevon’s Paradox suggests that as technology makes the use of a resource more efficient, the overall consumption of that resource may increase. In the BPO industry, LLMs are the equivalent of LED lights in the lighting industry, offering a more efficient way to handle customer support queries with less human labor.

“I believe that most non-differentiated human interactions will be fully automated over the next five years,” Walter stated. 

This shift is expected to reduce the need for human agents to handle routine, non-specialized tasks, which AI can manage with equal customer satisfaction.

However, Walter said that this does not spell the end for human agents in the industry. As AI takes over the more mundane tasks, human agents will be freed to focus on “high touch” interactions where empathy and human connection significantly enhance customer experience. 

The efficiency gains from AI will make it more affordable for companies to provide high-quality support, potentially expanding the market for specialized human agent services.

The biggest challenge will be for BPOs that have not adapted to this shift and continue to rely on outdated models of non-differentiated support. These companies risk becoming obsolete, much like manufacturers of incandescent bulbs in the age of LEDs.

Conversely, BPOs that embrace LLMs and align their strategies to deliver differentiated, high-value human interactions are poised to succeed. 

“The winners will be the BPOs that develop strategies to perform differentiated work most efficiently,” Walter concludes, highlighting the need for BPOs to innovate and adapt to stay relevant in the rapidly evolving landscape shaped by AI and LLMs.