Interdependencies between automation and sourcing of business processes

Automating business processes or relocating the processes to low-wage countries are two frequently used measures to decrease cost. With the main focus on cost reduction, however, productivity differences between locations as well as interdependencies between automation and sourcing are often inadequately considered. In fact, automation and sourcing opportunities are usually evaluated independently of each other. This common practice can systematically lead to decisions that consume expected savings. A decision model is proposed that is designed to simultaneously derive optimal degrees of automation and relocation for business processes. Our approach considers various process execution costs and productivity levels as well as the effects of business process automation on sourcing decisions in order to maximise the return of a firm. The model is illustrated with a real word case.