...Suz made an interesting comment against my blog last week. She said the following:

The US is increasingly a service-oriented society. Where are we heading with more and more automation, outsourcing, and crappy service? I just wonder when it's all going to end.

I had to stop and think about that. The U.S. is an increasingly service oriented society. Yes, this is sort of true.

But service to whom? As I watch companies continue to expand their offerings to better service their customers, I also watch the changes that are happening in the world. Service is an expensive industry. You have to pay people to do things for other people. And if they're good at what they do, then you have to increase their pay. Or you have to pay them more to do other things or to stay competitive to keep the good workers. But there comes a point when paying a bunch of people a good amount of money to do something will hurt the bottom line.

Companies automate whatever services they can to save money. You don't want to pay 100 people at an hourly rate of $10 to do some manual labor task for 4 hours a day when you can invest $20K into a machine that will do the same task at two and half times the speed of a single person. You buy several machines, depreciate the cost of the equipment over time on your taxes, and lay off some of the people.

What have you done? You've increased unemployment by, let's say, 90 bodies. You've also gotten rid of any costs associated with the people: agency markups if you had temporary employees, benefit costs for permanent employees, insurance risk (less people you have to cite on your production floor), and what you pay them. You know that you didn't just save $10 a person per hour, right? You've saved more like $13 a person, per hour.

Crappy service? Only when the machine breaks down. Or if you're facing an employee who doesn't care because they're making a wage that's just a touch higher than minimum and they think they're entitled to more. They may be, then again... don't try and convince me that some 17 year old that's still living at home and in high school with no debts or work experience deserves more than a starting wage at a burger joint or grocery store. Automation doesn't complain or give you an attitude. The only complaints that automation generates is from the people who are being let go, the HR team having to process all the people that are being let go, and from accounting and finance who have to figure the equipment depreciation into the balance sheets and taxes.

The company is providing their service or product even faster now, with automation, but without the human cost. Is it a benefit to the customer? Well, if the cost of the service to the customer doesn't change at all (or doesn't change materially for a very long time), then that's great for the customer. But if the customer wants to speak to a person and all they get is an automated menu, what is the perception of the customer service this company provides? It stinks, because when you want to talk to a person you do not want to press 100 buttons on your phone to get through the automated menu and eventually get kicked out.

Still, the company is saving money and those savings will be passed on to you. Is it a service to you? Not really...

...saving money and increasing profits is a service to the company.