Automation to the Rescue – Combating Rising Labor Costs with Data Processing Automation

Introduction:
Large businesses are entering 2024 under pressure from an unprecedented surge in labor costs. Wage inflation and worker shortages have driven up the cost of talent, forcing companies to do more with the same (or smaller) workforce. In fact, labor expenses are expected to be the single largest cost increase for most companies going into 2025, outpacing other inputs like materials or rent​

. A recent CEO survey underscores this challenge: when 182 chief executives were asked how they plan to offset these soaring labor costs, the number-one strategy (cited by 59% of them) was to invest in automation and technology​

. This marks a dramatic pivot in executive thinking – rather than simply raising prices or cutting staff, leaders are betting on Data Processing Automation (DPA) and related technologies to boost productivity and contain costs. The logic is straightforward: by automating routine, labor-intensive tasks, enterprises can maintain output and service levels with fewer labor hours, effectively blunting the impact of higher wages. In this post, we’ll explore how DPA and intelligent automation are stepping up as timely solutions to the labor cost crunch, what industry data and trends say about their effectiveness, and how businesses can deploy automation in a way that amplifies their workforce rather than replacing it.

The Squeeze of Rising Labor Costs

Labor cost inflation has been building for a few years and hit enterprises hard in 2024. Compared to just a few years ago, companies are paying significantly more for the same roles – one analysis shows total labor costs (wages plus benefits) jumped 18% from 2020 to 2024 on average​

. Certain sectors experienced even steeper increases, with service industries seeing labor costs rise over 24% in that period​

. Such increases directly erode profit margins if not balanced by higher productivity or pricing. At the same time, a tight labor market means key positions often go unfilled, adding to the strain on existing staff. The result is a classic squeeze: labor is more expensive and often in short supply, threatening operational efficiency and growth. Traditional responses like passing costs to customers via price hikes have limits, especially in competitive markets or when demand is uncertain. Cutting back on services or quality to save costs can backfire as well. This is why CEOs have zeroed in on automation as a savior. Automating processes allows companies to effectively increase output per employee. As one financial leader noted, “digital transformation, specifically with enhanced workflow and elimination of redundant manual tasks, is critical as employers seek efficiencies in back-office functions”​

. In other words, by using technology to streamline work, businesses hope to maintain or even improve performance without proportional increases in headcount. The urgency of this approach is evident – we’re seeing a wave of interest in technologies like robotic process automation (RPA), AI-driven tools, and advanced analytics precisely to address labor-driven cost pressures.

How Data Processing Automation (DPA) Can Offset Cost Pressures

Data Processing Automation (DPA) refers to using software and algorithms to handle repetitive, data-heavy tasks that were traditionally done by staff. Examples include data entry, report generation, invoice processing, customer data updates, and many other “busywork” routines that exist in every large organization. By automating these tasks, companies can achieve the same outcomes in a fraction of the time and with minimal human intervention. The impact on labor costs comes from two angles: First, automation saves employees’ time – what might have taken several full-time staff hours per day can be done automatically in minutes. This means a team can handle a larger workload without hiring additional people, effectively increasing labor productivity. Second, automation reduces errors and rework (which also consume labor resources). Fewer mistakes mean less staff time correcting data or fixing process failures. Consider a practical scenario: A bank’s finance department automates its monthly financial close data consolidation. Instead of accountants spending dozens of hours collecting spreadsheets from various units, a DPA tool aggregates and validates the data automatically. The accountants can then focus only on the anomalies or analysis, not the grunt work. That could save hundreds of labor hours each quarter – translating to significant salary cost savings or reallocation of those hours to more value-added analysis. At scale, these efficiencies add up. Enterprise-wide, adopting automation and AI in workflows has become the top tactic to combat labor cost increases​

, precisely because it allows businesses to essentially “do more with less.” Notably, companies pursuing this path are not necessarily aiming to cut their workforce en masse – in the same CEO survey, 88% of leaders anticipated automating without substantial layoffs (in fact, 40% said they expect no workforce reduction at all from their tech investments)​

. This emphasizes that the goal is augmentation, not replacement. Automation takes over mundane tasks, while employees focus on high-touch, high-impact work that truly requires human insight.

Trends and Success Stories in Automation for Cost Control

The pivot to automation is not just theoretical – it’s happening on the ground. In 2024, businesses have ramped up investments in a range of automation technologies. One clear trend is the rise of AI and machine learning integrated into process automation. Modern DPA tools can use AI to read documents (like invoices or contracts), extract relevant data, and input it into systems without human help. Generative AI has also entered the scene, helping to draft communications, summarize reports, or even write software code, further reducing labor strain in areas like customer service and software development. The technology has become “far more flexible, intelligent and inexpensive to deploy”​

in the past year, lowering barriers to adoption. We’ve seen companies automate roughly one-third of the tasks in certain roles, yielding higher productivity, greater agility, and improved profits – a result that EfficientMe’s own DPA clients often achieve. Moreover, automation is proving effective in departments beyond IT; finance, HR, and operations teams are using low-code automation platforms to build their own solutions for repetitive work. For example, a large retail chain implemented an automated price-tag auditing system. Instead of sending employees to manually verify shelf prices (a laborious process), they use image recognition and data automation to flag discrepancies, saving thousands of labor hours annually. Another success story comes from a manufacturing firm that optimized its supply ordering process with automation bots, cutting order processing time by 80% and avoiding the need to hire additional procurement clerks during a period of growth. These examples reflect a broader 2024 pattern: 59% of enterprises are prioritizing automation projects in response to cost pressures​

. The ROI on these projects is often quickly realized via labor cost avoidance and efficiency gains.

Implementing Automation Strategically with EfficientMe

While the case for automation is strong, implementing it requires a strategic approach. Not every process should be automated, and not every automation yields the same value. EfficientMe’s DPA service focuses on identifying the “low-hanging fruit” – areas where automation will have the highest immediate impact on labor cost reduction and accuracy. We typically begin by analyzing your operations to find tasks that are highly manual, frequent, and rule-based (ideal candidates for automation). Using our expertise in RPA and intelligent workflow design, we then develop and deploy automation solutions in those areas, whether it’s a software bot to handle data transfers or an AI component to classify and route incoming service requests. The goal is quick wins that free up measurable hours of work. Crucially, we involve your staff in this process. Since the objective is to enhance your workforce, we train employees to work alongside the new tools – for instance, teaching a finance team how to manage and monitor their new automated report generator. By upskilling employees to oversee and collaborate with automation, we ensure they are not displaced but rather empowered to be more productive (this ties in with our Staff Enhancement philosophy, which we’ll explore in a later post). We also put governance around automation initiatives, to monitor performance and maintain quality. The result is an organization where automation is carefully integrated into workflows, delivering cost savings without causing disruption or morale issues. Business leaders get real-time dashboards showing how many hours have been saved and how process throughput has improved, providing an authoritative basis for further decision-making. In sum, with a partner like EfficientMe guiding your Data Processing Automation, you can confidently navigate the balance between labor and technology – achieving cost efficiency while keeping your team engaged and focused on what matters most.

Key Takeaways for Business Leaders:

• Leverage Automation to Boost Labor Productivity: When wage costs rise, increase output per employee by automating routine tasks. This approach is favored by nearly 60% of CEOs​

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  as a primary strategy to offset labor inflation.

• Target High-Impact Use Cases: Identify the most repetitive, time-consuming processes (data entry, report generation, transaction processing) and prioritize them for automation. Quick wins in these areas can free your teams to focus on higher-value work and reduce the need for additional hires.

• Augment, Don’t Replace, Your Workforce: Approach Data Processing Automation as a way to empower your existing staff, not simply cut headcount. The vast majority of leaders implementing automation expect to retain their employees​

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  – use automation to handle the grunt work while your people take on more analytical, creative, or strategic tasks that drive business growth.