Laiye and Microsoft - why Chinese RPA is heading West to secure your data!

Chris Middleton Profile picture for user cmiddleton February 1, 2022 Audio mode
Summary:
Why is Microsoft partnering with a Chinese software company to kick out Western rivals?

Image of the Chinese flag
(Image by Marsel Elia from Pixabay )

In our post-Trump age, with its hangover of Sino-American paranoia and trade barriers, you might be surprised to learn that major US brands like Nike and Goldman Sachs have been partnering with a Chinese software company to automate business tasks.

You might also be surprised to hear that enterprise cloud titan Microsoft has announced a strategic partnership with the same provider, to bring robotic process automation (RPA) and software robotics to the UK and Europe. AstraZeneca is just one client, for AI-powered conversational bots.

Cue hysterical headlines about robots stealing jobs. But while some US commentators might be reaching for their keyboards or assault rifles to fire off an angry round or two - "I'm as mad as hell and I'm not going to take this anymore!" - this is no overnight shift or political cataclysm. It's been going on for some years, including during the previous White House administration.

The company is Beijing-headquartered Laiye, a multi-award-winning competitor to the likes of UK multinational Blue Prism and Romania-founded, New York-headquartered UiPath. All work in the intelligent automation and ‘digital employees' space.

These are the softbots that run repetitive tasks and business functions, freeing up human workers to be creative or to support business strategy (perhaps by updating their CVs). Such vendors provide chatbots too, automating the customer contact experience. (No jokes about talking out of your bot, please.)

So why are big names turning to China to automate non-critical tasks with software - and to a company set up by two Ivy League graduates?

The answer is that Mandarin Chinese is the first language of nearly one billion people, while English is the first for fewer than 370 million. Worldwide, English is spoken by more than 1.3 billion, of course - mostly as a second language - and Mandarin Chinese by just over 1.1 billion. But that doesn't make English the world language of business, as some like to claim. The figures show that 6.6 billion people don't speak English as their first or second language - or at all.

It stands to reason that as China's economy grows, more and more people worldwide will see the importance of learning Chinese, and the 200-million gap between English and Chinese speakers will close.

The key point is this: Western multinationals can't automate things in overseas territories just by shouting at them in English. If you are a global business and, especially, if you do business in Asia, having Chinese language automation support as standard is critical. Not to mention support for other Asia-centric languages.

This is where Laiye comes in. As one of China's native RPA providers, it's a major player. And in these days of consolidating global operations, this makes it a threat to rival specialists in the US and UK. Why have different automation solutions in each territory? Hence Laiye's description of the West's market incumbents as "legacy players".

Currently, the likes of Nike and Goldman Sachs deploy Chinese bots in Asia, not in the US. But make no mistake, Laiye has global ambitions. So much so, it has employed a man with a laptop in Cheltenham (that's not a criticism: most humans have been working from their laptops), merely a stone's throw from GCHQ.

Neil Parker is Laiye's General Manager of EMEA. He tells me:

We have, I think, 50% of the Fortune Global as customers. Last year, we began international expansion - Southeast Asia, Asia Pac, Latin America - and we started in the UK six months ago. There are now almost 30 people covering the sweet spots. Just very rapid expansion.

This was the reason for Laiye's 2021 Series-C funding injection of $50 million. In total, the company now has 12 Chinese and American investors. Parker continues:

So, we go back to those firms [which are already customers in Asia] and say, ‘We are now global'. And we are having conversations at this stage in retail, in health, in insurance.

An announcement from the company last week also mentions clients in utilities and communications.

So, is Laiye monitored by UK security services? No, claims Parker, because no data finds its way back to China. This is where Microsoft Azure comes in, along with other cloud providers. Microsoft has been onboard with Laiye since the early days, including as an investor.

Where is your data?

What the strategic tie-up (announced 27 January) gives Liaye's clients is reassurance that its automation capabilities are "ringfenced to comply with data protection, security, and transfer regulations", such as the EU's GDPR (in UK law as the Data Protection Act 2018).

The announcement explains:

As organizations use advanced analytics and business automation to sell into the UK and EU markets, they increasingly need to comply with strict data privacy rules around how and where data loads are stored and processed. Laiye recognized this need and now offers its fast-growing customer base a proven cloud hosting option, the Microsoft Azure platform.

As a result, customers can be safe in the knowledge their data will be "processed according to their requirements and in strict compliance with privacy laws at regional, national, and international levels". Laiye sees this as offering "a further level of reassurance.

Parker says:

The first question a hospital asked me recently was, ‘Where's my data? Where will it be kept?' The answer is, always in the UK or within an organization's Azure cloud.

That reassurance is important, but only a partial solution. At a pre-COVID Westminster eForum on UK data protection, several large organizations, including NHS hospitals, a bank, and a major charity, admitted to diginomica that they had no idea where their data is.

Why is that? It's because they (wrongly) abdicated responsibility to their cloud providers and expected them to sort out the details - no minor consideration when one considers that ‘the cloud' means data centres built on land under local data laws.

As another organization's CIO admitted at that event, some data was held in the EU, either all or some of the time, or was processed there for some tasks. The question arose after a presentation by the Information Commissioner's Office (ICO) about data adequacy between the UK and EU post-Brexit.

Today, data adequacy is tentatively in place, so these issues remain hypothetical - unless the UK decides to tear up its commitment to being a fellow traveller with GDPR. In this ideology-fuelled age, I doubt anyone thinks that's impossible.

As for Laiye's relationship with Microsoft, Parker says:

Providing customers with leading cloud capabilities from a region where they can meet regulatory compliance will massively streamline their ongoing transition towards hyper-intelligent automation.

Ronen Lamdan is CEO International of Laiye. He adds:

Our Microsoft Azure partnership brings the momentum players in the cloud-hosting and intelligent automation markets together in one easy-to-buy package. Laiye is sending a clear message of intent to legacy players to up their game or move aside.

Bold words, and endorsed by Microsoft, which gets a new EMEA market to play in, while jamming its foot through the door in China. Doreen Yun, General Manager of Partners and Alliances at Microsoft, says:

As the cloud platform for space stations, start-ups, and everything in between, we look forward to assisting innovative organizations with reaping the benefits of intelligent automation, by providing them with world-class cloud hosting.

My take

Space stations? An intriguing choice of words. Any US astronaut (I've spoken to a several in recent years) will say, "Don't mention China!" The US really doesn't like to hear the word. But US multinationals in China? That's fine. Sooner or later, the door was always going to swing the other way.

A grey colored placeholder image