The Coronavirus shadow over outsourcing

The world has not witnessed a global recession since 2008. Experts suggest 2020 will be reminiscent of the great depression of the 1930s. The elites will lose money and the working class will lose jobs; the poor will lose lives. Such prediction and prophecies are quite rampant on the Internet and the media these days, and especially in social media.

And it all revolves around the global pandemic: Coronavirus, precisely Covid-19.

Let us skip past what COVID-19 is because if you are reading this, I am sure it has become a part & parcel of your daily life by now. With the world under lockdown, people wait with bated breath for the vaccine. Civil rules like social distancing, isolation, correct hygiene practices have been enforced. The public essential services are working with a limited workforce. The private companies have resorted to “work-from-home” aka WFH policy as this is the best bet that’ll keep them going. Coronavirus has exposed the vulnerability of the supply chain and pushed the IT industry in a complex rut. Most IT companies need IT service providers and the pandemic just “threw a monkey wrench in the wheel”.

Almost every IT companies have mandated that their employees work from home. For now, video conferencing, cloud storage and collaboration tools are managing tasks seamlessly. Companies are leaving no stones unturned in making sure that their workers have the necessary tools and technologies to ensure speed, security, quality of services provided. In offshore locations, where much of the workforce is not familiar with the work-from-home scenario, is facing tactical and operational hassles such as getting laptops, setting up VPN, VDI, or Citrix access; seamless WiFi connectivity and ensuring product security.

The IT industry has faced one of the worst crises ever in the face of coronavirus pandemic. Companies have shut down workplaces, stores, and processing plants. With the looming possibility of lockdown extensions, as the coronavirus spreads, many big companies have already charted out elaborate WFH plans. For example, TCS has already mandated that post- COVID-19, 75% of 4.5 lakh employees will permanently work from home. Although this is just a solution to keep the wheels rolling, the coronavirus pandemic has unleashed greater impacts incorporate business machine then what meets the eye. With economies closed, borders sealed, outsourcing has become a daunting task all of a sudden.

Here is how the Covid-19 has affected IT industry and outsourcing:

Continuation of business

Let us be honest, most outsourcing business continuity plans were not designed to face a global pandemic and neither was ready to apply widespread work-from-home operations. In such trying time clients need to quickly assess the state of business continuity and take steps to address any holes or hassles. As of April, India was operating at around 80% of its pre-pandemic productivity with WFH fully enforced among 9 out of 10 employees. However, there are some companies repatriating services while some have opted for alternate delivery methods. It is expected that business continuation during a global disaster should be molded in a way that addresses such times.

Productivity and Performance

Coronavirus is already making impacts on productivity, either on a group or an individual. The sales department has witnessed it, particularly as their bonus targets are getting hampered due to uncertain situations. WFH is a sudden realization for every IT employee and churning daily productivity while maintaining performance is not consistent anymore. Another issue is with small and medium enterprises (SMEs) in India. They are the worst hit and cannot provide provisions for WFH for their employees Hence, either they have cut down their production and some have resorted to lay-offs.

Effect on the Global supply chain

Coronavirus pandemic has had a deep impact on logistics and supply chain. As of now, the cost of supplies from China has increased owing to expedited freight costs and paying premiums. Many industries in India are working out an alternative sourcing option, although chalking out and identifying an alternative supply system is not very easy. It is safe to say that, the more this pandemic extends, the more recovery time will be taken by the supply chain, which will affect all major countries.

Closure of workplaces and facilities

As the coronavirus kept on spreading at a rapid rate across the world, the first thing most governments did was enforcing lockdown. Absolute isolation. Of course, it is done with the noble intention of safeguarding citizens. Some governments have imposed long lockdown periods to let people familiarize themselves with it. However, this presents a problem for so many businesses as lockdown resulted in less footfall.

Many of our clients from the States have reported a substantial drop in business due to closure:

"It is great that our government is considering lockdown and stimulus package for corporations. However, when all our businesses collapse, who will provide these individuals with jobs? It is difficult enough to carry on any business in the state of California because of government oversight." Said one of our clients with a worried voice.

Work-From-Home hassles

Although many companies have mandated WFH as they had full provisions and access to necessary tools, there a lot many others who are having a hard time providing their employees remote working facilities, mostly due to the lack of collaboration tools and interpersonal training.

A report by a leading IT service management company suggests that 51% of the private companies in India do not have enough technology and resources to implement a full work-from-home strategy. While the non-IT firms struggle with decades-old systems, storage backup, and poor connectivity, the small and medium scale IT firms do not have adequate access to conferencing tools like Zoom or Skype or VPN and/or Citrix.

Will, the corporate world resort to a new outsourcing model once this is over? If this is over? In case the pandemic stays for quite some time it is evident that the outsourcing landscape will witness a massive reshuffle. There might be an entirely new economic and world business model altogether. As of now, do not panic, have trust in the system, work your way out, and keep an eye on the latest unfolding in the world.