Avasant is one of the leading global management consulting firms focused on the outsourcing, shared services & global delivery sectors. That is why Cognitive Business News Executive Editor Loren Moss felt it critically important to take a few minutes of time from their sought-after president and partner Anupam Govil in order to better understand how the current Coronavirus Pandemic is affecting operations across the world, what measures companies are taking, and what changes may end up being permanent—especially when it comes to governance and operations.
Govil offers insights on what is happening in India, but also what he is seeing in the Americas region, and differences in approaches being taken from region to region.
Loren Moss: India is a major, if not THE major IT remote service delivery location. International travel has been shut down, affecting things like site visits between providers and their clients. How is it affecting the actual internal logistics of service delivery providers?
Anupam Govil: While the current situation is unprecedented, Indian service providers have been taking very strong BCP measures. Having multiple delivery locations both within the country as well as outside also helps them to manage the load balance among different locations. Indian IT and BPO service providers are procuring laptops in bulk and allocating to their employees, provisioned with security and remote work software, to enable Work from Home. Supervision of Project teams is being done over Skype and other collaboration platforms. Statutory bodies like Software Technology Parks of India (STPI) and Dept. of Telecom moved swiftly to ease regulations to enable employees to work from home and even move their equipment out of their restricted zones.
As the disruption is also on the demand side, it has tempered the demand for non-essential services giving service providers a little more time to adopt these remote delivery methods. Most of the mid to large size firms do have the capacity and financial strength to implement these BCP and Work from Home measures. However, many of the smaller firms will find it difficult and may experience higher service disruption. Global service providers with larger offshore presence have a significant advantage to weather this crisis.
Loren Moss: In the US and in the nearshore, like in Colombia where I am right now, the government and many employers are pushing telework. Is that also the case in India? Are there practical or cultural constraints? For example, in many Latin American cities, urban density is such that it can create practical problems with ambient noise or having a dedicated workspace, even though the internet connectivity and electrical grid are more than up to the task. What do you find the case to be with your BPO and ITO clients?
Anupam Govil: It will be a challenge but with sophisticated technologies and hardware most of the challenges of Telework can be mitigated. Service providers are assigning work based on an individual’s delivery ecosystem and capability. It is important for nearshore countries to maintain a strong and stable telecom services ecosystem and bandwidth. One telecom provider in India has offered to waive off the tariff for a month to support Work from Home while another is reducing the bandwidth allocated for online streaming services to support critical business services. Free Zones in Latin America should also relax their regulations to allow equipment and workers to operate remotely. More automation and chatbots will also reduce reliance on voice-based CC/BPO services in times like these. However there is a high likelihood that this might become the new normal. This is also impacting captives and shared service centers of global enterprises. Many of them in the nearshore region are rapidly implementing telework solutions and training their staff to comply with rigid security, data privacy and compliance standards in a remote environment. This has increased service delivery risks, but in this situation, service continuity is of paramount importance.
Loren Moss: One CEO of a major US based BPO told me “companies tend to outsource more during a recession.” What do you expect to see with regards to BPO activity this spring and summer?
Anupam Govil: Yes, companies to tend to outsource more during recessions, and also once the economy starts to recover. Having lost employees and internal capabilities during a recession, organizations have to rely even more on external service providers to help them ramp back up after the downturn is over. Companies typically move through several phases, going into a crisis and then coming out of it.
- Phase 1 – Business continuity & risk mitigation
- Phase 2 – Cost reduction and operational streamlining
- Phase 3 – Stabilizing the business
- Phase 4 – Preparing for recovery
- Phase 5 – Ramp up to recover business and regain market share.
Typically, they will need more outsourcing services in Phase 4 and 5. In Phase 2, it is highly likely that they will reduce their overall spend by deferring or terminating non-essential projects and services. We believe that currently companies are going through Phase 1 and will enter Phase 2 in April once the financial losses accelerate. Phase 3 should kick in once they have reduced their operational costs to align with the current business situation. Phase 4 will likely not happen until late summer once the pandemic spread has been controlled. We expect to see a significant uptake in IT and BPO services towards end of Q3, provided that global markets start recovering and consumer sentiments turn positive. This is the Phase 5 that we expect will help bolster the Global Services industry in Q4 and beyond. While there are many uncertainties here, we believe that services businesses should plan according to the above-mentioned roadmap.
Loren Moss: When it comes to governance & vendor management, what are the takeaways emerging from this pandemic? What can and should firms do differently in the future?
Anupam Govil: The current situation is unprecedented and hopefully we won’t see a repeat in our time. Neither the outsourcers nor the service providers were prepared for such a large-scale disruption. As a result of the pandemic, many providers will change their service delivery model to be more globally distributed. Many services will be automated and done by digital workers. There will also be a permanent shift towards more Teleworking and micro delivery centers. All these trends will exacerbate the need for specialized governance tools and more structured Vendor management procedures. Risk and Compliance will be managed through automation enabled processes. Travel to vendor sites will become less common while Web Conferencing and AR/VR enabled Remote Site visits will become popular.
Loren Moss: At times like this, what is the role / importance of vendor management specialists and third party risk management policies and procedures?
Anupam Govil: We are seeing a spike in demand for vendor management and TPRM services as clients are unable to travel and providers move their employees to work from home, increasing risks of non-compliance, data theft and security breaches. Independent Risk Assessment by advisory firms like Avasant can provide a layer of service assurance to clients that are dependent on offshore service providers. In the early days of offshoring, advisors used to offer independent validation & verification (IV&V) of offshore service delivery. We have revived these offerings to assure clients that their service providers are taking requisite measures to ensure continual service delivery while managing risks, compliance and quality. In an IV&V service we assess current service delivery capabilities and BCP practices in the context of the specific client engagement. We also recommend remedial measures to close any gaps, mitigate risks and enforce effective BCP procedures. While global enterprises grapple with business-critical issues, these proactive steps can prevent risks of third-party vendors and help stabilize IT and business operational services.