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OUTSOURCING DURING COVID19 : A GAME CHANGER ?

Governments in many countries are taking stringent actions to contain global COVID-19 pandemic. Strong measures, such as putting in place a lockdown on most activities, have shown promise in controlling the corona virus spread. Unfortunately, this has disrupted most of the business activities. The outbreak has compelled organizations to look for remote working arrangements, enabling remote communication, preparation of paperless documents, payroll processes, automation among others.

All these routine procedures require constant attention and dedicated staff. The lack of resources during the pandemic have compelled companies to shift to virtual platforms, resulting in an uptake of outsourcing services. Besides the pandemic, a general requirement to streamline business operations has prompted small, medium and large scale corporations to invest in remote information processing services. Some of these players might have never thought of remote hiring as an option, if not for the pandemic. All these factors are acting as growth catalysts for the global economy during the forecast period.

For example, the banking, financial services and insurance (BFSI) sector has effectively adopted document outsourcing services, owing to the sheer volume of its operations. Looking at the nature of its operations, adoption of document outsourcing services has risen exponentially in the past, and will continue to do so through the pandemic. By outsourcing your back office functions, you can eliminate some of the uncertainty and the risks associated – this can include digital transformation, automation, and hiring. In this blog, we’ll be discussing how Outsourcing can benefit businesses in revival and growth.

The impact of an incumbent global recession post-COVID19 on Outsourcing can be better understood by analyzing the effects during the Global recession of 2008. The overall verdict was that a recession would not derail offshoring and, in fact, may even significantly increase demand for offshoring. Most global outsourcers, and even regional players found increased revenue generation back in 2008.

Let’s dive in about the impact of Covid19 in 2020;

Business analysts from the Economic Times, Gartner, and McKinsey predict that business continuity and revival is possible with more Outsourcing of operations. 

The Everest Group, a US-based IT advisory says, “digital transformation saves the client money in the form of lower operating costs, we do see an appetite to move forward,” “Having said that, it looks like we are entering a recession where capital for projects may be hard to find. Hence these digital projects which save money have a quick ROI (Return on Investment),” as told by the CEO.

Strategic Sourcing is playing a pivotal role in helping companies navigate their way through the COVID-19 crisis. 

What are some of the best ways to use Outsourcing?

Service contracts for works such as automation of processes, movement of business applications to the Cloud (remote servers), and Artificial Intelligence-based process transformation are expected to grow. Since they result in long-term cost savings for businesses, analysts said.

Application outsourcing is an arrangement for a range of application services, including new Product Engineering Services, mobile app development, offshore programming, legacy systems maintenance, management of packaged applications, and staff augmentation. While this form of Outsourcing generally involves a transfer of staff, the use of the term has recently broadened to include arrangements where this is not the case, as in staff augmentation. It does not include system integration activities.

Hiring a offshore software development team to handle requirements in Cloud, DevOps, Mobile app development services or Testing would help you with the velocity of your software product development. Some organizations in certain tier 1 locations might be facing budget constraints to hire a development team locally, there’s always reliable options that you can choose from a different geography. Most offshore providers offer various engagement models for technical projects – Fixed Price and T&M.

Find the right talent based on the availability of best on-demand talents from coding communities worldwide. 

Members of Top Coder Community – A major coding community

How can you engage in a great Strategic Sourcing Partnership?

Worldwide, the outsourcing industry has been an integral part of economic crisis management across sectors. For example, CIOs facing challenges with technical support in the Philippines’ lockdown can step in to move to India. The transmission would be smooth, with almost no disruption to service or quality within a few days. 

Such quick responses wouldn’t have been possible if the business had had to rely solely on its internal operations. 

Gartner offers great insights into Outsourcing Best Practices, here’s an excerpt from their guidelines;

  • Determine outsourcing candidates by assessing their strategic importance and operational impact

– Strategic importance of functions

– Determine whether to hire or partner

– Consider effect on operational performance

– Determine whether to eliminate or outsource

  • Determine how to outsource by tying organizational infrastructure control and domain expertise requirements

– Understand your providers’ risk tolerance, policies, and expertise

  • Determine the outsourcing type for each function
  • Identify service providers that align to your requirements
  • Formalize innovation activities and commitments

Cost optimization should not be a one-off response to a difficult situation.

The prevalence and global scale of Outsourcing in every industry has made it critical for CIOs to work with offshore service providers to manage immediate issues and position their businesses. Most remote facilities will be able to handle medium- and long-term engagements. Business continuity during uncertain times do require cost optimization in internal operations. Alternative cost optimization options and continuous innovation should be an ongoing process.

While most CIOs have taken immediate steps in response to COVID-19, deeper integration with outsourcing providers on crisis-response actions should be considered.

  • Draw in a personal connection into your offshore service provider ensuring their employees’ well-being, especially during lockdowns. Ensure your offshore team in a lockdown can effectively work remotely. 
  • Security of critical infrastructure, systems, data security, and processes that are essential to run your business must be taken care of with utmost care. Notably smaller, more agile players, may have furnished their employees with the right equipment to work at scale. So do not hesitate to hire a relatively smaller technology service provider. 
  • Make sure that your providers scale up key enablers, such as work protocols (roles and responsibilities, decision rights, issue management); processes (communications, workflow); technology (network bandwidth, VPN, collaboration tools, video conferences, security); andpeople management.
  • Plan for capacity rebalancing with your outsourcing provider. Work with your providers to understand current capacity and to plan for the future impact of any declines in productivity. 
  • Ensure business process outsourcing, remote development centers, and help desks are ready for increased volume and crisis-related customer questions. Many technology providers have seen a surge in requirements even as capacity is under pressure from lockdowns and quarantines. Proactive decision making is required with the business side to identify and address emerging demands.

Do you need assistance in understanding more about outsourcing partnership models?

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