Governments in many countries around the world are increasingly taking more stringent actions to contain the global COVID-19 pandemic. Strong measures, such as putting in place lockdown and shelter-in-place guidance, have shown promise in blunting the spread of the coronavirus.
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However, these measures are also creating specific challenges for CIOs in supporting their organizations and managing the implications of the crisis. Among the many actions CIOs must take in the first wave of their response—from reliably supporting a work-from-home workforce to keeping their colleagues safe to battling cyberattacks—they must also consider whether to manage their outsourced services to ensure business continuity in the light of global lockdowns or to better manage IT costs in anticipation of potentially challenging economic times.
As of this writing, for example, the Philippines (with more than 1.1 million call-center workers) has called for a lockdown for 47 days; similarly, India, a powerhouse in providing IT services (with an estimated 3.1 million call-center workers), has instituted a 40-day lockdown of the majority of business and government establishments. These measures have forced companies to react quickly. Outsourcing providers have placed orders for new laptops at significant volumes and, in the interim, have adopted tactical solutions such as shipping desktops to their employees’ homes. At the same time, demands on many outsourcing providers have increased. A media company, for example, had to quickly hire 500 people to manage the sharp rise in call waiting times and increased customer demand for broadband packages as more people worked from home.
The outsourcing industry has been an integral partner in companies’ crisis response across sectors. For example, a CIO was facing challenges with call-center support with the lockdown in the Philippines. The company’s service provider stepped in to move more than 50 percent of the call-center volumes from the Philippines to India—with no disruption to service or quality—in a matter of days. Such a move wouldn’t have been possible if the business had had to rely on its own internal operations. Considering the prevalence and scale of outsourcing in every industry and company, it is now critical for CIOs to work with their providers not only to manage immediate issues but also to position their businesses well for the emerging medium- and long-term implications.
In the past three weeks, we’ve spoken with multiple senior leaders at global companies and outsourcing providers to better understand what the most successful responses to the coronavirus crisis have been. Based on these conversations and our experience helping companies in previous crises, we believe CIOs should focus their energies and those of their outsourcing providers over the next 60 to 90 days on two areas: 1) resolving immediate issues and 2) building resilience and planning for ongoing COVID-19-related impact.
Resolve immediate issues
Take care of your people—including your outsourced team. Now is the time to be “one” team. COVID-19 is first and foremost a human tragedy. Like all other companies, outsourcing providers are focused on taking care of loved ones and trying to stay healthy while doing their jobs effectively under stressful and difficult conditions. This requires empathy and flexibility from CIOs.
- Bring a human front to all provider interactions. Ask how they are ensuring their employees’ well-being, especially during lockdowns.
- Work with your providers to develop clear guidelines for the health of employees who need to remain on-site, such as dividing workspace into smaller zones that employees should not cross.
- Ask your providers to provide appropriate mental-health support to assist their employees in these challenging times (and, if possible, find ways to supplement the providers’ support).
Secure services on critical infrastructure, systems, security, and processes that are essential to run your business. Current lockdown and remote-working operating models are putting unprecedented strains on every outsourcing provider’s infrastructure. Some of them, particularly smaller, more nimble players, may have furnished their employees with the right equipment to work at scale. Internet service providers in areas heavily affected by the coronavirus, however, are experiencing service degradation due to capacity overloads or lack of robust infrastructure—particularly true for India and the Philippines—which compromises the ability of their employees to log in to systems and provide support at high levels of productivity. Add to the mix the possibility that critical knowledge of your company’s infrastructure, security, processes, and systems may be entrusted to a provider employee who has no backup should he or she fall sick, and your organization’s technology ecosystem and business continuity could be at critical risk.
While most CIOs have already taken immediate steps in response to the COVID-19 situation, a deeper integration with outsourcing providers on crisis-response actions should be considered.
- Ensure critical provider employees in lockdown can effectively work remotely. Even though most providers have enabled their workforce to work from home, CIOs need to track workforce productivity and the ability to work in real time. Make sure that your providers scale up key enablers, such as: 1) work protocols (roles and responsibilities, decision rights, issue management); 2) processes (communications, workflow); 3) technology (network bandwidth, virtual private network [VPN], collaboration tools, video conferences, security); and 4) people management (health tracking and support). Establish daily crisis-response calls with your outsourcing providers until the new working model proves itself.
- 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. For example, productivity in infrastructure support is expected to drop by as much as 40–50 percent due to a lack of remote infrastructure availability. Design and implement possible rebalancing plans between locations and/or providers. Initially, this may need to be done weekly, since each country might be at a different stage of the COVID-19 outbreak. A company might, for example, move work to Eastern Europe as India and the Philippines go into lockdown. Encourage your providers to provide early warning about impacted resources and services.
- Safeguard continuity of outsourced critical hardware and infrastructure services. Make a detailed day-by-day plan with your outsourcing providers to monitor, address, and track developments with data centers, critical servers, and network support, accounting for both increased network usage and reduced productivity of both client and provider employees.
- Set up and confirm compliance with the right offshore security protocols. It’s critical to ensure that all provider employees safeguard and handle all data, especially personally identifiable information (PII), the right way, even in remote locations. CIOs should make sure that providers have safe remote-working protocols and procedures for threat identification and escalation. Consider, for example, using multifactor authentication to derisk access to sensitive data and working with providers to shorten patch cycles for essential work-from-home systems such as VPNs and endpoint protection to reduce the risk of data being stored at endpoint devices while considering latency issues.
- Set up a virtual command center. CIOs need to pull together a team to help ensure technology uptime and enable critical “crisis-time” business requirements—mission-critical systems, inventory data availability, and payments, for example. Some of these may require changes to systems for remote business users. Stalled workflows may need to be adapted; instead of printing invoices, for example, perhaps scan them to PDF in a shared folder.
One public-sector organization set up a command center in a matter of days to identify and support critical business needs. It also tracked and reported on all critical system-usage metrics, such as number of transactions, by remote users. This allowed it to proactively identify and resolve bottlenecks.
- Rapidly reduce noncritical demand and usage in the short term to ease the burden. While most outsourcing providers are running at full production capacity without a significant drop in service levels, they will likely run into capacity shortages as the lockdowns continue. Ensure that available capacity is being wisely used. Reassess all applications for true criticality and 24/7 support, reduce service-level agreements for nonpriority tickets, and, if facing network issues, move to audio conferences as opposed to video conferences.
- Ensure business process outsourcings (BPOs), call centers, and help desks are ready for increased volume and crisis-related customer questions. Many call centers and other support services have seen a surge in calls even as capacity is under pressure from lockdowns and quarantines. CIOs should share weekly workload forecasts with providers and work with them to identify options to address potential surge capacity, including how they will increase staff as needed. CIOs should also work proactively with the business side to identify and address emerging customer and employee FAQs and craft communications for providers. One banking organization, for example, realized that high call volumes were from customers who wanted to refinance their mortgages, but the call-center operators had no guidance on how to respond.
Build resilience for ongoing COVID-19 effects
Proactively collaborate with your outsourcing providers to prepare for what’s next. Once the critical needs have been addressed, CIOs should then be proactive with their providers in addressing the likely ongoing effects of this crisis. These might include business-continuity planning for possible capacity reduction, dealing with issues around remote work on critical technology programs, and developing approaches to address new needs as they emerge.
- Build real-time crisis-monitoring dashboards across all outsourced services. Work with your providers to build “easy to access” real-time dashboards to track the right set of metrics—status, service levels, capacity across locations, areas of risk, and so on.
- Assess options to back up capacity for critical subject-matter experts. Identify critical subject-matter expert roles with the providers, build backup plans (documentation and knowledge transition) to back up resources. Assess if your providers can use or share capacity across locations or services in case of shortages.
- Develop disaster-mitigation plans for various outsourcing scenarios. Work with your providers to identify potential scenarios, including a full shutdown of their services. What if networks in India deteriorate rapidly under high loads, for example? Develop specific mitigation plans: Could the provider move critical activities to on-site facilities and balance the load across various services?
- Reallocate resources to critical projects. Work with your providers and business partners to identify and prioritize technology solutions that are critical for the business and its customers—critical patient journeys in healthcare systems, perhaps, or inventory and supply-chain analytics for retailers. Ask your providers to find out if there are common “industry” solutions that you can benefit from. Consider reallocating resources from projects that are no longer a priority to those that are.
Have honest discussions with your providers on the financial impact of the COVID-19 crisis, with the goal of finding the best outcomes for everyone. As companies come to terms with the human toll of the COVID-19 crisis, they also need to work closely with their providers to work through the financial implications and find solutions that can benefit both parties.
- Assess the long-term partnership with providers. As CIOs consider the financial costs of the crisis and assess ways to better manage spend, there will be strong temptations to cut back on some outsourcing. To properly assess the relationship with their providers, CIOs will need to take a hard look at their road map and the capabilities they will need in the future, once the recovery starts. Knee-jerk cost cutting may incur greater costs later.
- Work with your providers to improve your financial resilience. Assess how providers can help your organization weather the crisis, perhaps by adjusting the mix of labor in locations, pushing out payments, or implementing lean transformations. Understand each party’s needs and set up financial arrangements accordingly. For example, one organization changed the spend mix from capital expenditures to operating expenditures with its provider, thus providing immediate cash benefits to its provider—in return for favorable in-year credits redeemable at the end of the year or in the following year. Explore all options to cut discretionary spending from the contracts, even minor spending, such as travel and expense line items.
The COVID-19 pandemic has clearly highlighted the need for critical technology resilience and strong partnerships with outsourcing providers, and it may dramatically shape the nature of the outsourcing industry for years to come. Business-continuity planning with providers, for example, will not merely be a “check the box” exercise but an area of differentiation defined by such concerns as how quickly a provider can lift and shift workloads across geographies.
Becoming comfortable with remote working also potentially provides CIOs with an opportunity to accelerate the shift to new operating models. Being able to work with talent in any location can empower teams to work successfully without in-person face time, institutionalize agile application-development methodologies for distributed or remote work at scale, build support models with the flexibility to ramp up and down quickly across locations, and potentially increase outsourcing of nonstrategic and back-office services. In some cases, it may also make sense to work with outsourcing providers with the capabilities to accelerate important transformational programs, such as the shift to digital channels or development of new business models. One organization, for example, is now putting together a task force with providers to automate its paper-based invoice-reconciliation processes, which was previously done manually by 40 to 50 full-time employees.
Whatever the path, CIOs will need to work in true partnership with their outsourcing providers to change the delivery of technology services not only to manage this crisis but also to power the business forward.