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How will COVID-19 alter the BPO/BPM Industry?

A practitioner’s perspective on the impact COVID-19 will have on the shared services / business process outsourcing industry.

It is still early days to judge the efficacy of the response to the COVID crisis. Service Providers, their clients, and companies with in-house shared services centers performing business process work around the globe, have leveraged a range of strategies to keep their businesses afloat, while putting employee safety at the center of their efforts. There is little doubt that we will emerge out of this crisis quite differently from the way we went into it.

We’ll examine three areas in this context:

  • Localized BCP to Distributed Workforce
  • Multifunctional versus siloed functional centers/shared services
  • Accelerated standardization and platform services

Localized BCP to Distributed Workforce:

It’s not really BCP, or business continuity planning, as we understand it. Ask any client or provider and they will tell you that prior to the crisis, BCP typically referred to a specific location, center, or city, which becomes unavailable to process work, and the actions taken to compensate for it. Typical solutions ranged from having an alternate location in the same city to flying people to other locations; or if work was done across two reasonably distant locations, the lights on workload could be shifted to the unimpacted location.

The COVID crisis has turned the localization assumption on its head. What do you do when your centers in Poland, Philippines, India, and even in the US, take a hit all at once due to a crisis? The obvious and swift response to move work infrastructure, such as laptops and desktops, to the employees’ homes, has meant that this isn’t lights on critical work BCP, it is a distributed workforce.

But managing a distributed workforce has its limitations.

The areas of concerns have been both sector specific and cross industry. The initial concerns across industries were around security of data and potential impact on productivity, either due to infrastructure quality or due to the lack of supervision, especially for novice associates. Solutions have been quickly deployed whether it’s about upgrading the home internet of the associates working from home, or deploying technology to ensure supervisors constantly stay in touch. Collaboration tools like Cisco’s Webex, Google’s Hangout, Zoom and Skype, have proved to be great enablers and served to assuage some of these concerns.

There will be some industry-specific challenges, such as the inability to record customer calls remotely in a WFH environment, or potential PII data exposure, which necessitates additional controls due to the sensitivity of information.

Why is this shift important?

Assuming this grand experiment proves to be a success, companies will question the need to go back to the old model. The most basic change - the cost differential between desktops and laptops - will be easily justifiable as essential to business. More importantly, transitioning work, which historically involved some amount of travel and initial weeks of in-person interactions, will also be questioned. Transition and Training will shift to leveraging software collaboration platforms and learning experience platforms like Wingspan, ensuring anytime, anywhere, and at-your-convenience learning.

Multifunctional versus siloed functional centers/shared services:

Single locations with a significant chunk of work for a specific function serving global customers constitute a higher degree of risk, and companies will look to de-risk operations. This necessitates multiple service lines at a given location, and to the extent it’s viable, looking at more than one low-cost location with exposure to critical work packages. While a concurrent global crisis may make multiple locations look inconsequential, the varying degree of the crisis does make a difference. When initially the China centers were hit, other global locations picked up the slack. Now, however, the China delivery centers for most are operational, with some even working with a reasonable mix of office and WFH.

Why is this shift important?

The crisis will filter out those with the ability to shift work rapidly, and at scale, as the key players and strong partners. While it is still anecdotal at this stage, a few smaller shared services centers have struggled to adapt. Companies must question themselves on what constitutes core vs. context; especially when they look at deploying internal shared services, they can reduce their risk, either with the multi-functional/multi-locational approach, or by splitting work between internal resources and external providers.

Accelerated standardization and platform services:

The adoption of standard platforms and work for cross industry processes has been rather tepid, with multiple reasons ranging from the limitations of company-specific systems to process nuances. New age companies have lesser limitations, but most Fortune 500 companies have existed long before the internet. Imagine a multi-tenant, cloud-based platform, where 70% - 80% of the work is fungible, while the truly company-specific nuances account only for the balance 20%. In such a scenario, cross trained resources can be deployed quickly. Combine with it the points on training and location discussed above, the ability to respond would increase exponentially.

Why is this shift important?

The shift to platforms brings several advantages – less manual work and more automated ways of working, which in turn drives efficiencies and effectiveness. BPM providers are now increasingly dealing with more complex projects and the onus, hereon, will be on service providers to deliver business value.

Empathy as a tenet

It took a crisis to unite us as a race. Arguably not in full measure, but substantially. If I had told you 3 months ago that Republicans and Democrats would unite to pass a $2 trillion package, would you have believed me, irrespective of your views on the efficacy of the stimulus or your political leanings?

One consistent response that brought this home for me was the concern our client companies unanimously showed for the safety and wellbeing of employees, even as we talked them through our response options. Who would have thought that a social distancing project would teach us the value of a unified community?

Human memory is short, they say, but hopefully we will not lose the lessons emerging from the current crisis. Admittedly, many more questions will emerge as we navigate through the crisis.

Other interesting points of view

The BPM industry is heterogeneous so the impact on industry subsegments will look differ. Rajesh Ranjan from Everest Group looks at the strategies Service Providers can deploy to manage and thrive based on their financial strength and market standing.

My colleague Andrew Jarvis has a view on the role of procurement and how they can help their organizations navigate through the crisis.

How do you think the crisis will impact the industry?

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