Mitigating New Outsourcing Service Provider Challenges During COVID-19

Posted: 04/15/2020 - 03:46
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As the outsourcing industry manages the widespread impacts of the COVID-19 pandemic, enterprises are evaluating how to move forward with their outsourcing engagements and work with their service providers to overcome new challenges. Marc Tanowitz, a managing director at outsourcing and business transformation advisory firm Pace Harmon, offers his perspectives and advice for navigating this unprecedented time to continue fostering strong outsourcing partnerships and driving business outcomes.

How is COVID-19 impacting current enterprise outsourcing engagements (ITO/BPO)? 

Organizations are being impacted in different ways depending on the stage of their IT or business process engagements and the geographic locations of their provider resources. For outsourcing engagements that are currently being implemented or are in the midst of a transition, many of these programs have slowed down if not put on complete hold. Some engagements have paused because companies are suffering economically due to the virus impacts. For other engagements, implementations are moving forward, but there are many challenges and limitations, such as providing technology assets and access for remote workers, delivering training to new resources, and being unable to perform meaningful job shadowing or reverse shadowing.

We’re seeing a different set of challenges in cases where outsourcing is already implemented and in a steady-state, namely issues related to complying with physical and logical security requirements, maintaining productivity, and provisioning assets to all resources. In many cases, providers may not be able to meet the needs as outlined in an outsourcing contract, which may not have contemplated remote worker scenarios for all roles. Companies must decide if they are willing to allow for temporary flexibility around certain elements to ensure the continuation of their programs.

What types of new constraints should enterprises expect on their outsourcing engagements based on service provider dynamics and at-home delivery environments?

As mentioned above, there are a number of unforeseen limitations that are hampering the normal operations of outsourcing providers and having impacts on clients. Many countries where outsourcing providers are delivering services, such as Malaysia and India, have ordered all but essential workers to stay at home. In other locations, even if provider resources are able to access their usual physical office, they may opt not to go to avoid health risks involved in riding mass transit or because of family responsibilities. As such, it is becoming increasingly difficult for people to perform services onsite even if they are considered critical employees or to perform work requiring physical presence such as removing and replacing physical hardware.

In cases where providers’ delivery centers have gone to a work-from-home environment, there are several challenges that must be addressed. First, resources may not have laptops – delivery centers could likely have assigned them an onsite desktop computer that was used by multiple resources across multiple shifts. Additionally, productivity may suffer because of limited access or latency when accessing necessary apps remotely.

There are also physical security issues. Many outsourced delivery centers abide by strict security standards, including privacy screens, lockable storage, not permitting phones inside certain areas to prevent photos, etc. Unfortunately, many of these requirements cannot be maintained in a home environment. And, in low labor-cost locations, resources might not even have sufficient Internet access or a productive space to work from home. Client enterprises must decide whether they are comfortable accepting the risks of temporarily relaxing security protocols to enable work to continue. They will also need to address how oversight is being handled remotely instead of onsite agents escalating issues.

How can enterprises best reassess contract requirements moving forward to accommodate remote service delivery if needed based on emergency circumstances?

We foresee that enterprise clients will think differently about business continuity and disaster recovery moving forward. No one anticipated something taking down operations across the globe. Business continuity plans previously contemplated scenarios of facilities going offline temporarily and having the ability to transition work to a different office floor or another facility.

Going forward, we will see contracting requirements including the full ramifications of a pandemic plan while also identifying the natural constraints. These include the reality that security regulations may be difficult to meet and that infrastructure requirements must enable resources to work from home within reason. Contracts will need to contemplate how best to relax the requirements and then how to bring them back into place as part of the governance plans; they will also need to build in incremental requirements that specifically address these situations (e.g., IP, confidentiality, data privacy). This will include outlining the respective financial responsibilities, commercial requirements and specific triggers for business continuity in a pandemic.

How does cloud access factor into outsourcing engagement success and continuity given the new provider delivery environment restrictions?

The cloud makes it significantly easier to access necessary apps, provided the right security infrastructure and protocols are in place for provider resources to login remotely. However, having a cloud environment doesn't mean you can simply login from anywhere. Many organizations use a VPN to maintain secure access – if resources are not on the VPN, then they cannot get in to perform work. Also, many outsourcing provider companies that use services like Citrix have had to buy more capacity because they didn't anticipate the sheer number of people needing to use it. Overall, when controlled at the right levels of security, the cloud can help companies offer more widespread access to resources, as well as help new resources get up to speed and working faster.


About The Author

Marc Tanowitz's picture

Marc Tanowitz is a Managing Director at Pace Harmon, a business transformation and outsourcing advisory firm providing guidance on complex transactions, process and operational optimization, and provider governance. He has more than 15 years of experience in outsourcing advisory services, strategic sourcing and supply chain process improvement and has served over 30 Fortune 500 and middle market clients and generated more than $1 billion in client savings. Focusing on business process outsourcing, process optimization, and vendor governance, Tanowitz works with global enterprises to develop and implement strategies for improving operations and increasing company performance.