Businesses are reassessing their models and clients are reviewing contracts. Will global business remain the same? A broad question to top CEOs will currently elicit no reply as most have their permutations and combinations and data -models upending in a fortnight! In the technology offshoring arena, companies are scrambling to put business continuity in place.
So what went wrong with major players in the global sourcing industry? There are several reasons.
Force majeure calamities has never struck at this level. Over 150 countries at last count scrambling to maintain social distancing and in some form of lock down due to the COVID -19 virus.
Most force majeure continuity was planned for natural disasters, like earthquakes, floods, hurricanes, tsunamis. Geography was the great leveler, a hurricane in the Philippines and work could be shifted to India, or floods for a week in India and work moves to the Philippines. But this Pandemic caught the business world by surprise. A microbe that caused a multi-billion industry to stagger.
Offshoring usually happens with a price-conscious model and so countries with lower wage and infra costs usually capture bulk of the work from economies of developed countries, Think India, Philippines, Mexico, etc. What happens if a calamity spreads across the globe at the same time? Almost like an end time prophesy. Every corporation's Plan B failed. Period.
Nothing brings down productivity than a constant fear of death. Across nations in lockdown, people are planning for contingencies, moving into reserve and panic mode, the productivity of that person drops by 50%. Across the world, delivery schedules are not being met due to tense and upset staff across all sectors in offshoring and manufacturing worldwide. Newspaper front-pages screaming death is not the ideal start of a workday!
Every organization that works on delivering maximum value for the buck ensures 75% of their workforce work out of their desktops. This could be due to a variety of factors, like lower costs, high-end machines with a larger screen, or simply data security in a closed location. When there is complete lockdown its next to impossible to move 75% of these engineers to laptops. Operations usually collapse with only 25% cover on a 'Best effort' basis.
Some top companies are under more severe pressure to deliver for they are the backbone of their clients; like banks, foreign government departments, etc. You can't have a bank go down because of an unplanned continuity. A leading top 5 ITES company CEO said the lockdown is causing turmoil; he said this on Linked in "We power financial backbones of several countries, support some of the largest healthcare and pharmacy companies in the world, run technology for governments and public services organizations," This pandemic has upturned almost all forms of continuity planning.
Amid all of this, adaptable offshoring Companies led by creative leadership dive deep into local infrastructure and come up with 'Work from Home' and "Work from Hotels" options to manage the crisis. There are mid-size companies who saw this coming a few weeks ago and hired most of the laptops in the city. CTOs ensured IT managers were prepared well to make infrastructure ready for laptop users to work via VPN or Amazon VDI. For the service provider, the costs were doubled, but a business risk was taken to ensure continuity and provide support to customers.
Most clients don't realize that Laptops and home internet come at a cost whilst the Desktop and office infrastructure continues to be paid. This easily adds up to a 20% hike in per-person costs.
The surprising bit in this difficult season is that few clients demand 20% cuts saying their resources are working from home, so they expect to reap the cost savings! By all means, ask for continuity for business, but ensure work is done, evaluate how the offshore partner covered you, check adherence to contract terms, and leave the negotiation for later. How happy would you be as a customer with 75% - 24/7 back up in the worst pandemic of the decade - well there are few companies who are making the cut. Crown Jewels in the IT services industry of the next decade!
Remember, we have moved from an era of massive pink slips in offices during 2008-10 to now an era of body bags in mortuaries built-in playgrounds! Yes, if we don't take precautions and add costs to per person safety, then that employee is risking his/her life in current offshore centers. The new normal could be drastically different; 80% of users will now move to laptop only model, homes will now have hi-speed fiber internet for work; data security agreements will be direct with employees, offices will have desks at 5 ft distances, larger cafeterias, food delivery to work desks, homes with WFH option to have power back up in power deficient countries like India… the list is endless.
The pandemic is now causing pandemonium in the Board rooms. Not one Corporation expected their balance sheets to turn upside down in 2 weeks. But that's how the cookie crumbles… till the next one is baked.
Let's be ready! Opportunities will arise again! Work from Home is here to stay!