How Outsourcing is Changing Towards a Post-COVID-19 Era

by | Last Updated: Apr 16, 2022 | Business Strategies | 0 comments

There is no doubt that COVID-19 has affected the whole global economy. But this global health crisis has particularly exposed companies that have outsourced key business and operational processes. For instance, Telstra, a renowned telecommunications company, had challenges shipping new orders and dealing with faults when countries like the Philippines and India went on lockdown. The pandemic has demonstrated that certain aspects of the current outsourcing model are ineffective. So companies now have a real opportunity to develop more resilient frameworks to ensure survival in the event of similar global events. Let’s now look at how outsourcing is changing towards a post-COVID-19 era.

Rethinking Business Continuity

For many years, business continuity planning (BCP) has been characterized by having several physical backup sites that can be quickly set up in case of an accident. The assumption is that employees and systems can be moved from one location to another to ensure business continuity. This is especially common when it comes to business process outsourcing (BPO) arrangements that depend heavily on remote staff. While several physical locations play an instrumental role in BCP, they may not provide the necessary protection in the event of an extensive global lockdown, as the pandemic has shown. Going forward, organizations must rethink their business continuity planning. They must incorporate new strategies for effectively managing global remote working into their BCP. 

Widespread Adoption of Remote Working Arrangements

Remote working arrangements are likely to stay in place even post-COVID-19 era. Because of this, organizations must come up with the best information and data security mechanisms for their outsourcing arrangements. Traditionally, security mechanisms meant for remote teams have been centered on physical security, which involves keeping sites secure through physical access control. Post-COVID-19 era, security frameworks for remote working arrangements must also comprise of logical security mechanisms, which entail keeping sensitive information safe and secure through technical controls coupled with electronic access control.

Companies will also need to implement effective strategies for assessing and controlling the performance of their outsourcing partner’s employees when in-person supervision is impossible. For instance, outsourcing partners may be required to keep track of the output of their team members electronically. Another option may involve shifting from time and material-driven arrangements to output-driven arrangements such that delivery risks, as well as risks related to a potential drop in the efficiency in a remote working context, are shifted to the outsourcing partner. 

Review and Adjustment of the Outsourcing Strategy

Through outsourcing, companies can take advantage of skilled employees in countries with lower hourly rates. The biggest downside of an outsourcing arrangement is that a company has little control over the remote workforce. It also requires effective communication and a smooth flow of information and resources. But the cost savings associated with outsourcing makes this arrangement appealing. After the COVID-19 period, organizations will be forced to rethink their outsourcing strategy and find ways to make it robust and resilient. This may involve bringing some critical outsourced functions back in-house or on-shore.

Another option is the automation of labor-intensive tasks to minimize the reliance on human capital and hence the vulnerability to pandemics and a variety of other health issues. This transition to automation has already been witnessed among companies with considerable outsourced operations. The heightened adoption of automation in outsourcing could be a perfect chance to bring critical functions on-shore. 

The Transition from a Single-Source Model to a Multi-Source One

Post-COVID-19 era, companies may consider shifting from single-source models to multi-source models. In a single-source model, a company outsources all its functions to one outsourcing partner in a specific geographical location. But in a multi-source model, critical functions are outsourced to multiple service providers in different geographical locations. That way, if one service provider is unable to perform, another equally competent provider will step in. For instance, organizations can outsource their customer support to multiple call center services in an array of different geographical locations.

Final Thoughts

Although the pandemic has greatly affected outsourced models in the short term, the demand for outsourced services is likely to increase in the future as many organizations continue to embrace digital transformation. Companies must also rethink their business continuity planning and invest heavily in flexibility and resilience. Only then can they survive and even thrive in a post-COVID-19 economy.

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