Effect of Coronavirus on The Outsourcing Industry
Updated: Feb 27
The coronavirus pandemic has effected all industries in the global network adversely. Most effected countries are in a state of nationwide lock down with only those that are in the recovering phase starting to partially open with a lot of safety measures in place. Scientist predict that a full recovery from this pandemic is at-least a year away, if not more, with a likelihood of a second wave hitting this December much severely on many countries. The global Outsourcing industry along with its related sectors such as BPO, KPO and ITES have been heavily impacted from the pandemic. With business being either closed, or having their operations be drastically reduced, many outsourcing companies are seeing a large reduction in their volume of work. In order for them to come out of this dire times and survive, the industry must understand what challenges they are facing and adopt measures to overcome them.
Challenges faced by the Outsourcing sector amid the COVID-19 pandemic
The below are the four major challenges the outsourcing sector will be facing in 2020 and beyond from the COVID-19 pandemic. This list is by no means exhaustive, as there are many other obstructions that the sector must face in the upcoming months.
1) Reduction in the volume of work throughout the sector, amid the pandemic crisis, is one of the biggest challenge for small to medium sized outsourcing companies. Many smaller BPO companies in Bangladesh, India and Philippines are either closed or running their operations in a very limited manner. If the crisis prolongs for an elongated period of time, say more than a year or so, some of these businesses will be forced to shutdown due to incurring consecutive losses.
2) The economic halt from the pandemic and the recession that will follow, will cause some clients to stall payments or even default on them. This will effect the outsourcing companies in maintaining steady cash flow and subsequently pay dues on time.
3) Home based working model will be something that many BPO companies will find hard to have success with. Because work efficiency will decrease for employees, major reason being home based work is unable to bring out the results that a professional working environment can. Other factors for this includes that most employees will not have the infrastructure (in terms of net speed and desktop configuration) that a business may have in order to facilitate fast and efficient work flow.
4) Home based work model will also pose security risks of confidential information that all outsourcing companies have to deal with. While larger companies may have stringent security policies and training programs in place for such disasters smaller and medium sized companies may have not leading to potential security leaks.
Measures to adopt to rise against the challenges brought by the pandemic
When applying measures to survive the upcoming challenges, BPO and IT companies not only needs to take into account the immediate problems they are facing but also plan ahead for the long term survivability.
1) Outsourcing companies must strategically cut all unnecessary costs, specially where no ROI is being generated. Strategical cost reductions can lead to significant decrease of the overall operational costs without having to fire any employees. This can be achieved by:
Making employees with less work load work temporarily as part-time instead of letting them go.
If companies are running online ads these ads must be heavily scrutinized whether they are generating a significant positive return over investment (ROI) in a 40-50 day cycle. Ads that are not generating a positive ROI and only incurring costs, should be turned off for now.
All businesses have many miscellaneous costs, these can be looked into and mitigated where applicable.
2) Because home based working model decreases a lot of the control that a business has over its employees. adding measures can be taken to regain a lot of it. This measures includes remote monitoring through applications such as Teramind and Empmonitor that tracks employees work and efficiency. When this cannot be done due to budget constraints, managers can do weekly review of employees to analyze their work efficiency, see which employees are lagging behind and take appropriate measures to resolve them.
3) To mitigate potential security risks, outsourcing companies must lay out clear security protocols that can be implemented and virtually train their home based employees to make them aware and understand the potential liabilities they can be facing should any security leaks occur.
4) BPO companies must also plan for the future and the long term survivability, and how to grow after the recession ends. Once the pandemic is over, and the economy starts going back to normal, many businesses will need the services of outsourcing companies. So it will be important to plan now for the future marketing strategies and how to implement them correctly in order to stay ahead of the game.
We must understand that the pandemic will bring out a recession instead of a great depression in the economy and when we get passed it, the economy will go back to normal. Thus, it is imperative that the outsourcing companies now focus solely on surviving this pandemic through implementing adoptive measures. Because those that pull through, and plan for the long term would assuredly able to grow in the future days to come.
Zayed Ahmed is the founder and CEO of ASL BPO, a startup outsourcing company in Bangladesh.