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Coronavirus: BPO and IT services delivered from India face big challenges

UK businesses receiving business process outsourcing and IT services from India will face disruption, but IT services from large IT suppliers less so

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Organisations that receive business process outsourcing (BPO) services from India face major challenges following the country’s Covid-19 lockdown, but IT services are less affected as investments over the years pay off.

India’s lockdown, announced on 24 March, saw the government ask 1.3 billion people to stay at home for at least three weeks. Although thousands of miles away, UK businesses, already with their own coronavirus challenges, now have to worry about the challenges faced by the companies that do work on their behalf from India.

Although disruption is inevitable, the larger IT suppliers that deliver from India are well equipped to continue to deliver services amid the lockdown. But BPO suppliers and smaller IT players face major hurdles.

India’s lockdown is a shock for many of the UK’s largest businesses, including most of the big banks.

With UK business offshoring work in India in huge volumes, the knock-on effect of this announcement is inevitable. Large UK companies have for years shipped roles to India, whether in call-centre operations or IT support. On the back of this, large Indian IT suppliers, such as Tata Consultancy Services (TCS), Infosys and Wipro, as well as BPO firms such as Genpact, have grown to be global giants over the last two decades.

Meanwhile, service providers in the West, such as Accenture and Capgemini, have established operations in India to take a share of the growing market.

Following the announcement of the lockdown by India’s prime minister, Narendra Modi, a message from Nasscom, the industry body that represents suppliers in India, warned its members of the challenges ahead. Nasscom president Debjani Ghosh wrote:  “While the prime minister acknowledged the need to have the bare minimum of people in office to support with mission-critical work, he strongly reinforced the need for all companies to increase work from home for the next few weeks. He also acknowledged some of the logistic issues being faced due to lack of coordination in the states and we will work with his office to follow up on that.

“However, with all the developments today, we would urge members to prepare for a complete lockdown and move all your assets immediately, where possible, to enable employees to work from home. Please assume that only a handful of staff will be allowed to come to the office to support the mission-critical functions and operate datacentres.”

And it is not just Indian heritage companies that are being affected. Accenture has about 200,000 workers in India and Capgemini nearly 100,000. These employees are often serving customers in the West, with large customer bases in the UK and the US.

Lack of planning

Barry Matthews, partner at outsourcing advisory ISG, said there are risks for both BPO and IT services because suppliers have not planned for this situation. “How do you plan for tens of thousands of workers to suddenly have to work from home?” he said.

Matthews said BPO is likely to be harder hit that IT services, but it is hard to tell because “it will be almost impossible for either to maintain current services levels”.

He added that customers working with the big Indian suppliers, such as TCS, and the Western suppliers delivering from India, are likely to be impacted less, because these IT companies have the skills and capability to make remote working work.

But the lockdown has inevitably caused major concerns for businesses using services from India. According to human resources specialist New Street Group, many UK businesses are trying to re-shore work from India to the UK following the lockdown.

Read about the UK government’s response to Covid-19

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  • In the past couple of weeks, nearly a million people have signed up for Universal Credit as a result of the Covid-19 coronavirus crisis. Never has the UK government’s move to a digital-first world faced a greater examination.

Andrew McIntee, managing director at New Street Group, said: “For many UK businesses, the problems in India risk key functions going offline. That has added to the chaos at many UK operations and delivery centres over the last 24 hours.

“It has resulted in a surge in demand for hiring professionals like business process change specialists, who can help redirect work from India back to the UK, where companies have greater flexibility in both workforce and workplace strategy.”

It is easy to jump to the conclusion that the best idea is to repatriate work to the UK, and for companies using BPO services from India, this might be a good strategy.

But India might be better prepared to deal with IT service delivery amid the lockdown thanks to investments made to enable workers to work remotely. Also, the large IT services companies have global delivery networks that can make up for lost capacity by switching locations for support delivery.

BPO, on the other hand, which is all about data processing, poses very different challenges. People can’t do their work from home because of data security issues – strict rules about protecting the data of corporate customers. “BPO services are a much bigger issue because they can’t be done from home,” said Peter Schumacher, CEO at the Value Leadership Group, which specialises in advising companies on outsourcing.

Corporate lawyer Mark Lewis, who specialises in IT outsourcing contracts, agreed, saying: “Instinctively, this must be a problem and particularly in BPO. If UK businesses are struggling to connect their staff and get them working remotely, it is the same in India but on a much larger scale.”

Major privacy concerns

Lewis added that with BPO, there is a further challenge with major privacy concerns. “BPO is all about IT-enabled data processing, and very often the offshore operations are dealing with personal data and consent has to be given to process personal data from home,” he said. “There is a lot of personal data processed quite legitimately. The offshore company is the data processor employing people at centres that have been through due diligence by their customers. Working from home from an unsecured connection could be a real problem.

“Similarly, staff in India providing voice support to customers of corporates in the UK cannot work from home because they will be unable to access the information about customers they need.”

But while these services face huge disruption, IT services need not, said Schumacher. “IT service providers have invested heavily in enabling staff to work from home over the years,” he said. “Some of them are up to about 90% in terms of the proportion of staff that can work from home. It is important to separate offshore IT services from offshore BPO and voice services, where the impact will be greater.”

For example, TCS, India’s biggest IT services provider, quickly increased the number of staff that can carry out their roles fully from home. The company reacted to the coronavirus by rapidly scaling up its Secure Base Working Space initiative, which enables staff to service customers securely. Within weeks, it has made it possible for 85% of its global staff to do this. Before the pandemic, that figure was less than 40%.

TCS CEO Rajesh Gopinathan said: “We launched a massive programme to ensure business continuity using our Secure Borderless Work Spaces infrastructure, which allows TCS associates working from home, both onshore and offshore, to ensure business continuity with support from minimal associates working from offices.

“TCS has been a pioneer in location-independent work practices, having started offshoring 50 years ago. We proactively deployed collaboration platforms, cloud-enabled infrastructure and robust security practices, which stands us in good stead as we deal with this unprecedented situation.”

Seeking alternatives

But if problems do occur, it could spur businesses to start looking at alternatives to offshore services. The current pandemic could have a massive impact on the BPO offshoring industry as it demonstrates the advantages of automation, which could replace the traditional models of lower-cost workers in countries such as India carrying out tasks manually.

Automation can negate the impact of people not being able to get to their workplace. An EY report, How do you find clarity is the midst of a crisis?, examined how businesses can respond to the Covid-19 outbreak to protect their supply chains. Automation was identified as a key necessary investment for more than one-third of businesses questioned.

The report said: “The sudden and unexpected nature of Covid-19 has compelled executives to re-evaluate operating models. While building agility and resilience have been dominant themes for much of the past decade, the unique nature of the current situation has left many companies unprepared.

“The total shutdown of activity in parts of China – and increasingly in others part of the world – has exposed vulnerabilities in many companies’ supply chains, with more than half (52%) looking to re-evaluate their current arrangements. Nearly the same number (47%) are taking active steps to reconfigure. More than a third (36%) are accelerating their investments in automation.”

Lewis observed: “It will be interesting to see how this impacts offshoring and even nearshoring.”             

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