Articles 3 min read

Will re-shoring affect the Indian outsourcing industry? by Joe Wheatley

It’s lockdown in India – and not many IT or Business Process Outsourcing firms are prepared for it. The ability of Indian employees to work from home is limited compared to the UK, and they are not set up for it. This isn’t just an Indian problem either, for example Vodafone’s call-centres are located in Egypt, and SYKES (a global call-centre outsourcing company) has facilities in the Philippines; all will be suffering under similar conditions.

There are a couple of factors to consider in this:

  • Many individuals will not have access to business-grade internet from home, making it hard to log-in even via a remote VPN.
  • Most will not be working from laptops, rather from corporate desktops in an office environment. How will this equipment be provided and set up for such scale in such a short amount of time?

The reality is that for this crisis and the immediate future, people will have to continue going into the office, where their governments allow them to. If social distancing measures are being applied in these locations this must translate to a dip in service, because you won’t be able to fit so many people into the available office space. Alternatively, we will see high levels of sickness related absence, translating to the same effect. This comes at a time when call-centres around the world are experiencing high volumes on issues ranging from cancelled holidays to unpaid mortgage payments.

These are extreme circumstances and could hardly have been expected. It’s doubtful that a global pandemic was factored into decision-making when agreeing business continuity plans for these services. This crisis will not reverse the previous decades of globalisation; the Indian outsourcing industry, in particular, is colossal and will not be felled by this, but it remains to be seen how badly this situation will affect their client’s confidence in their ability to deliver in tough situations.

What this situation does though, is re-ignite the discussions around re-shoring, particularly with the advantage of modern process automation software making local labour more cost-competitive. When considered on a transactional basis, as many BPO contracts are, process automation is roughly one-third the expense of a low-cost employee. This means that even with the higher-value added work being done by a more expensive resource, companies can continue to deliver their current operations at a similar cost from a UK location, where it can be more easily managed and in-house standards can be applied at all times.

We anticipate seeing some of this re-shoring transformation occurring in the coming months and years, and we’d advise organisations to take three steps ahead of pulling the trigger:

Understand your processes.

These may have been outsourced some years ago, it is likely that there isn’t anyone at the company who still remembers how to perform them and the process maps you once had are likely to no longer be relevant. It’s too easy to become dependent on your provider for everything, but unless you know what the steps look like, what the skillsets needed to perform them are and what the volumes look like, it will be hard to design a suitable capability to take them on.

Take the opportunity to standardise

If you haven’t already. Traditional outsourcing was characterised by a ‘your mess for less’ approach, meaning that there’s likely still opportunity to standardise and optimize your processes when you bring them back in house from your outsourced supplier. Re-shoring is therefore a rare opportunity to take a holistic look at your operations and plan for efficiency gains.

Design for automation

Processes optimised for automation can have long sequences of steps which require minimal or no human interaction, in this way the cost of labour can be minimised. When re-shoring your processes take the time to examine them and redesign them to be optimized for automation. Not only will this allow you to increase the percentage automated but it will also save you from having to undergo two change programs as you set up your facility and then subsequently introduce automation.

Taking the above into account there’s no doubt that, leveraging modern technology, re-shoring is a viable option for businesses that have made extensive use of labour arbitrage in the past years. However, it’s vital that organisations work collaboratively with their provider to ensure service delivery during these unprecedented times. Companies need to weather the storm, watch this pandemic unfold and take stock of the facts before committing to any decisions on their future model. Large-scale change programmes are challenging even at the best of times and it’s important to run the costings, factor in the organisation’s risk tolerance and take an educated decision on something that will have a significant impact on the organisation going forwards.

This article is exclusive to The Business Transformation Network.

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