19 May BPO- What to Expect in 2020

Business Process Outsourcing (BPO) has long been a reality for most of the large and medium enterprises around the world. However, with COVID-19 halting business operations beyond an unimaginable level, and the governments of most of the countries imposing lockdowns as a preventive measure against the spread of the virus, the pandemic has taken a serious toll on the BPO industry. The nationwide lockdown has further resulted in a cascading effect to bring down the BPO industry to its knees.

A wake-up call for the BPO Industry-

A poll by Deloitte in April 2020, found out that 32% of the employees believe that there will be less outsourcing once the pandemic ends. This may be due to the inflexibility (perceived or real) of hard contract terms and conditions, that may have hampered the immediate actions needed in response to the sudden changes that the crisis presented.
Currently, the outsourcing service providers are struggling with the travel restrictions imposed by the government, and as a result, work from home has become a new trend in the BPO industry. Google has extended work from home for employees till June 30 next year, Facebook has announced that eligible employees can request for permanent remote-work arrangement. Realising the immense market opportunity, Reliance has launched its own application JioMeet, in order to compete with already established video conferencing apps like Zoom, Google Meet. Also, Airtel has partnered with Verizon to launch BlueJeans, another video conferencing app in India. This shows how the companies are trying to seize the market opportunities amidst the pandemic.

Moreover, the government’s mission of ‘Atma Nirbhar Bharat’ is acting as a catalyst to improve the efficacy of the business and perpetrate the business operations in India. The recent example is that of Apple which has started manufacturing IPhone 11 in India in partnership with Foxconn, Wistron and Pegatron.

Also, considering the fact that China has passed a new National Security Law in Hongkong, and the tensions between China And US are rising precipitously, a survey from analyst firm, Gartner Inc. revealed that about 1/3rd of the companies are planning to move their outsourcing and manufacturing activities out of China in the next two or three years to India, Vietnam and Mexico. The China’s top tech players are having contracts cancelled, products banned and investments blocked, with more restrictions on the horizon. This throws a ray of hope on the BPO industry in India, which contributes nearly 8% to the country’s GDP, as India can get hold of more outsourcing contracts than ever before.

Future of Outsourcing-

Given the opportunities present for BPO industry in India, the infrastructure of this sector needs to be refurbished so that it can foresee and respond to an alarming situation like COVID 19 in the near future with greater ease and speed along with the required security protocols in place. The pursuit of digital transformation, which has been long talked about will need an incitation in order to reduce the reliance of cumbersome and heavy volume tasks on people and rather improve celerity of business in response to such unprecedented situations such as COVID 19.

The COVID 19 crisis has exemplified that the highly digitised businesses around the globe have seen less disruption as compared to the competitors who are less enabled. What exactly is going to be a
scenario for outsourcing in 2021 is hard to postulate; but given the fact that almost all the business will have approximately 50-60% of its employees working remotely for the next year as well, there’s a lot of expectation that the companies will refurbish their existing infrastructure into a more digitised one with the help of mergers and acquisitions.

Recently, Google and Facebook among many other investors have invested in Reliance Industries for a total stake of approximately 33%. Amazon is also in talks to gain a 9.99% stake in the company; with Flipkart acquiring 100% stake in Walmart, in order to extend its capabilities across technology, logistics, and finance to prepare for upcoming battle with Jio and Amazon; Infosys tying up with LANXESS for ultra-modern workplace; and other proposed mergers like that of Bharti Infratel with Indus Towers; we can clearly anticipate that for the clients and outsourcing partners that have conviction, capability and ability to leap over the technology chasm, outsourcing can unlatch the prospects for top-line growth and simultaneously enable swift and efficient operations.

Conclusion

Despite the short-term detrimental effects of COVID 19 on BPO industry, it can act as a stimulant for rapid transformation of the traditional BPO model. It is shining a light on how flexible outsourcing partners can be with their clients when the situations are atypical. How Outsourcing partners have stepped up in order to discover novel, expedient and pragmatic solutions and how clients have flexed their responses, and have accepted the perils that would have been unimaginable before the pandemic will be recalled even after the crisis has come under control. Moreover, the outsourcing partners that have acted like true business partners, have been flexible with their clients, and have rapidly implemented digital solutions during these unprecedented times; will come out of the pandemic with their reputations not only unscathed but potentially enhanced. This will put them in a position to increase their market share post COVID-19. In contrast, traditional Outsourcing Partners that are still operating on a simple labour arbitrage model and that have been neither flexible nor willing to adopt new digital operating models may fall by the wayside.

With remote working being an alternative that has not been tested or implemented much by BPOs in the past, it remains to be seen how the future of the industry shapes up in the coming years.

Sources: Deloitte, Business Standard