Impact on Global Offshore centers - Blog three of three

About the author: Until last year I have been working with Businesses in India for several years. And two weeks ago, I traveled back to Bangalore and India again and Centigo’s subsidiary to understand the Corona situation in the Indian society and how it has impacted Businesses in India.

I will release a blog series the coming days that gives you short updates about the Society, Impact on Swedish Businesses and Impact of Global Delivery Centres.

Read The Indian Society - report 1/3 here

Impact on Global Offshore centers - Report 3/3

India is the number one sourcing destination in the world, with a total business value of 167 Billion USD. We at Centigo did a survey with several international companies that have either own delivery center (or so-called Captive Centre) or partners that they have outsourced to that operate in India.

The work from home has gradually increased the last 2-3 weeks and the 24th of March the locked down started in the whole country, which led to that all employees must work from home. However, there are exceptions that can be granted. In addition to this, before the lock down, a travelling ban was started at the time of the 13th of March.

Read Impact on Swedish Businesses - report 2/3 here

Key Observations

Our conclusion from the study is that different offshore businesses has been affected very varied. Some have lost up to almost all capability, and some have lost very marginal of the capability.

How much they lost the delivery capability depends on type of business they are into, kind of services, and how generous the work from home policy has been before at “normal times”.

  1. High degree of compliance work.

The offshore centers that execute work that have a high degree of compliance (for instance work in military fields or manage data that is highly classified) are the ones that have been affected most and have tough times currently. Many of these centers are completely dependent on a security infrastructure that is only accessible at the physically office. The delivery capability loss for these cases are enormous. The delivery capacity has dropped more than half (50%) of the capacity for many of these types of operations.

  1. Service requiring physical presence

Services being delivered that require physical presence most of the time are also being affected.

The first category is IT operations that is based on physical infrastructure (e.g. server infrastructure). The SLAs for these are very difficult to keep up in these times. To be able to manage the most urgent interruptions, the organizations need to request for special passes from the government to send employees to work. The drop in quality is somewhere around 10-30%.

The other category is work that can be done at home with a proper setup, but is better executed from office such as customer support through phone.  The quality drop for these services are around 10-15%.

  1. Services with less requirement of physical presence

Offshore centers and services that don’t fall into 1) or 2) above, nor involve Project Management and Change Management to decent extent have better circumstances to deliver. These services can be delivered relatively well from home in decent setup, with support from the company to ensure WIFI connection, VPN and other security and risk aspects. The organizations’ delivery capacities depend on how used the organization is to work from home since earlier, and which working model the teams are applying.

In the best scenario where they are used to work from home, and have rigid working delivery model, especially agile methodologies, the deliveries are less affected. However, the efficiency in the work is less, due so less informal collaboration and more disturbances at home. In addition to this, the work becomes more boring without having the colleagues physically around, even if the quality output is just limited affected in total.

For the situations when the employees are not used to work from home, or the working methods are not adapted to work from everywhere the drop is significant more. 

  1. Project and Change Management

The Offshore centers where Project Management and Change management are a key part of work to deliver have lost momentum and efficiency to some extent. Many organisations use Skype, Team, Slack and similar communications and task / activity tools which works great in many aspects. However, surprisingly few have any specific tools for running workshop and create engagement in group discussions in a structure that is similar to physical workshops.

  1. The impact of travel ban

The current travel ban that limits for instance developer to travel to HQ to build stakeholder network or understand new business requirements, or acquire new knowledge in these times. To not be able to meet and develop stronger personal connection, and bridge cultures are also areas that are weakening the offshore delivery business. However, in the short term this will not be affected at all, but if it continues this might be a larger issue.

Next steps

Even for Global Delivery Centres, as for the most companies, a lesson learned would be to review the Business Continuity Plan for this kind of crisis in the future. And in particular for companies that have Global Delivery Centre of any kind, it will be important to assess the sourcing strategy as part of updating the Business Continuity Plan.

Kontakta Johan Andersson