Outsourcing Insights in the COVID Era
Nitin Modi Director | Business Process Solutions Deloitte Thailand
Whilst the term disruption has been synonymous to the rise of new business trends and/or industries, COVID-19 has been one of the most disruptive events in a generation; and the impact
is still being felt, not only throughout the global economy, but also across the large number of outsourcing relationships in place. In addition to COVID-19, businesses today are facing a rapidly evolving landscape, including regulatory changes, continuous advances in technology, and the adoption of more sophisticated approaches by authorities. These 3 challenges are causing businesses to rethink the appropriate mix of in-house and external resources in efficiently managing essential operational processes with visibility, flexibility, transparency, and control.
Outsourcing ultimately offers business owners great advantages. The process allows them to build a team of skilled professionals without adding the expense of full-time employees, additional office space and equipment. With outsourcing, business owners and senior management can focus attention and resources on their company's core competencies and spend their time setting new goals and finding ways to achieve them. The findings from Deloitte’s 2020 Global Outsourcing Survey reveal companies are embracing disruptive technologies, as Cloud and automation continue to be driving forces for change. However, amongst all the emerging disruptive trends, the fallout from COVID-19 is signaling a return to basics: shoring up value and driving down costs, with a renewed focus on risk management.
The key themes from our survey findings are as follows:
1. Cost reduction is back on top
2. Cloud & Robotics Process Automation (RPA) are now “table stakes”
3. Agility is critical
Whilst clients talk about scalability, agility, technology enablement and innovation, COVID-19 has brought cost reduction back on the table and hence the focus back to the numbers. Our survey respondents indicated it is easier to measure the impact on cost than it is to articulate the benefits of scalability and technology enablement. Our survey results show a clear progression in the adoption of RPA through outsourcing. The primary motivation seems to have shifted with most interviewees (two-thirds) citing cost savings as the major driver for RPA adoption, whereas previously it was never “top of mind.” Nevertheless, RPA adoption is not just about cost reduction. It can also free up the workforce to focus on more strategic issues. Doing so can lead to greater employee and customer satisfaction, with subsequent improvements in enterprise value.
Outsourcing creates tremendous opportunities as compared to core traditional in-house business models, as it enables businesses to create a pool of additional funds, from the elimination of expenses from non-core activities. Thus, businesses are enabled to free up resources and can shift their focus to core business operations and innovation, whilst non-core functions can be outsourced. Having a large pool of outsourced “on-demand” talent means companies can rapidly scale their workforce without the need to hire additional full-time employees and increase their overheads and their investment in office space and equipment. Using outsourcing creates new opportunities and makes better use of existing talent that helps employers get the most out of their current workforce. Certain auxiliary tasks that are outsourced, allows in-house talent to focus on more strategic activities and projects that better leverage their skill sets, knowledge, and abilities and truly generate results. Similarly, for every employee that is not hired to perform a support function, more budget is available to hire revenue generating employees.
As organizations continue to be challenged in dealing with the prolonged impact of the pandemic with agility, outsourcing will still be an enabler of business transformation. Whilst the digitization agenda has become imperative across all sectors, clients are seeking partners who can help elevate the way they do business, enable them to be more flexible, help them leverage the latest technologies and improve their overall speed to market. Working with an experienced outsourcing provider helps companies overcome productivity challenges, streamline operations and add additional resources that may be lacking in-house. From sales to recruitment to operations, outsourcing provides an unlimited amount of opportunities to help your business work smarter. Advances in technology have helped forward-looking companies to benefit significantly from outsourcing services for quite some time now. This is particularly relevant for small to medium-size enterprises, who simply lack the financial and other resources for in-house auxiliary departments like finance and tax.
Further to saving time and money which usually garner all the attention, outsourcing certain back office functions allows access to the latest technology and systems, as well as leading practices. It keeps organizations and departments agile as they face more complex business challenges and increasingly more regulated business environments. Outsourcing to the experts can help businesses not only remain compliant without having to worry about how they will comply with each new legislation, it also equips businesses to be agile as they respond to new business trends. Above all, Outsourcing will help businesses remain competitive and relevant in their industries.
Outsourcing remains an essential tool for client organizations to support their strategic goals. Requirements constantly evolve (even more so due to the COVID-19 pandemic) and the industry continues to support with both established and new solutions.