- Major Studies
As global enterprises brace for the uncertain impact of the coronavirus pandemic, travel bans and visa restrictions have complicated the landscape for companies that manage a global workforce and have partners in different countries.
Based on current proliferation trends, it is unlikely that pandemic conditions will abate until mid-Q2 at the earliest. This poses an unforeseen challenge to global companies that have become increasingly reliant on offshore teams to manage their data centers, support critical applications, and handle customer interactions.
For example, India-based service providers manage more than $150 billion in IT and business process outsourcing services, much of which is for the world’s largest companies. As the global crisis escalated, and international travel became a work hazard, India recently imposed one of the strictest travel advisories ever, suspending all visas for foreign nationals from March 13 to April 15, 2020.
This visa suspension means that any company wishing to visit its service provider’s facilities or shared services center in India will be unable to do so, at least for the next month. This action significantly impacts the ability of customers to oversee and manage the quality of their provider services being delivered out of India, unless they have local teams on the ground. This further aggravates the situation for companies that already face disruption of services from China-based service providers, many of whom have had to pause operations during the lockdown.
While most service providers offer remote monitoring capabilities and dashboards, the inability to meet periodically with offshore teams could escalate service-level issues and possibly impact service quality. This situation highlights the importance of having strong service management and vendor governance frameworks in place. While day-to-day service performance can be managed remotely, the inability to host onsite quarterly business reviews or periodic health checks could result in decision bottlenecks and service-business mis-alignment.
As the pandemic disrupts normal life in India, an added concern is the strength of service providers’ business continuity plans, which could amplify the service delivery risk. According to Avasant research, 40% of India-based service providers have also instituted travel restrictions that prevent senior executives, account managers, and delivery teams from traveling to client sites in the U.S. and Europe. This is on top of the Indian government’s strong advice to its citizens against traveling abroad and the risk of being quarantined upon return. This exacerbates the potential risk to seamless service delivery and governance.
In light of these developments, we are recommending that clients take the following measures to mitigate the risk of service disruption and the deterioration of service quality:
Evaluate your governance processes and strengthen your vendor management (VM) team.
Double the frequency of calls with your offshore teams to ensure quick issue resolution and prevent value leakage.
Insist that service providers have access to performance dashboards and service level management reports on a regular basis.
Consider using a specialized vendor management application that can track and measure service-level performance and send an alert when there is slippage.
Hire a vendor management specialist locally in India who can regularly visit offshore delivery locations to communicate, align, and resolve issues.
Schedule quarterly business reviews and service health checks remotely and with greater rigor to offset lack of site visits.
Review your third-party risk management procedures and align them with your current business and market risk.
Ask to review your service provider’s business continuity plans. Many of them have work-from-home provisions, which could help prevent service disruptions in case of local lockdowns due to the pandemic. But ensure there’s adequate protection for security and data privacy.
We believe that the market turmoil and travel restrictions will ease, once the pandemic is brought under control globally. However, that time horizon is still unknown. Given the uncertainties, it is prudent to adopt aggressive measures immediately to prevent negative impacts on business operability and customer satisfaction.