It’s fair to say that the business continuity plans of outsourcers have been under considerable pressure over the last three months. COVID-19 fueled an unrivaled level of panic around the globe as consumers and employees locked themselves up at home—initially voluntarily, but now with the full force of the authorities in most developed nations. The business impact has been huge; while no firm has been untouched by the crisis, outsourcers are likely to face tough decisions. It is likely that this crisis will not be the only one the industry needs to face over the next decade, and outsourcers must be better prepared.

Outsourcing contracts and arrangements are simply not flexible enough to support the business agility COVID-19 requires

In a recent blog, we focused our attention on the homeland of global outsourcing, India, and the relatively basic provisions the nation and its hosted businesses have directed toward handling the crisis. While a reactive approach loses precious time, which we’ve seen in the stark differences between the worst-hit regions, there is something more fundamental at the core of the outsourcing industry that has, thus far, paralyzed it until national bodies issue strict guidance: contracts.

In discussions about the issue with industry luminaries, we heard that the foundation of the core business continuity planning failures is in the strict terms of most outsourcing contracts. It’s not abnormal, for example, for contracts to stipulate that work cannot be delivered out of company buildings, at times listing the specific buildings where employees working on engagements must be based. This simple stipulation, which historically has been used as a fundamental quality assurance and information security measure, has hampered decision making from the leadership of major providers. Up until the government issued a full workplace ban, as it has done this week, providers were stuck between convincing clients to void stipulations, redraft contracts, or just carry on as normal. All the while, clients were working solidly to keep their own businesses afloat. It seems like the majority of service providers simply tried to balance the core requirements of delivering against contracts with the health and safety of employees, although, in reality, this rarely resulted in any meaningful measures beyond supervised handwashing and mandatory glove-wearing.

Historically, we have examined the inflexibility of contracts as a provider problem to fix; however, it is the risk-averse buyer community that has become intransigent to change. This stark reality has been laid bare by the COVID-19 crisis.

Contracts aside, basic business necessities such as system access and key hardware have been overlooked by business continuity plans

But, we can’t blame everything on traditional contracting methods failing to offer flexibility when needed. We are also hearing stories of sparsely provisioned business continuity planning (BCP) assets—even hardware as basic as laptops now holds a higher commodity value in the same way that consumers have bumped the value of toilet rolls through inexplicable demand. Unlike toilet rolls, however, call center agents, IT experts, and sales teams struggle to access systems without home computing—and even those with plush home offices and the latest gaming hardware need corporate devices to access key systems.

For analysts, it’s hard to balance the speed at which this crisis has emerged with the slothful nature major players in the market have reacted. Many had a month-long early warning from other nations paralyzed by the virus as far back as 2019. So, it becomes hard to excuse a lack of core IT equipment to keep services running.

Poring over social media accounts—while not an exact science—reveals a degree of shock, fear, and absurdity from the staff, who, right up until a major national lockdown in major delivery locations, were still forced to come into work. A recent report from an employee goes so far as to document HR teams blocking them from wearing masks in the office to quell other employees’ fear. As the industry has matured since the early days of outsourcing, delivery centers have come a long way—but even the best-equipped providers will struggle to explain why hundreds and thousands of employees continued to be crammed into open-plan offices as the virus spread across the globe.

The Bottom Line: COVID-19 has laid bare the futility of existing BCP plans and provisions, for credibility in the future, outsourcers must learn from this crisis and ensure they are suitably prepared for the next.

It would be unfair to expect to package such an unprecedented crisis into everyday BCP plans. But even so, those who have failed in the eyes of their clients to protect core business services will struggle to regain credibility as the crisis subsides. While buyer audiences across the globe are sympathetic now, as they take previously unthought-of measures themselves, we can be certain that BCP plans will come under greater scrutiny in the future. Over-exposed firm’s will need to explain their position in detail once we return to business as usual—assuming there is a business as usual to return to.

One thing that the lack of preparedness has done is leave enterprise leaders we have spoken to with the dawning realization that they left what they had thought of as “commodity” services sitting with single providers. As business clamp down, those core business and IT services have never been more critical to business survival. If the outsourcing industry is unable to prove it has the plan and resources to see clients through this crisis, the new business as usual will be starkly different.