The Evolution of Outsourcing

Waiting over half an hour for my bank to answer a call over a suspect credit card transaction made me consider just how many banks and insurers are struggling to service their customers (and in some cases even keep the lights on) during the Covid-19 crisis.

We all know that most financial institutions have cut costs over the last 15 years by outsourcing to lower cost countries such as India for their IT services, business processes and in some cases their customer services. I suspect all of those companies with significant offshore delivery (which it must be said is almost everyone now) are currently struggling to support their clients because their offshore staff cannot work remotely with limited or no broadband, as well as the fact that most offshore employees do not have business laptops available. This comes at a time when their customer really need access to them the most, for business and personal loans, to make claims for travel, business interruption and of course, tragically, death.

The outsourcing market had already started to change, with companies bringing business and IT services back onshore for a few reasons. Firstly, there is increased use of robotic process automation (RPA) and artificial intelligence (AI), as well as the decrease in cost differential as offshore wages continue to increase apace. Does this mean that CxOs will start to reconsider whether offshore outsourcing is going to continue as we know it? Will companies look to shorten their supply chains or just decide that nearshore or onshore is much less risk? Will offshore players start to invest locally rather than always use offshore delivery or ship thousands to the West as the only model? Who knows, but I suspect things will never return to what they were. Being unable to service clients effectively during these trying times will not go unnoticed by end customers, and those who respond well will be in a much better position when we recover.

However, I should also mention it is not just offshore that is struggling. I’m aware that one of the major high street banks is all over the floor and even its UK based staff don’t have the telephony infrastructure to allow their UK staff to call clients through a secure mechanism.

As we start to look toward recovery, I can see lots of companies re-imagining their disaster recovery and business interruption models; the move to remote working will have a lasting effect, especially given the environmental benefits. I think business and IT services will continue to be repatriated as executive boards around the world realise the risk outsourcing offshore has brought and wish to manage the risk themselves or with geographically local delivery.

Perhaps CGI’s metro model of localised UK delivery centres, where everyone was moved to remote working in days, with no interruption to service to any clients, will be the way to go in future?

To start a conversation about the future of outsourcing, managed IT services and business transformation, and what you think your business outcomes might look like, please send me an e-mail or reach out to me on LinkedIn.