The pandemic calls into question the model of service outsourcing

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The pandemic calls into question the model of service outsourcing





© NOAH SEELAM
At a crossroads, the advice to stay at home to fight against the coronavirus is painted on the pavement, in Secunderabad, twin city of Hyderabad in India, on April 16, 2020


In Bangalore as in Manila, the coronavirus pandemic paralyzes the functioning of offshored services, pushing the large companies on which they depend to “relocate” jobs or accelerate the transition to automation.

With the confinements in force in India and the Philippines, the restrictions create a logistical nightmare for call centers and other support services (“back-office”), relocated in these countries by international companies because of the lower cost. local workforce.

But, because of the strict rules governing access to confidential data – such as banking data – of customers living on the other side of the world, the teams of these delocalized services can hardly work at home.

And many Filipino or Indian employees live in overcrowded housing with a poor internet connection. Some companies cannot even afford to provide their employees with homework equipment such as laptops.

“The outsourced services sector does not lend itself to working at home,” notes consultant Vivek Sood, author of the book “Outsourcing 3.0”. “We are talking about companies that asked their employees to leave their pens and pencils outside the office for security reasons.”


General view of the offices in India of the American computer services company (24) 7.ai in Bengalore, April 16, 2020


© Manjunath Kiran
General view of the offices in India of the American computer services company (24) 7.ai in Bengalore, April 16, 2020


Anxious to remain operational, some companies have chosen to have employees living at their workplace. Vodafone India, for example, “organized temporary accommodation arrangements in our data centers, making food and groceries available at critical locations.”


The offices of the German group Bosch, in Bangalore on April 16, 2020


© Manjunath Kiran
The offices of the German group Bosch, in Bangalore on April 16, 2020


These practices have attracted strong criticism from unions, which have received information from certain employees “in quarantine and locked up in their offices,” Mylene Cabalona, ​​president of the Business Process Outsourcing Industry Employees’ Network, told AFP ( GOOD).

In early April, the Financial Times published photos he said showing employees sleeping on the floor of a call center in the Philippines, living in what the newspaper described as “inhuman” conditions.

Anthony Esguerra, who works for a Manila company managing data for a Chinese online video game company, says 80% of its operations are disrupted due to the containment.

“The process of responding to requests from players has really slowed down, given that our internet access is limited compared to the time we worked in the office,” he told AFP.

Some companies, like the telecom company Spark New Zealand, or the Taiwanese computer hardware manufacturer Acer – which relies on a call center in the Philippines to respond to its New Zealand and Australian consumers – even ask the public to stop calling their customer service.


View of the offices in India of the American company Adobe in Bangalore, April 16, 2020


© Manjunath Kiran
View of the offices in India of the American company Adobe in Bangalore, April 16, 2020


Other large companies dependent on offshore services in India and the Philippines have already announced that they plan to recruit hundreds of people in their country of origin, where they could better adapt to the situation. This is particularly the case for the Australian companies Telstra and Optus, or Virgin Media in the United Kingdom.

The operator Optus is seeking to recruit 500 people in Australia, announcing that it has abandoned the creed that “the diversity of places would make us resilient to all disturbances”.

– Major economic transformation –

But in the longer term, the coronavirus pandemic risks accelerating the transition to automation for this type of service, which will see artificial intelligence perform tasks now devolved to men and women, experts say.

“Artificial intelligence does not go on strike, it can work 24 hours a day, seven days a week, and is less of a problem,” said Michael Czinkota, professor of international trade at Georgetown University in Washington.

Telstra, which already planned to reduce its call center capacities by two-thirds by 2022, is now aiming to accelerate its transition to artificial intelligence.

The telecom company “will use (this situation) as an opportunity to further digitize and automate our model,” CEO Andy Penn told the Sydney Morning Herald this month.

“The Covid-19 accomplished in six to eight weeks what the apostles of automation had failed to achieve (…) in more than five years,” Ilan Oshri, a teacher at the school, told AFP. of management from the University of Auckland.

The “relocation” of jobs and an increased use of artificial intelligence will have a major economic impact for countries like India and the Philippines. Offshored services support millions of people and generate tens of billions of dollars in revenue.

“We will have to rethink the whole model of outsourced services,” said consultant Vivek Sood. “The presumption that you can relocate everything to Bangalore or Manila and relax is now over.”

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