A view from the operational trenches from a service provider and their strategic client
The Service Provider View
The COVID-19 pandemic has changed the way we live, work, and go about our everyday tasks. A new normal is starting to emerge as most of us plan the logistics and modes for a phased return to business as usual.
The end state for what business as usual might look like is still under construction. Service providers are faced with a challenge that seems like changing the wheels on a moving car – and thinking about how to convert the car into an airplane at the same time.
Service providers are being asked to simultaneously design and execute a new, elastic, disruption-proof operating model while delivering above and beyond their obligations to their clients.
Some clear trends have emerged regarding the questions being asked, the kind of solutions that are emerging, and what must be prioritized to meet these challenges. Some trends are particular to specific industries and functions, but others are more fundamental and intrinsic for helping shape what the new normal may look like.
Flexible Operating Structures and Business Models
The global IT and IT-enabled services industry had to fundamentally alter its way of doing business due to COVID-19. Most service providers and their clients anticipate multiple disruptions in the future, and want to create resilient operations to combat them.
- It is imperative to reimagine operations management and IT-enabled services operating model to allow the flexibility needed for quick pivots in structure and delivery channels. This will involve solving for technical, logistical, legal, and regulatory challenges for an industry optimized to operate from large centralized delivery centers.
- A larger challenge will come on the legal and regulatory side. The industry is used to operating from ultra-secure centers with the latest in physical and cyber security. Ensuring the same level of compliance in a work from home environment will be a significant challenge.
- Service providers will need to reevaluate their business models and how they deliver services to their clients. If a work from home model is now acceptable under revised regulations, what functions lend themselves to this mode, and what is still prohibited? Replacing the single ultra-secure center delivery model with multiple options is likely to be the new blended norm.
- Traditionally, a service provider employee’s workday meant an eight-hour shift performing the client’s processes. Employee performance management, service level commitments, and pricing models were aligned to the number of full-time employee equivalents. Now, the flexibility to deliver work in a 24/7 mode redefines the norms of a productive day. Outcome-based or valuebased pricing will likely evolve to become the norm, and possibly a source of competitive advantage.
Automation is the New Leading Edge
Process automation has traditionally been driven by cost and efficiency motives and so had been restricted to high volume, low complexity functions. However, the disruption caused by COVID-19 has opened up minds enough to consider a digital workforce as a legitimate capacity leverage across all functions and processes.
- With AI and ML solutions, technology has been ready and present for some time now. The leveling force of the pandemic has broken down historical biases and organization silos that impeded rapid deployment of a digital workforce. The stars seem to have truly aligned for the golden age of process automation.
- Control, optimization and continuous improvement of outcomes through automation solutions is still critical. However, augmenting capacity through automation is now a major driver
- With clients more willing and eager to move directly to automated solutions, solution providers will now lead with automation. A digital workforce will be at the front and center of their offerings.
Rapidly evolving business demands are putting pressure on service providers to move from being specialists, who only serve specific and limited functions, to generalists, who can quickly adapt to work across multiple functions. With capacity and staffing demand being recalibrated on the go, there is an urgent need to reskill resources and build a crosstrained, versatile workforce that can quickly be redeployed as market priorities shift.
- With the pandemic, many organizations have to work using smaller teams doing more varied work. Organizations are seeing the advantage of a versatile and blended workforce. The workforce of the future will need to be able to be retrained and reskilled with minimal notice, bringing in a renewed focus on agile training capabilities.
- While specialization is still important, only a small group of people will need to be specialists. Platforms for rapid dissemination of know-how from designated specialists will help larger teams pivot and develop expertise at an accelerated pace.
- In order to optimize the results of such moves, service providers will have to develop flexible skill-set and qualification mapping practices capable of also handling constraints of compliance and regulatory demands; like segregation of duties for accounting compliance for example.
- Change management structures that help people transition from one role to another quickly and effectively will be a key element of all future-state planning for service providers.
Communication and Governance is Key
As teams work from offices, homes, or pretty much anywhere, managing the way companies work and communicate is going to be pivotal for success. Physically disaggregated teams increases the need to connect more frequently, calibrate and re-calibrate expectations, and agree on combined priorities and outcomes.
- Service providers must focus on truly listening to and communicating across their clients, customers, and employees. The right communication can create clarity, build resilience, and catalyze positive change. Communications should be frequent, even if they just reaffirm what is known. Communication must flow both top-down and bottom-up so that management priorities are in-sync with ground-level realities and hierarchical silos are avoided.
- Traditional communication methods used when operating from centralized single-building facilities will need to be reconsidered. As teams become more virtual and dispersed, service providers must consider new communication and collaboration platforms.
- Service providers must consider new ways of keeping the workforce engaged. As the average age of workers in this industry is below 30, companies thrived on training, connecting, and motivating team members through an environment that interwove fun with work. Now, a remote workforce will need to be managed in new ways.
The fast-paced economic impacts of COVID-19 have generated an unprecedented amount of macro- and micro-economic data for analysis. Clients are looking for their service providers to help cut through the noise for real-time, actionable insights relevant to their business.
- In the present circumstance, three key sets of data can help guide informed decisions – macro market trends, customer response and behavior, and internal business performance.
- The first two sets of data, which are mostly external to clients, have been available in abundance through the last few weeks
- Rapid insights generated from the real-time combination of external data and internal performance data is key to adapting an operating strategy suited to the fast-paced changes brought by the pandemic.
- As clients embrace more futuristic norms of strategic decision making aided by real-time data-driven business insights, such services will become an increasingly important point of competitive differentiation for service providers.
The Omnicom View
Like many Fortune 500 companies, Omnicom has partnered with EXL for BPO services for over a decade. That partnership was tested during the Covid-19 pandemic, and we believe we will come out stronger and more evolved from it.
The learnings EXL summarized above played out in real-time as we worked through the changes which were occurring on a daily or sometimes hourly basis. As the pandemic migrated from one country to another, the amount of data was overwhelming. Every website and social board had some data point plotted, but it was difficult to define the relevance or application of the data to our personal lives. In our business the use of data is core as we help solve marketing strategies for our clients. We created daily tracking of key data points around resources, work efforts, and utilization to better understand the operational health. As the pandemic started to unfold in India, we combined our regular cadence of data with clear and persistent communication, to work through the critical weeks of the crisis.
We find that the pandemic has served as an accelerant for change across our operations. The rigor of daily calls forced us to evaluate our work in line with business objectives sometimes requiring pooling of resources and making critical prioritizations on a daily basis. Pooling resources has always been part of our strategy, and now within the matter of a few weeks we demonstrated its viability. Longer term, we appreciate that operational automation is critical, and insurance against such pandemics. I’m confident we will be in crowded (yet safely distanced) company as we all push forward to automate much of our current processes. Ultimately enabling us to evolve the work of our teams towards even deeper and more value-add for the organization.
-- Jack Virdee
VP Finance and Operational Excellence, Omnicom
“ Business insight, communication and resilience, and digital and human interventions are the key differentiators for BPO service providers in a post-COVID world.”
These trends are not new for the industry as a whole, as seen by the rising prominence of automation and data-driven intelligence tools prior to COVID-19. Organizations have also seen the rising need for resilience and adaptability of both operating structures and people skills. However, COVID-19 has disrupted all trends, and sped up the evolution of business structures. It has also forced every business to question their accepted norms and reprioritize according to the needs of their stakeholders.
At this juncture, BPO service providers are no doubt faced with a significant challenge. However, that challenge could be the greatest opportunity for the industry to redefine itself as partners who help clients become future ready.
Rup J Goswami
VP Finance and Operational
With Contributions from:
Narasimha Kini, SVP and Business Head,
Emerging Business, EXL
Raghav Jaggi, SVP, Insurance F&A Leader
and Global Co-Head of P&C Insurance, EXL
Senior Manager, EXL