Major Facts
The Covid-19 pandemic is the first health crisis to affect the business landscape at all levels. As a result, it has driven the need to restructure the global economic order. Offshoring and outsourcing received serious attention from businesses as a solution to the threat of disruption by Y2K. As a consequence, outsourcing was viewed as a means for businesses to protect their investments. After all, it was yet known that a black swan in the form of a single virus could produce a disruption that has reached the magnitude of COVID-19 (Aryatama, 2020). Due to the pandemic businesses have had to shut down or reduce the scale of their operations, economies have been closed, and the lockdown protocols instituted in different countries meant that normal operations have been halted for the foreseeable future (Nhamo et al., 2020).
Outsourcing and offshoring, as a business strategy is under threat. For some businesses, the offshore workforce was their main source of competitive advantage (Di Mauro et al., 2018). For other companies, the workforce is a backup in case disruptions keep their onshore workforce from performing their jobs (Koskinen & Mansikkaniemi, 2015) . However, the pandemic and the measures put in place to contain its spread has capped the offshoring and outsourcing market. India’s multibillion dollar outsourcing market lays unutilized as efforts to upgrade offshoring platforms run into problems (Ghosh et al., 2020). For instance, companies whose operations depended on fixed internal networks discovered that they could not have their workers adapt to working from home. Others have had to bring in their critical staff, like analysts, in shifts while maintaining social distancing to ensure continuation of business operations.
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Major Problem
In light of the challenges brought by the COVID-19 pandemic, what are the ways businesses will have to change their offshoring strategies to make them resilient against the continued impacts of the COVD-19 pandemic?
Possible Solutions
The first solution to the challenges brought by the pandemic is to change the outsourcing and offshoring business model and make it more resilient to disruptions by taking the portfolio approach. This approach will have the businesses distribute their providers both on and offshore while placing them at strategically separate locations. The advantage of this solution is that it will make the offshoring strategy more resilient against such disruptions. The disadvantage, however, is that maintaining different on and offshore providers will increase the cost of operation, thus reducing a company’s competitive advantage. Furthermore, the portfolio approach still has humans in the loop who are vulnerable to another pandemic like COVID-19.
Therefore, another solution would be to retain the advantages of the portfolio approach while eliminating its disadvantages, especially the single point of failure humans are in the process loop. The solution is to adapt robotic process automation (RPA) where production services can be automated using machines. RPA is not only efficient but can save businesses money and resources in the long-term. Furthermore, RPA is highly customizable as it can be used to implement a just in time (JIT) production and distribution strategy. The main disadvantage of RPA is that it requires a lot of resources and finances to set up and maintain long enough to start to be advantageous.
However, not all jobs can be outsourced to RPA or bots. For instance, customer service and customer engagement cannot be automated as the machines still lack the level of intuition humans use when engaging with customers or performing other duties. The last solution, therefore, is to employ a digital workforce. The digital workforce will take the best parts of automation and humans. For instance, the tedious and repetitive work can be delegated to digital tools while humans are left to use the technological tools to derive value for the businesses.
Choice and Rationale
The most optimum would be to start working with a digital workforce. The portfolio approach is not the optimum solution as humans are still vulnerable to another biological pandemic, thus impacting operations if they are in the loop. On the other hand, RPA and other forms of automation are a partway solution as they do not have the intuition, flexibility, and versatility that are natural to humans. However, when the two approaches are put together, the digital workforce emerges with the best of both and none of their worst. A digital workforce will also be familiar with the underlying infrastructure that they can work remotely. After all, the repetitive and tedious work is done on site with little or no supervision. Furthermore, when the workforce is no longer tied down by repetitive and menial labour, they are free to think of ways to boost their productivity, such as by optimizing business processes or engage the customers more.
Implementation
Implementing a digital workforce to protect a company from the pandemic and other disruptions can be done in two phases. In the first phase, the infrastructure for automation or RPA would have to be built. This would be done in three steps. In the first step, the business need for automation would be done. Secondly, vendors to build, pilot, and implement the RPA and its infrastructure will be selected. Lastly, the RPA will have to be maintained throughout its lifecycle to ensure productivity. In the second phase, the workforce to use the RPA infrastructure will have to be acquired, trained, assessed, and monitored so that their performance is always at desired levels of productivity.
References
Aryatama, H. (2020). The Effect of Pandemic COVID-19 in the Outsourcing Industry Sector and the Role of Human Resourcing in Dynamic Organizations. Available at SSRN 3591137 .
Di Mauro, C., Fratocchi, L., Orzes, G., & Sartor, M. (2018). Offshoring and backshoring: A multiple case study analysis. Journal of Purchasing and Supply Management , 24 (2), 108-134.
Ghosh, A., Nundy, S., & Mallick, T. K. (2020). How India is dealing with COVID-19 pandemic. Sensors International , 1 , 100021.
Koskinen, J., Halttunen, V., & Mansikkaniemi, J. (2015). An exploratory case study of offshore outsourcing: problems in multicultural settings. In New Trends in Networking, Computing, E-learning, Systems Sciences, and Engineering (pp. 137-147). Springer, Cham.
Nhamo, G., Dube, K., & Chikodzi, D. (2020). Preparedness and Responses to COVID-19: A Comparison from Selected Countries. In Counting the Cost of COVID-19 on the Global Tourism Industry (pp. 53-86). Springer, Cham.
