Eight months since the first was reported in Wuhan in 2019, the COVID-19 pandemic has proven to us that we need more resilient outsourcing strategies. As governments in the different continents struggle to manage the spread, the impact of infectious virus has been felt by dozens of industries on their supply chains. As companies worldwide scramble to identify new suppliers, others are opting for outsourcing.
The coronavirus pandemic has shamelessly exposed the vulnerability of supply chains. The weaknesses in the current supply chains that are in place have resulted in:
· Loss of revenue
· In some cases, market cap
How has coronavirus impacted the outsourcing strategy?
Businesses from across the world have been disrupted as most people are forced to work from home due to the social-distancing rules. There are several ways in which the pandemic has impacted the outsourcing strategy. Here are some of them and how they may be addressed in order to adjust to the evolving new normal.
1. Issues with business continuity
A lot of outsourcing business continuity plans are only designed and equipped for local disaster and so they do not factor in global pandemics. This shows the need to rapidly assess gaps in the business continuity measures and operations and then address the issues. Business outsourcing strategies need to be modified to factor in cases where an entire country is under lockdown.
2. Information security changes
Outsourcing companies need to make sure that data is secure from home locations. The customers also need to be diligent in ensuring that their providers put measures in place to achieve security.
3. Service level shifts
Companies need to be flexible operationally to accommodate the impact of the coronavirus pandemic on business. Given the challenges of meeting obligations in a fluid situation with varying constraints on delivery, many clients are working with businesses that best use the available capacity to meet the changing business needs.
4. Application and network resiliency
The existing infrastructure across different parts of the world is being stretched as most outsourcing companies are struggling to keep up with demand. Most companies have to put in place additional redundancies to ensure sufficient availability.
5. Pricing model modifications
Companies need to temporarily rethink their pricing models to reflect the shifts that are happening globally.
6. Audit rights uncertainty
It may be a wise idea for companies to waive the audit rights until things get back to normal. However, a complete waiver wouldn’t be a good idea. This would leave the company without recourse in situations where they’re necessary or appropriate.
7. Non-essential spending delays
It makes sense to delay any discretionary spending at least until the lockdown period is over. If non-essential costs are cut down, the company’s expenditure decreases significantly.
The coronavirus pandemic has shamelessly exposed the vulnerability of supply chains. The weaknesses in the current supply chains that are in place have resulted in:
It makes sense to delay any discretionary spending at least until the lockdown period is over. If non-essential costs are cut down, the company’s expenditure decreases significantly.
Conclusion
It seems like the current situation is here to stay so businesses need to put measures in place that will enable them to recover their losses quickly. This means that in order to return to the status quo, businesses need to make numerous changes ranging from operational, financial, and contractual. These measures will determine how quickly personnel can go back to work after the transition.
