Tag: Coronavirus

A World Caught Unaware: Business Continuity and Disaster Recovery in the Wake of COVID-19 | Blog

This is the fourth in a series of blogs that explores a range of topics related to these issues and will naturally evolve as events unfold and facts reveal themselves. The blogs are in no way intended to provide scientific or health expertise, but rather focus on the implications and options for service delivery organizations.

These insights are based on our ongoing interactions with organizations operating in impacted areas, our expertise in global service delivery, and our previous experience with clients facing challenges from the SARS, MERS, and Zika viruses, as well as other unique risk situations.

A virus originating in China has brought life to a standstill around the globe – and that includes service providers and shared services centers or Global In-house Centers (GICs). From delays in procuring office supplies (most of them sourced from China) and rescheduling of important meetings/events to the threat the virus poses to human capital, the risks have pushed most firms to revisit their business plans and potentially prepare for another worldwide recession. The virus spread has also been a wakeup call for providers and shared services centers, testing their preparedness in terms of business continuity and disaster recovery. In fact, it has made some firms comprehend the need to balance their cost-competitive mindset with a risk-competitive one.

Some organizations are well prepared and offer examples for others to follow. In this blog, we take a look at some of these noteworthy business continuity and disaster recovery measures, based on our conversations with more than 20 GICs and service providers globally. Strategies that stand out in particular include:

  • Site-based strategies for senior leadership – A few firms have balanced their leadership positions across centers and geographies to ensure that all senior roles for critical processes are not based in a single location
  • Headcount thresholds – Some firms have thresholds on the maximum number of Full Time Equivalents (FTEs) in a particular location – both at a city level and country level
  • Dedicated resilience management groups – Some firms maintain a full-fledged business continuity team to manage crises and their responses
  • Robust work placement strategies – A number of firms ensure that critical activities are spread across locations

For example, a UK-headquartered bank (with GICs across multiple locations) has an intra-city, inter-city, and inter-country Business Continuity Planning (BCP) strategy. The bank follows a robust BCP operating procedure by: (A) assessing a service’s/process’ business impact /criticality if work were to stop due to reputational, financial, or customer-related reasons, among others); and, (B) identifying the work location based upon criticality – highly critical services/processes are typically distributed across two countries. To understand this better, the company invokes:

  • Intra-city BCP for extremely short-term events, such as shutdowns for three to four hours due to maintenance work at a site
  • Inter-city BCP for short-term or limited impact events affecting a city, for example, transport strikes
  • Inter-country BCP for critical events such as natural disasters. For instance, during the recent floods in Chennai, India, the bank moved critical processes such as risk and analytics to other GIC locations, such as Poland

Disaster Recovery and Business Continuity in Service Delivery Centers

In the aftermath of the coronavirus outbreak, we are likely to see significantly strengthened business continuity plans – those that take into account talent availability, work placement strategy, infrastructure availability, and newer metrics to manage performance. In particular, we encourage enterprises to explore answers to the following questions to develop robust business continuity plans:

  • Can the virtual model emerge as an effective alternative to physical locations? What does it mean from an infrastructure perspective?
  • How can automation solutions be deployed to manage down time?
  • What additional features need to be added to office communication tools and applications to enhance collaboration?
  • Is there a need to adopt new metrics to monitor resources working from home for an extended period of time? What should these metrics be? How will they co-exist with privacy laws?

Visit our COVID-19 resource center to access all our COVD-19 related insights.

Impact Of Coronavirus Threat To The IT Services Industry | Blog

Clearly, the coronavirus (COVID-19) already has an impact on the global economy and broader market. Companies are cancelling conferences and events. They are closing their campuses to outsiders. Travel is restricted. And in some instances, companies impose a work-from-home policy. In the IT and BPO services industry, decision-making is stalled, and we already see clients cancelling planned contracts.

How bad is the disruption to the services industry? It will have a negative impact on revenue growth in the next quarter (ending in June 2020) and potentially in several quarters to come. New projects will be postponed or cancelled. This is because, first, companies simply cannot buy complicated services without some form of travel. Second, any large initiatives require executive support and energy, and they won’t have time to push contracts forward during the next few months.

Read more in my blog on Forbes

Visit our COVID-19 resource center to access all our COVD-19 related insights.

Coronavirus Service Delivery Update | Blog

This is the third in a series of blogs that explores a range of topics related to these issues and will naturally evolve as events unfold and facts reveal themselves. The blogs are in no way intended to provide scientific or health expertise, but rather focus on the implications and options for service delivery organizations.

These insights are based on our ongoing interactions with organizations operating in impacted areas, our expertise in global service delivery, and our previous experience with clients facing challenges from the SARS, MERS, and Zika viruses, as well as other unique risk situations.

Over the past two to three weeks, media focus has shifted away from China, where the growth rate of new infections has slowed markedly. Hubei province remains the epicenter of the disease, but 8 of the 10 provinces that make up that core group of provinces where the disease has been most prevalent, have seen no new cases for several days. Hubei and the coastal province of Zheijang alone among the 10 are reporting new positive cases. There have been no public reports of service delivery interruption from any of the 44 Global In-house Centers (GICs) inside the core group of 10 provinces. Indeed, the last week has seen a steady return to work outside Hubei province.

The new global focus is on a group of high-risk countries including South Korea (Daegu and Cheongdo), Iran and Italy (specifically the whole of the north of the country and not just the provinces of Lombardy and the Veneto), and on a secondary group comprising Japan, Singapore, Laos, Thailand, Vietnam and Myanmar.

Data from Everest Group Market Intelligence (EGMI) shows that there are 470 Global Inhouse Centers (GICs) – or shared services centers – and 196 service provider delivery centers located in China and across these additional nine countries. Based on travel advisory and media reporting of regions that are more or less severely impacted, China still has the greatest exposure to delivery risk, with 73 delivery centers in high impact areas, and a further 272 in areas that are likely seeing little or no impact. Italy has 14 service provider delivery centers in the high-risk Northern provinces. South Korea has one or two GICs in Daegu, the city most affected by coronavirus infections. See details by country and sector in the two tables below.

exposure by country

exposure by sector

In view of restrictions imposed by governments, or companies implementing business continuity protocols, or simply out of fear of contracting the virus through proximity to large numbers of people, it is highly likely that most, if not all, of the delivery centers in high impact areas are closed and will remain so until further notice.

Many multinational corporations with offices in China and Hong Kong have imposed either complete travel bans (Amazon, Apple, Citigroup, Credit Suisse, Ford, Goldman Sachs, Google, HSBC, JP Morgan, LG, Salesforce) or have banned non-essential travel (GM, Johnson & Johnson, P&G, PwC, Siemens) to and from mainland China, Italy, Japan, and South Korea. In some cases, cross-border travel has been suspended indefinitely.

The same imposition of a work from home policy for all staff of multinationals in China and Hong Kong, which is beginning to ease, is now the norm for many businesses in Milan, the capital of Lombardy. The cancellation of meetings or conferences involving even modest numbers of international participants is now a daily occurrence.

The outward spread of the disease has also started to impact major service delivery locations, especially India, which comprises 40 percent of the world’s global services delivery capacity. As of March 6, 2020, 30 Covid-19 cases have been confirmed in the country. Initially, only passengers from high-risk countries were being checked at airports, but the government has implemented universal screening for all passengers flying into the country. Multiple companies such as Cognizant, PayTM, Wipro, and KPMG have temporarily closed select offices in Delhi NCR and Hyderabad and stepped up their employee safety efforts. In addition to encouraging the remote working model, these efforts include disinfecting and sanitizing office spaces, putting hand sanitizers at entry and exit points, discouraging staff from conducting physical meetings, restricting the entry of outsiders in office premises and distributing N95 masks amongst employees.

We continue to monitor these locations.

Visit our COVID-19 resource center to access all our COVD-19 related insights.

The UK’s Perfect Storm: Brexit, EU Workers Returning Home, IR35 Changes, and Coronavirus | Blog

Businesses in the UK are facing a spate of challenges; there’s the specter of new Brexit-driven red tape on trade, a staffing shortage as some EU workers are returning to their home countries, and UK changes to the IR35 contract worker tax legislation, which is making it very difficult for companies to hire contractors. A Coronavirus pandemic could be the final straw that breaks businesses’ backs. Let’s face it – there is a perfect storm ahead.

With Brexit and the EU trade negotiations still going on, there is little certainty about the red tape that businesses will face in order to trade with each other across the English Channel. Yet, with the transition period set to end on 31 December 2020, there is little time for businesses to prepare for whatever the new trade requirements may ultimately be.

Because adherence to the as yet unclear regulations will increase businesses’ workloads, a natural response would be to hire more staff. But unemployment is at record low, and many skilled EU workers are leaving the UK and returning to their home countries. Furthermore, the UK Office of National Statistics (ONS) reports that EU immigration to the UK is at an all-time low.

The HMRC’s new IR35 rules, which come into effect in April 2020, are exacerbating the problem. Many companies have had to adopt no-contractor hiring policies and cannot fill temporary vacancies. They are already feeling the impact of the regulation. If they can’t hire staff or contractors, where are companies going to find resources to handle the extra workload of trade red tape?

Additionally, widespread cases of the Coronavirus could lead to prolonged periods of sick leave, further reducing the number of staff who are available to help with the increased workload of trading with the EU. While cases are still far and few between in the UK, the impact of the spread of the disease in China has been great. Empty offices and factories in Chinese cities and manufacturing heartlands are already leading to a shortage of parts for cars and other products that are much in demand in the UK.

Clearly, UK businesses are facing a perfect storm.

Investing in digital and Intelligent Automation (IA) technologies can help them tackle some red tape issues, particularly if they use IA for what I call Red Tape Automation (RTA). This could be automation of compliance form-filling and reporting requirements, weights and measure conversions, or making changes to transaction or product-related data and synchronizing them across multiple systems such as those used for sales and revenue to record value added taxes and other duties. Companies that trade with both EU and non-EU countries could automate the red tape for all of those, using rules engines to fill in the right forms and apply the correct rates.

IA is not a perfect solution, as people will be needed to implement technology, and there is a growing talent shortage. Nonetheless, UK businesses will be well served by investing in learning the art of the possible with IA. While the final details of any trade deals with the EU, or new deals with the rest of the world, will not be known for a while, knowing how to implement the requirements quickly using IA can help them weather the impending storm.

For more information about IA, please check out Everest Group’s Service Optimization Technologies research.

Visit our COVID-19 resource center to access all our COVD-19 related insights.

Impact of Coronavirus on Service Delivery Is Limited But Ongoing | Blog

This is the second in a series of blogs that explores a range of topics related to these issues and will naturally evolve as events unfold and facts reveal themselves. The blogs are in no way intended to provide scientific or health expertise, but rather focus on the implications and options for service delivery organizations.

These insights are based on our ongoing interactions with organizations operating in impacted areas, our expertise in global service delivery, and our previous experience with clients facing challenges from the SARS, MERS, and Zika viruses, as well as other unique risk situations.

To date, over 99 percent of the officially confirmed total of 45,000 (61,000 if the Chinese authorities’ newly expanded definition is used) Covid-19, or Coronavirus, cases are inside China. The impact of the virus is pronounced in a core group of ten Chinese provinces: Hubei, where the virus originated, the six neighboring provinces of Shaanxi, Heinan, Anhui, Jiangxi, Hunan, and Chongqing, plus the adjacent coastal provinces of Guangdong, Fujian, and Zheijiang. As of February 9, these areas account for 90 percent of the total reported confirmed cases and 92 percent of China’s new cases.

While supply chain organizations in these provinces are facing severe impacts due to closures, we believe the level of exposure to risk of disruption for service delivery organizations is limited because the service delivery centers are largely servicing internal customers, which are themselves operating at reduced capacity or are closed completely until further notice.

Data from Everest Group Market Intelligence (EGMI) shows that there are 51 Global Inhouse Centers (GICs) – or shared services centers – and 20 service provider delivery centers located in these 10 provinces. Of the seven GICs in Hubei at the epicenter of the outbreak, two, owned by FedEx and UPS respectively, are thought to deliver internal shared services to domestic and near-Asian employees. The rest are technology research or innovation centers.

In view of restrictions imposed by the Chinese government, provincial governments, or companies implementing business continuity protocols, it is highly likely that most, if not all, of these delivery centers are closed and will remain so until further notice.

Examples of the restrictions imposed by the authorities or by companies themselves that have been in place for at least two weeks and look set to remain include:

  • The Chinese government extended the New Year holiday, which began on January 24, to February 2. Authorities in in 24 provinces and cities further extended closures by a week to February 9, and many businesses look set to remain closed the week of February 10; authorities in Beijing have urged businesses to adopt flexible working policies, including working from home
  • Places of business in Hubei will remain closed until February 15 at the earliest
  • With extensive internal travel restrictions in place, many workers who had returned to their home provinces for the New Year holiday are now unable to return to work
  • All multinationals with offices in China and Hong Kong have imposed either complete travel bans (Amazon, Ford, Google, HSBC, and LG) or non-essential travel (GM, Johnson & Johnson, P&G, PwC, and Siemens) to and from mainland China
  • Many multinationals have imposed a work from home policy for all staff in China and Hong Kong until further notice; in some cases, this policy has been backed by widescale closure of offices and facilities
  • Some businesses have cancelled meetings or conferences involving large numbers of international participants, including, for example, Citibank’s annual investor conference in Singapore, ZTE’s press briefing at MWC in Barcelona, and Ericsson’s attendance at MWC in Barcelona.

As an example of specific defensive measures businesses are taking, all businesses and public facilities in Singapore, in accordance with government guidelines issued on February 10, are now:

  • Scanning people entering and leaving buildings for raised temperature
  • Increasing the frequency and intensity of cleaning
  • Making hand sanitizer widely available
  • Requiring all visitors to make a health and travel declaration
  • Issuing face masks to staff who interact with members of the public

It is possible that some enterprises will use the disruption caused by the outbreak as justification for cost cutting and capacity reduction, but we don’t yet see clear evidence of that.

Visit our COVID-19 resource center to access all our COVD-19 related insights.

Ongoing Coverage of the Service Delivery Impacts of Coronavirus | Blog

Ongoing Coverage of the Service Delivery Impacts of Coronavirus

Coronavirus, or 2019-ncOv, creates many uncertainties for organizations engaged in the delivery of business process, IT, and engineering services. While the initial focus is the delivery of services from China, geographies such as India and the Philippines (and perhaps others) may also become areas of increased concern. Global service delivery organizations are typically large and involve extensive international mobility, increasing their risk exposure; at the same time, they are also leaders in virtual interactions via phone, email, and video.

This is the first in a series of blogs that explores a range of topics related to these issues and will naturally evolve as events unfold and facts reveal themselves. The blogs are in no way intended to provide scientific or health expertise, but rather focus on the implications and options for service delivery organizations.

These insights are based on our ongoing interactions with organizations operating in impacted areas, our expertise in global service delivery, and our previous experience with clients facing challenges from the SARS, MERS, and Zika viruses, as well as other unique risk situations.

Everest Group recently published a Risk Radar update on China related to coronavirus. With this update, we increased our risk rating for service delivery in China from “low-medium” to “medium.” Members of our Locations Insider, Catalyst, and Market Vista memberships can access the report.

We recommend that business process, IT, and engineering services firms migrate their critical operations to alternate delivery locations and promote the use of teleconferencing and work-from-home policies to ensure business continuity with minimal impact to operations. Additionally, companies should implement precautionary measures in compliance with the government guidelines.

In the coming days, we will publish additional blogs covering a range of topics related to this issue. At this point, mortality rates appear low, so the main concern may continue to be basic availability of business operations in China and implications on travel, families, and in-flight initiatives.

Visit our COVID-19 resource center to access all our COVD-19 related insights.

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