Tag: SOVM-COVID-19

COVID-19 Brings Opportunities To American Businesses | Blog

The COVID-19 pandemic came upon us so quickly. In just three months, the US went from a boom economy to threatening recession and businesses closing nationwide. CEOs now ask Everest Group for advice on how they should address their business issues because of the pandemic. What should they do right now to maintain business continuity? How can they ensure third-party services continuity? And how they can position their businesses for recovery – and even find opportunities for competitive advantage – when we come out on the other side of the COVID-19 pandemic?

Read my blog in Forbes

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

Are You Prepared for a New Normal? | Blog

This is the fifth 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 month ago the equity markets were hitting all-time highs, but as I write this, the Dow Jones Industrial Average is down about 30%, largely due to the actions being taken to control the spread of COVID-19. Simply put, many enterprises are shutting down and pulling back – preserving cash, cancelling projects, delaying investments, and freezing hiring and/or laying off employees. We are truly living in unprecedented times.

However, through the confusion and panic, leading enterprises are demonstrating their preparedness in this difficult business environment, putting their leadership and digital business models on display. Amazon is pivoting quickly, responding to the crisis by not accepting new inventory to their warehouses other than medical and household staples, extending delivery hours and quickly hiring 100,000 additional employees to meet demand, while raising employee wages by $2/hour through April.

Other lessons from a less dominant company includes a Chinese cosmetics company, Lin Qingxuan, which was forced to close 40% of its stores in China (and 100% in Wuhan) during the peak of the crisis. The company quickly redeployed sales resources to their online presence to influence customers and drive online sales, resulting in 200% sales growth over prior year sales for the same period according to Harvard Business Review. In another example, luxury brand LVMH, which owns Louis Vuitton and Fendi, has repurposed its perfume manufacturing lines to make hand sanitizer, a move that may win the hearts of consumers as the crisis diminishes.

Clearly, this crisis demonstrates just how quickly consumer and business demands can change. If your business model is not designed to absorb these impacts, you most likely have been severely affected.  Leading enterprises are already planning for the end of this crisis. China is seeing a dramatic decrease in the number of new COVID-19 cases, factories are reopening, workers are returning to their jobs, and companies such as Dow Inc. are actually seeing increasing demand for goods in China.

If you were one of the companies on the outside looking in, now is the time to act so that the next crisis does not catch you on your heels. To fortify your business model, start by doing the following:

  • Review the alignment of your business strategy, business model, and core processes. The evolution of many enterprises focused on one area – such as client interactions – while overlooking other processes – such as such as manufacturing, supply chain, distribution, or accounting. The entire value chain must work in harmony when facing dramatic shifts in the business environment.
  • Develop your perspective of the “new normal,” and quickly make adjustments. Do your customers still want to do business with you in the manner they did before the crisis, or will they expect a new normal? Do you really understand your customers’ buying behaviors? This crisis may have a significant impact on how you conduct business in the future as you learn new habits such as remote work, virtual collaboration, enhanced e-commerce, and improved visible business tracking.
  • Understand what drives your value – outsource everything else to more capable providers. Dedicated outsourcing providers invest in their core business and strive to offer world-class services so that you can focus on your core value drivers. While outsourcing will drive cost efficiencies, you should expect it also to drive quality, flexibility, and agility of non-core processes that can better enable your business model.
  • Review the alignment of strategic third parties to your business model. Many enterprises do not understand the value of a vendor management organization (VMO) until a strategic partner fails them. A VMO ensures alignment to the business model and selection of the right providers and suppliers to ensure they can move at the speed that your business model requires.
  • Ensure your organization structure is aligned to your business model. To deploy as quickly and decisively as Amazon, Lin Qingxuan, and LVMH, you must have an organization that is innovative, empowered, aligned, and prepared. If your organization structures have not evolved as your customers have, you may want to review the reporting structures, spans and layers, and internal governance models to be certain you can address quickly changing business environments.

While this crisis has not yet peaked in many parts of the world, it is not too early to begin planning for a recovery and the new normal. Leading companies are monitoring the situation while also pushing forward with transformation and cost saving plans, incorporating changes with new learnings. This is not the first time we have been here, and it certainly will not be the last. Now is the time to not panic, but be bold and forge ahead.

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.

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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