6 Post-Pandemic Outsourcing Challenges for Businesses and How to Overcome

If you’ve read a news article recently, or even heard a business segment playing in the background at work, then the topics of supply chain meltdowns, labor shortages, and soaring salary costs have been presented to you endlessly this year. And while it is tempting to tune some of this gloom and doom out, I would urge you not to. Like most crises, there will be clear winners and losers, and accepting the reality of looming threats is the first step to adjusting to these changing times and markets.

And while most mainstream media outlets have produced an endless supply of economists telling businesses how to adjust and rebound from current obstacles, all of the talks of economic repercussions and operational paralysis due to COVID-19 have largely ignored one key aspect: Outsourcing massively cushioned the blow for those companies that partnered with service providers in the years before the crisis. And in some instances, outsourcing allowed them to avoid it altogether.

In industries less inclined to leverage outsourcing relationships, there are constant talks of downturns, financial loss, and stagnation. However, many companies that have long incorporated outsourcing into their organizations maintain a balance while their counterparts toil in precarious situations.

I wouldn’t say there was remarkable growth across the board for offshoring companies and their clients, as there are impacts from the pandemic in most industries, of course. But, what was not brought into the spotlight is that companies with symbiotic relationships with their outsourcing partners thrived. They avoided being crippled by a geographically limited workforce by tapping global talent pools, and kept salaries predictable through offshore dollar cost averaging. And with that, I am more confident that these players are the ones prepared for the post-pandemic world.

Of course, it’s not all rainbows and butterflies. Many companies with outsourcing partners had to take a long look at their business continuity plans, and make significant investments to realize success. And the offshoring industry in large part adapted well to the increased responsibility they were given during the pandemic. For instance, in the Philippines, BPO companies were quick to implement blended work from home policies, in order to avoid having COVID-19 outbreaks jeopardize the critical mass of onsite employees.

Within weeks of the various lockdowns being declared, a large number of BPO companies began distributing work from home kits that included reimbursements and allowances for employees to set up workstations at their homes. Other BPOs saw to it that there were regular distribution of health kits among work-from-home employees.

When the seriousness of the situation became more evident, outsourcing providers were also quick to strategize ways to keep their employees safe, while maintaining the integrity of the end product. For example, some BPO companies commissioned hotels to house their workforce when employees did need to work onsite, and created bubble environments to proactively guard against the threat of data breaches that are commonly associated with a decentralized workforce. In these examples, workers were given access to food, stable and secure internet connections, regular COVID-19 testing, and vaccinations.

For some partners, the unprecedented steps included internal adjustments: scalable solutions, price reductions, or additional services without extra cost.

No doubt, many companies will still count on their outsourcing partners as they bounce back from the pandemic. But most importantly, more newcomers will incorporate outsourcing into their structure in the post-pandemic world.

In this article, I will outline the outsourcing challenges that companies should anticipate in a post-pandemic marketplace. Nevertheless, let me say as early as now that with a compatible outsourcing partner by your side, these challenges may either be overcome, or avoided altogether.

6 Challenges of Outsourcing in the New Normal

#1: Sustainability of Work From Home

Many outsourcing companies were relieved to see an increase in productivity from their respective work-from-home workforce. Still, many decision-makers doubt the sustainability of the setup especially since we are all yet to see if the arrangement is effective minus the pandemic.

One aspect that raises doubts is the success of virtual training in producing employees with both the mental and social capacity to handle job responsibilities. Most employees hired during the pandemic went through remote hiring and training processes. Are they prepared to handle live tasks and thrive in their respective organizations once deployed back to physical settings?

These days, new hires do not have the chance to meet their coworkers in person and get a natural feel of the workplace dynamics and culture. A study conducted among Microsoft employees showed that remote employees communicate less frequently with members outside their internal teams. They are also slow to initiate new connections outside their groups, even for social activities.

This situation makes the employee prone to the pitfalls of working in silos which brings us to the next concern: how effective is virtual communication?

Working in silos restricts creative thinking and collaboration, and corrupts foresight. It could also lead to wasted time and company resources as silos create an environment where there is job duplication.

Of course, some managers will always blame the shortcomings of virtual communication on unreliable internet connections. But a great leader knows that the issue goes far beyond internet speed and reliability.

Nevertheless, internet connectivity and power supply also threaten the sustainability of purely remote work. As employees are dispersed in different locations, unreliable internet connections and power supply affect how teams and project managers ensure alignment and engagement. It also exposes work-from-home employees to commit non-intentional security breaches.

Remote workers’ home offices are also often shared with other family members, making it difficult to maintain privacy, especially during video conferencing. Team leaders have to double their efforts to monitor compliance with internal and external policies and regulations.

Lastly, there’s the issue of voluntary attrition. As the pandemic situation improves, outsourcing companies are gradually increasing their in-office capacity. However, many employees are reluctant to go back to the office. Some choose to look for other jobs that offer permanent remote work arrangements or opt to work freelance.

Despite these challenges, the work-from-home arrangement is likely to stay. To thrive, outsourcing companies must work out ways to build a connected culture, ensure frequent communication and group engagement activities, and invest in cognitive collaboration tools.

#2: Regulatory Changes to Accommodate Hybrid Work

There is no doubt that outsourcing offers a myriad of benefits but cost advantage remains its most substantial value proposition. Businesses outsource mainly to reduce costs. However, changes in some government regulations may lead to an increase in the cost of outsourcing services.

For instance, BPOs and other companies in the Philippines that are based in economic zones enjoy tax breaks. But, some necessary tax exemptions are only valid if most employees are physically present in the workplace.

As a strong driver of the Philippine economy, the outsourcing sector received an exemption from the government during the early months of the pandemic. Outsourcing companies continue to receive tax incentives even as a sizable percentage of the workforce had to work from home. But early this year, the government revised the incentive system, reducing the tax exemptions enjoyed by companies employing work-at-home arrangements.

While many key outsourcing firms are now entrenching hybrid work into their business models, changes to fiscal-incentive laws are causing concern among outsourcing industry members. In short, the reduction of tax break incentives might cause outsourcing services in the country to be more expensive than the pre-pandemic days.

With all things considered, however, outsourcing to BPO companies in the Philippines would remain economical compared to other countries. Moreover, the country is one of the oldest outsourcing pioneers with international clients regarding Filipinos’ work ethic and soft skills unparalleled. Respect is ingrained in Filipino culture, and they bring this quality to their interactions with clients.

#3: Rise in Cybersecurity Concerns

Since the global COVID-19 outbreak, ransomware, data breaches, and other security threats were added to the day-to-day concerns of many businesses that were previously not accustomed to having to deal with cybersecurity. In fact, it is estimated that cyberattacks will cost the world $6 trillion by the end of 2021 and $10 trillion annually by 2025.

With how advanced, aggressive, and intentional cyber attackers are becoming, enterprises should take cybersecurity to new heights. This measure is particularly crucial for organizations that plan to employ a fully remote or hybrid work model. In 2020, 61% of malware attacks were directed at remote workers accessing cloud-based systems.

Due to the decentralization and lack of infrastructural control with remote and hybrid work environments, these setups are extremely vulnerable to cybersecurity threats.

Before the pandemic, remote work infrastructure was not a priority investment for most businesses. Many have not fully prepared for the digital revolution, and cyber attackers take full advantage of this situation. On the other hand, outsourcing companies which by their very nature as integral pieces of their clients’ business continuity plans, have long mitigated these risks by using the most robust methods to enhance VPN and cloud storage security and educating employees effectively on cybersecurity measures.

#4: Increased Need for Digital Tools to Address Changing Consumer Behaviors

Even as the pandemic and fear of catching the virus subside, consumers will continue to embrace the convenience and time-saving benefits of technology across all areas of life. The trends that will likely stay and continue to shape consumer behavior are digital entertainment, remote work and learning, online shopping, and telemedicine.

However, the permanence of these new consumer behaviors is not guaranteed. After all, it is in the nature of consumers to adopt trends as they see convenient. As the American psychologist Thorndike puts it, “behaviors that are followed by consequences that are satisfying are more likely to be repeated, and behaviors that are followed by unpleasant consequences are less likely to be repeated.”

Consumers need to find significant value in new experiences before embracing them for the long haul. Outsourcing companies must cope by investing in tools that offer enough agility to scale according to the nonlinear and ever-evolving consumer behavior and, at the same time, elevate the customer experience journey.

#5: Regional and Corporate Cultural Differences

Language barriers and conflicting customs, beliefs, and values impact the way organizations build trust with their outsourcing providers, and will continue to do so long after the pandemic is over. Left unaddressed, these issues prevent client-vendor relationships from thriving. A considerable number of outsourcing deals failed wholly or partially because of cultural incompatibility.

Culture conflicts manifest in various forms, such as clashing management styles and misaligned visions. And with the emergence of remote and hybrid work ecosystems, corporate cultural alignment may become even more challenging for organizations.

Culture is multi-layered and deeply ingrained in one’s consciousness. However, it is not all black and white. While many outsourcing destinations find it hard to bend, the Philippines stands out in this aspect. The country shares close cultural ties with Western countries, so reconciling cultural differences is less challenging than would be the case with other outsourcing destinations.

With the Philippines being one of the early adopters within the global outsourcing industry, the Asian country has mastered strategies to overcome cultural barriers. Many BPO companies in the Philippines embrace the significance of constant and open communication. Regular cultural alignment activities are also heavily integrated into training and engagement programs.

#6: Choosing the Compatible Outsourcing Model and Provider

There are thousands of outsourcing providers in different parts of the world. The list of considerations is also perplexing.

On top of the list is choosing which outsourcing model works best. Should leaders be offshoring, onshoring, or nearshoring? There are also many factors at play. Those with significant weight include the vendor’s size, location, management strategies, and expertise.

I can say that the most conclusive strategy is replicating what the big players have already accomplished. For instance, Google, Microsoft, Amazon, AT&T, and Telstra (among others) choose the Philippines for their outsourcing needs.

The country, known as the world’s call center capital, has diversified its expertise to include other solutions, such as information technology, legal, and data science outsourcing. To date, there are about 700 BPO companies in the Philippines.

How To Find The Right Outsourcing Service Partner

#1: Identify Your Outsourcing Goals

Narrow down your search to outsourcing companies whose expertise aligns with your company’s visions. Your foresight as a leader will come in handy here. Think of the goals you would want to achieve in both the near and distant future.

#2: Conduct In-Depth Research About Potential Outsourcing Partners

Scrutinize your shortlist. Do you share the outsourcing company’s mission and vision? Do their value propositions align with your needs at hand and long-term goals? Compare each outsourcing companies’ experience, infrastructure and technology, security policies, location, and financial stability.

Assess their capabilities by examining past projects and present involvements. A good gauge to look at is whether a provider leverages statistics and metrics, basing their business decisions on actionable data.

#3: Perform Service and Price Comparison

Choosing an outsourcing provider that guarantees low cost is very tempting. However, a decision based on pricing alone may result in disappointing service delivery. To get the best value for your investments, check for the service inclusions of each provider’s offering and compare them exhaustively. Weigh the skill level of the workforce, the location of the provider, and the development support that the company provides.

#4: Check for Cultural Compatibility

Bringing together people of various backgrounds fosters innovation and creativity, but blending cultural differences also has significant challenges. To mitigate cultural barriers, gauge how compatible your regional and corporate cultures are with potential outsourcing partners.

Learn about their corporate values, leadership style, and vision and see if they fit with yours. Assess how they foster inclusivity and manage differences of opinions and beliefs.

#5: Evaluate the Outsourcing Company’s Responsiveness and Overall Communication Style

Good communication is an excellent foundation for any great client-vendor relationship. Ensure that you and your outsourcing partner are working toward a similar goal, even if you are in different parts of the world.

Before signing a contract, make sure that the potential partner speaks your language, both figuratively and literally, and is responsive and accessible through various communication platforms.

Maintaining a Positive Outlook

Change is never easy, especially if it comes unexpectedly. But if we keep an open mind, learn to adapt, and prepare continuously, we can anticipate and therefore overcome the challenges that are bound to come. We might even be surprised to see better results as we embrace and evolve with the changes.

I have seen this myself with SuperStaff. When most BPO companies in the Philippines and other parts of the world were scaling down, we emerged stronger and achieved significant growth. As we continue to navigate the uncertainties of the current times, you can count on SuperStaff to innovate and stand behind our commitment to deliver excellent support amid any crisis.

To learn more about our outsourcing services, schedule a consultation with one of our human capital strategists today.