Outsourcing has become an inseparable part of the global economy over the last decade or so. Many companies rely heavily on outsourced talent. Typically, outsourcing is seen as an effort to reduce costs and render a company more effective, keeping it more profitable. In the end, the inability to do so might result in the company being unprofitable and almost definitely ceasing to trade.
The global COVID-19 pandemic has put a serious strain on the outsourcing industry. There are hundreds of companies trying to come up with solutions to the problems caused by the global pandemic.
Companies in India and the Philippines have even resorted to having the employees sleep in the office. Most outsourcing companies don’t have enough resources to give their employees laptops to work from home, like most middle-class workers in the global North are doing. Another issue is the sensitivity of information the outsourced workers deal with. Most companies, due to their strict privacy policies, make the employees leave their pens and paper at the door, so there’s little likelihood the ‘work from home’ would be used in this case.
The Outsourcing Impact
There are many companies utilizing outsourcing to keep their costs down, leading to the growth of their businesses. Outsourcing has made the global economy more complex and interconnected than ever. For example, a simple t-shirt travels across the globe before making it into the hands of the consumer. First, the cotton is picked in Texas, the US; it’s shipped to China or Bangladesh, where outsourced workers bring them to life, then it’s shipped to stores all over the world and after exhausting itself with the first owner, ends up on the second-hand clothing markets in the global South countries.
All companies that have a major global impact are using outsourcing. The outsourced talent isn’t just for creating garments. They can be educated tech experts, game developers, and engineers who work for transnational companies to produce games. New online casino games for Canadian players can be produced by a US-based company, with the talent from India or China contributing to the final product. As the online casino industries are booming in NZ, many online gamblers might not be aware of the effort that goes into the development of their favorite games.
Outsourcing during the Global Pandemic
The companies that use outsourcing extensively are faced with a dilemma. With the work not being done, companies had to carry the job back in-house. This may lead them to totally avoid outsourcing their jobs, long after the global crisis is over. Even the companies that can produce have to deal with projects that are already on hold and the lack of new projects coming in.
As the pandemic brings even more challenges for all economic activities, the outsourcing sector is one of the most affected, simply because of the lack of resources that can make non-conventional ways of work viable. If a small European firm can afford to provide its employees with all necessities to guarantee a smooth transition to working from home, the outsourcing companies in the global South don’t have the same resources.
Outsourcing in the Post-Pandemic Era
That doesn’t mean that the European companies aren’t facing challenges. Many are regretting not automating their work before the employees were forced to work from home. Many experts suggest that this will be a strong motivator for European companies to take decisive steps towards digitization and automation of their work processes once the pandemic dies down. Ultimately, this will significantly lower the threshold for outsourcing in the future. So looking at the long-term effects, the European businesses will be more likely to outsource their IT or business processes to other countries.
The quickest recovery from the novel coronavirus crisis is expected from the European welfare and Western states, with the others to follow slowly. As for the countries who are major providers of the outsourced talent, they might take longer to recover from the crisis.
The main challenge while the pandemic lasts is to do everything possible to stay in business. Both large transnational corporations and small firms providing outsourced services are affected by the pandemic, therefore there is a common understanding between the two that some services might be on hold for the time being.
Experts agree that to withstand the effects of the pandemic, companies must adapt to the digital-based work environment, whenever possible, as well as providing customers with their goods and services digitally.
Even if the current situation for outsourcing looks gloomy, the future certainly will bring new opportunities as the companies on the global market will need more outsourced talent while recovering from the damaging effects of the pandemic.