Re-evaluate your IT sourcing amid COVID-19

The global business ecosystem has been severely impacted by the COVID-19 pandemic. As such, now is an ideal time for organisations to re-evaluate their IT sourcing for a COVID-19 world that addresses factors such as delivery operational efficiency, customer experience, service quality, innovation, cost, and business continuity.

Organisations should determine what to insource, outsource, or co-source. These approaches can be applied broadly to an entire function or narrowly to a specific project or task.  Additionally, decisions should consider what to onshore or offshore. These plans can be augmented through the growing usage of crowd-sourcing which is performed online by a large group of independent people.

COVID-19 has changed the usage of technology with a surge in popularity of videoconferencing due to remote work and e-commerce due to travel restrictions. It is obvious to say that post COVID-19 this is likely to have ongoing ramifications on remote working and the procurement of goods and services. Local and global supply chains have been impacted, which raises concerns for companies and countries in ascertaining whether domestic self-sufficiency or international diversification is more economically and politically advantageous.

Prior to COVID-19, organisations embraced offshoring to low-wage countries; however, disruption to those offshore services is forcing organisations to re-evaluate their strategies and continuity plans. For instance, Telstra was forced to temporarily shutter its offshore call centre operations in the Philippines and India, and onshore 3,500 staff to its Australian centres. Telstra CEO, Andy Penn stated that “Our aspiration is that by the end of our T22 program all in-bound calls from these customers to us will be answered in Australia”.

To add to the disruption, the Australian economy is in its biggest economic down-turn in almost a century, forcing businesses and the government to re-evaluate their macro geo-economic focus, such as supply chains, domestic skills and capability, and research and development. Businesses with a domestic focus on local job creation and onshore manufacturing can capture a competitive advantage through consumer goodwill who are seeking out more locally made goods and services, even at higher prices.

There are many advantages in a shift to more onshoring. This includes improved communication in terms of a shared language and cultural conventions, which better facilitates new ideas and innovation as well as ensuring timely customer feedback. Additionally, similar time zones and consistent holiday periods reduce turn-around times. Intellectual property is easier to manage onshore as the laws of both parties are governed and enforceable within a single jurisdiction. Furthermore, offshore contracts provide little protection due to the force majeure nature of COVID-19.

Gartner recommends implementing service-specific contingency plans for each critical service by reducing low-priority demand, implementing distributed agile teams across multiple sites, increasing temporary crowdsourcing and insourcing, and utilizing alternate delivery methods.

Australia would do well to have the skills and innovation ecosystem to support a globally competitive economy. Investment into Australia needs to be encouraged to secure economic growth with local employment and local IP creation. COVID-19 has seen the Australian Government engage with the manufacturing industry through various partnerships and funding schemes to adapt their supply chains to produce Personal Protective Equipment.

Last week’s Federal Budget delivered billions of dollars of investments in creating digital capability across the economy; from 5G and broadband infrastructure, to investments in digital skills and cyber security capabilities. It also provided additional research and development incentives for Australian businesses – removing the cap on refunds and lifting the rate and rewarding those that invest the most.

Is your IT sourcing adapting to provide resilient value creation during COVID-19 and envisioning what this would look like in the post COVID-19 era?