The COVID-19 pandemic has shattered the global business environment by triggering a sharp fall in demand, coupled with supply disruptions. While governments and businesses have responded to the crisis by enforcing social distancing and lockdowns, these measures have profoundly affected businesses, forcing companies to take a fresh look at their operating models.
In the current environment, companies are using remote working as a primary measure to ensure business continuity. A number of changes have been initiated in the ecosystem to nurture and support remote work. In this blog, we look at how these changes, along with other factors, could allow companies to take advantage of expertise across the world, even after things settle down.
Factors that could multiply external engagements
Change in management attitude towards remote working
Prior to the COVID-19 crisis, remote working was an exception and mostly discouraged in many companies. There were multiple reasons for this attitude, including negative perception about employee productivity without physical presence / direct supervision. Some often-cited challenges to remote working are employee productivity, motivation, management, complexity of processes, and data security. Stuart Gurr, Deutsche Bank’s group chief information officer for Asia-Pacific, commented, “Remote working hasn’t been part of banking’s core DNA.”
The physical distancing and lock-out norms arising from the COVID-19 crisis have forced management teams to become more open-minded about remote working. They have been able to study employee output and examine the occurrence of other perceived challenges during this period of remote working. At the same time, a redesigning of processes and an increase in collaboration between various departments have improved their confidence about long-distance working. As many of the remote working related concerns are relevant for companies looking for expertise that is unavailable or too expensive in the local market, the change in attitude could allow them to opt for external talent even after the current situation is over.
Remote working success stories
Rich Barton, the CEO of Zillow, the largest US real estate listing firm commented, “My personal opinions about WFH have been turned upside down over the past 2 months. I expect this will have a lasting influence on the future of work ... and home”. James Gorman, the CEO of Morgan Stanley said, “We’ve proven we can operate with no footprint”. The company was able to successfully transition 90% of the firm’s 80,000 employees to work from home. Modelez & Barclays have expressed similar views. Cost savings from reduced expenses on commercial real estate and office infrastructure is a prime factor.
From an employee perspective, remote working has its positive points. As per a survey conducted by getAbstract in the US during the current crisis, 43% of the respondents said that they would like to work remotely more of the time, going forward. The top three reasons among survey participants for wanting to work remotely are not having to commute, enjoying a more flexible schedule, and being more productive.
Remote working is catching the attention of both employees and employers. As more success stories emerge over time from companies that have embraced remote working, it could translate into increased acceptance of completely externalized workforces.
Increased adoption of technology
Technology has been at the center of remote working in this crisis. While data storage and processing are managed through cloud computing, virtual machines and software (such as GoToMyPC and LogMeIn) enable remote desktop access using a web browser. Support functions, such as IT management, troubleshooting, and HR management, can also be done remotely. Group video calling applications, online project tools, and remote presentations have ensured continued communication and collaboration.
The increasing adoption of technology by companies has shown that physical location is no longer a limitation in opting for a borderless workspace. The same technology stack that allows remote working of existing employees can be extended to external partner experts.
Robust cyber-security and control systems
Security has always been a key concern, when it comes to remote working, due to risks of cyber-attacks, data leakage, fraud, etc. Virtual Private Networks (VPNs) and encrypted remote connections have helped make remote working secure. Multi-factor Authentication (MFA) has provided additional layers of secure access. Antivirus and cybersecurity tools are used to protect against intrusion. During the current crisis, most companies are developing and / or testing full-blown comprehensive plans for information security, data recovery, and business continuity. Employees are being regularly educated to create awareness and drive them to adopt best practices. Barring the initial hiccups, remote working has emerged as a viable operational alternative. As we move forward, most robust control systems and time-tested policies will reach markets and also act as an enabler for long-distance engagements.
Need for geographical diversification of operations
This crisis has made it apparent to companies that certain regions can become inaccessible for long periods of time. The greater a company’s geographic concentration in a region, the greater the risk of business disruption in unusual circumstances. As a response, companies are looking to diversify their operations, suppliers, and service providers. They need to have the flexibility to easily shift their work to alternative locations, whenever necessary. This need for diversification could also drive them to engage teams and individual experts in remote locations, as it is easier, faster, and more cost-effective compared with having complete setups in multiple locations. In 2019, Franklin Templeton announced plans to externalize certain areas of fund administration, including fund accounting, financial reporting, and fund tax services for its retail funds. According to the company, this was possible due to the presence of several highly developed professional firms with a global footprint.
Cost pressures
The global business environment had been shaky even before the COVID-19 crisis. Sluggish growth in developed economies, coupled with a slowdown in emerging nations, had already emerged as concerns. Demand and supply disruptions due to the current crisis have further compounded the problems. The future economic scenario looks uncertain, with major economies expected to shrink. In such a muted top-line growth scenario, companies are looking at cutting costs to the maximum extent possible to improve their bottom line without losing their competitive edge. For example, asset managers, who are witnessing a continuous decline in fees and growing AUM, have resorted to job cuts to manage cost pressures. In such a scenario, partnering with a highly skilled and flexible employee base can help companies to not only manage costs but also enhance their capabilities.
While the use of a distributed talent base may not solve all problems, but secure technology, coupled with more openness towards remote working, has surely made engagement with highly skilled firms and individuals an attractive option. Moreover, such an approach will free up teams to focus on core workstreams, such as client-facing operations, sales, or key investment algorithm development. However, there is a large number of activities for which companies can consider working with partners that have expertise in multiple service areas, such as professional services, healthcare, IP, finance, and so on.
As per a Deloitte Survey, several firms that facilitate remote workforce engagement are now using “emerging technologies to drive innovation, speed to market, enhanced user experience, and improved performance”. Companies such as Evalueserve have developed expertise in the segment, by working with multiple industries and clients.