Impact of COVID-19 on Outsourced Services – Key Issues to Take Into Consideration
By DBOS | Apr 25, 2020
As we all now know too well, the coronavirus pandemic has forced many companies and their employees to shift operations to work from home (WFH) setup. This shift has had a great impact most especially on the outsourced services industry. An obvious example is the Philippines 30-day lockdown of its entire population, which creates immense logistical complexities for delivery centres across the country.
A massive amount of focus is placed on logical layers of security to protect clients’ data. Fortunately for DBOS, clients have full control of all their data which allows a less complex transition of operations to the work from home environment. However, this sea of changes in service delivery also introduces other challenges and a lot of considerations for both providers and their customers, which in most cases demand swift decisions under enormous pressure.
Below are some of the key issues to take into consideration in the pressing term, while both clients and providers find the balance needed for the continuity of services against the restrictions and other realities of working remotely:
Outsourced services providers and customers must work collaboratively and swiftly to come up with actionable decisions. Both must fully understand and not lose sight of their contractual rights and obligations while allowing at least a temporary deviation from contract norms. For example, many service providers and customers may be apt to look towards their force majeure clauses, but there may be conditions where mutually agreeable alternative arrangements could be more beneficial to both parties.
In summary, while it is crucial to understand contractual rights and reliefs, in most cases, the WFH operations will mean that not all services can be fulfilled and not all service levels can be reached. With this in mind, customers should stay focused on their business and operational priorities and then work closely with providers to address them, rather than trying to hold firmly to all of the contractual requirements. Likewise, service providers should aim to address the customer’s most immediate needs and be transparent about what is attainable.
Documentation is extremely critical. If the service provider is enquiring change of contractual obligations may it be performance related or otherwise or if a customer is demanding to re-prioritise services or extend the service provider’s liability due to increased performance or security risk, it is critical that:
- These changes are discussed and understood by both parties
- Any contractual amendments and the degree of such amendments are documented clearly in writing that is contractually binding on both parties.
Ideally, any documentation will follow the formal contract process and be explicit vis-à-vis the pre-existing contract terms.
Internal Stakeholders Should All Participate
Customers should encourage all relevant departments within their companies, including representations from data security, legal, compliance and business operations to be proactive in identifying and documenting WFH set up with service providers. On the other hand, outsourced service providers are required to have a strengthened level of internal coordination within their companies.
Address External Concerns
Customers and outsourced service providers must try to fully understand and alleviate any impacts that WFH or working remotely might have outside the physical contract and services. For example, both parties must figure out if WFH jeopardises any liability insurance coverage on which its company may have been banking on. This also includes whether and how the WFH setup impacts corporate controls that are subject to reporting and audit. Lastly, it is critical to understand future impacts on any contracts with third-parties and all the necessary actions needed as a result of the WFH environment setup.
No Unwarranted Delay
All parties must balance justified consideration with the requirement for action. Customers should acknowledge that the outsourced service provider’s resources may be limited. This includes internet, computers and other physical resources as well as manpower, such as legal, account management, contract administration and service delivery. On the service provider’s side, they must recognise that customers will have reasonable concerns and queries with the WFH setup. They will require immediate and continuous engagement with their outsourced service providers to understand and assess the ramifications.
With all considerations in mind, customers and outsourced service providers should aim to work together closely and quickly to minimise any delays with making important decisions including reasonable negotiations. While not ideal, the current precedence requires more accurate documentation to follow the implementation and financial considerations or service level support be addressed.