India’s back office business faces Covid-19 calculations

India’s disastrous second wave of Covid-19 has become the ultimate real-life stress test for the global service industry as companies are struggling to keep their back-office operations running amid widespread infections and overwhelmed healthcare systems.

India is the world’s leading back office center. From responding to customer service calls to software development to mortgage processing, nearly 4.5 million people are engaged in various jobs, far surpassing their peers with 1.2 million employees such as the Philippines.

Global banks and technology companies from Goldman Sachs to Google also operate their own internal businesses there, and have done more contract work with outsourcers such as Infosys and Tata Consultancy Services.

However, the country has been hit by the second wave of pandemics. The country’s reported 7-day average number of infections is 260,000, and the average daily death toll is 4,100. These two figures are considered to be severely underestimated. A crisis exacerbated the humanitarian crisis. Severe shortage Hospital beds, oxygen and vaccines.

India has become an indispensable part of global companies, but executives say the crisis poses a risk to the model. Companies are forced to move jobs overseas, postpone projects, and even establish their own remuneration facilities for employees.

Vishal Sikka, former CEO of Infosys and a member of the board of directors of American technology company Oracle (Oracle), said: “I think that with the second wave in India, it will have a significant impact on the industry.” The company has 45,000 employees in India.

India was suddenly blocked by the state last year, forcing the industry to publicize, so the pandemic has shocked the industry. Transfer to remote work Almost overnight. “But now, with the chaos coming, it seems to be getting worse. It feels going to get worse.” Sikka said. “It’s just the number of people who are sick.”

Executives and analysts say that many companies report that as many as 10% of their employees use Covid-19. But this number does not include workers who are busy caring for sick family members.

Vinod AJ, secretary-general of the IT Staff Forum, an industry organization, said that for many workers, the burden has become uncontrollable. He said: “The problem is that not only them but their families are affected.” “Many companies are seeking 24-hour support. [clients in] America and the rest of the world. They cannot provide that much support. “

Consultant Sid Pai said that no company is immune. He said: “Whether you are Goldman Sachs, Accenture, TCS or Infosys, all companies, regardless of size and nationality, will be affected.”

Bangalore hit by pandemic

Bangalore, the main technology and IT center, has been one of the worst-hit cities, although the situation has shown some signs of improvement.Although experts worry that the virus is Spread in parts of the country Has fewer test functions.

Arvind Krishna, CEO of the American technology company IBM, who has more than 100,000 employees in India, said that if the second wave is near the peak, the burden can be controlled.

He said: “This is a worrying issue, rather than five alarms.” “I am more worried about the long-term impact on some families. We went back to many anecdotes in our 20s and 30s, but did not recover. Compared with the previous year, this is really shocking.”

Pravin Rao, the chief operating officer of Infosys with more than 250,000 employees, said that India’s IT department has experienced many ups and downs and has the ability to withstand this storm.

He said: “From the bursting of the Internet bubble to the global financial crisis, this industry has demonstrated its resilience time and time again.” “There have been discussions about whether the industry can survive, especially in the first wave of Covid last year.”

High-skilled, low-cost business model

India becomes a hub for outsourcing by Western companies Call Center He has been engaged in IT work since the 1990s.

The country has a large number of highly skilled, low-cost workers, which encourages banks and software companies to delegate more and more key functions to India. Indian IT industry group Nasscom claims that the industry generates approximately US$180 billion in revenue each year.

Last year’s travel ban and lockdown Shake A business model that relies on sending workers overseas and across campuses. According to Nasscom’s data, IT service spending fell by 4% in 2020.

However, as business activity in Europe and North America picked up, cash-rich industries began to rebound. According to data from the rating agency CARE Rating, net sales growth increased from 2.7% in the quarter ending in June 2020 to 6.4% in the first quarter of 2021.

If the second wave of the Indian government constitutes a second wave of threats to India, it will pose a greater threat. Bad handling The consequences of the crisis-due to the inability to prepare the health system and purchase enough vaccines-damaged the country’s reputation as a reliable outsourcing destination.

For example, in the UK, regulators have been consulting With the lender Regarding the possible impact on operations.

“It denies people’s confidence in resilience [companies] Said DD Mishra, a senior analyst at research and consulting firm Gartner. “The response did not bring good comfort to everyone.”

The medical crisis puts pressure on employers

A particular challenge is that the second wave has placed a heavy burden on India’s medical system, which makes India Wealthy indians Unable to get treatment. This forces the company to leave things in their own hands. British bank NatWest is one of many companies that purchase oxygen concentrators for its employees in response to a severe shortage of medical uses.

With the full opening of the hospital, companies such as Infosys and TCS have also established their own Covid treatment facilities.

In order to maintain normal operations, some companies have also moved work outside of India. Shanmugam Nagarajan, co-founder [24]The customer service outsourcer 7.ai is transferring calls from India to centers elsewhere.

Nagarayan said: “The waves hit different parts of the world at different times.” “When India cannot answer the call, Colombia and the Philippines will answer the call.”

Rao said the impact is limited, but Infosys is also hiring subcontractors and negotiating with customers to postpone “this is not critical” projects.

TCS stated that the ability to maintain its workforce productivity and provide services to customers proves “the power and effectiveness of the model.”

Pai added that the latest outage will increase costs and hurt productivity. He said: “So far, customers have been aware of this, but at some point, the economic situation will start to improve and customers will ask questions.”

One of the challenges the company is trying to solve is vaccines.India revised its rules this month to allow the private sector to directly purchase prodding, but Severe shortage It is expected to last for several months, which complicates their capabilities.

Apparao VV, head of human resources for Delhi-based outsourcer HCL, said the company was able to obtain a limited number of vaccines through a partnership with a private hospital, but was still working to obtain more vaccines.

He said: “No one can provide you with the timetable and quantity you need.” “We contacted all the manufacturers. They are very noncommittal… We can’t get promises at all.”

Approximately 3% of India’s population has been fully vaccinated, compared to over 30% in the United States.

One advantage may outweigh all other advantages: people

Executives said that despite all the turmoil, India’s biggest long-term advantage is likely to outweigh any pandemic: the labor force.

With fierce competition for programmers and software engineers around the world, they argue that there is no other place in the company where you can find so many workers at the right price.

JPMorgan Chase and Credit Suisse, which already have considerable operations in the country, announced this month that they plan to hire 4,000 and 1,000 Indian employees respectively in 2021 to upgrade their technology.

Sangeeta Gupta, senior vice president of Nasscom, said: “The company will go where the talent is.”

Nicholas Megaw’s other reports in London