Clearly, COVID-19 has had a significant impact on the global economy over and above its impact on public health and on daily life. Supply chains have been affected and buyers and service providers around the globe have been compelled to develop short-term workarounds while they also consider how to build greater resiliency into their globally sourced operations for the future. IAOP and NeoGroup partnered on this survey of the Global Sourcing community – buyers and service providers – to gain a greater understanding of the impact and response to COVID-19 and to launch a broader discussion on recovery.
OBSERVATIONS & FINDINGS
The survey was live from April 20th until May 8th. While the majority of responses were from organizations headquartered in North America and Asia, we received 91 responses from global sourcing leaders located on every continent except Antarctica. Approximately two-thirds of the respondents were service providers.
LEVEL OF DISRUPTION
We found striking similarities between the responses of buyers and service providers. For instance, approximately, one third of both buyers and suppliers, 28% and 33% respectively, experienced greater than a 50% disruption of services.
ROOT CAUSE OF DISRUPTION
Additionally, cross buyers and service providers, the biggest cause of service disruption was not virus contamination workspaces (14% of buyers; 17% of service providers) but mandatory stay-at-home orders (43% of buyers; 52% of service providers) exacerbated by inadequate infrastructure and/or equipment to support the work-from-home (WFH) model. However, this inadequacy was reported to be more a of problem for buyers (36%) than service providers (12%). The absence of laptops to support WFH was a cause for disruption for only 2% of the service providers vs 22% for buyers. Interestingly, policies constraining WFH, which caused disruption for 5% of the service providers was not reported as a cause for disruption by any buyers.
One area where buyers’ and services providers’ responses differed greatly was in their responses in their confidence in their ability to maintain the current level of service and prevent any further deterioration to service quality. A overwhelming majority of 81% of the service providers said they were either “confident” or “very confident” compared to only 50% of the buyers. At the other end of the confidence spectrum, only 2% of the service providers were either “not confident” or “not at all confident” by contrast to the 36% of buyers who expressed low confidence levels.
Regarding predictions on the timing of a full recovery, no clear consensus view emerged. Responses to the expected time frame for a return to steady state by both buyers and service providers ranged from less than a month to exceeding six months.
Both buyers and service providers plan to undertake a combination of various actions as and when the crisis abates. These include:
|Review spend and costs in an effort to find savings – 71.43%
|Review spend and costs in an effort to find savings – 40%
|Revisit sourcing strategy and increase insourcing – 42.86%
|Re-evaluate current operating model and engagement model – 60%
|Revisit sourcing strategy and increase outsourcing – 42.86%
|Revise and strengthen business continuity plans – 40%
|Conduct health check on all third-party providers – 50%
|Innovate and expand use of technology – 52%
|Implement stronger governance and risk management – 57.14%
|Implement stronger governance and risk management – 29%
|Incorporate work-from-home into business continuity plans – 50%
Buyers responded that Mexico, the US and India were most stable, whereas LATAM, the Philippines and China were least stable. Service providers on the other hand expressed mixed responses in terms of stable and unstable locations.
SERVICE PROVIDER RESPONSES
A majority of service providers responded said that their BCPs helped mitigate most or at least some (though not all) risks of disruption (52%) or that their BCPs were very comprehensive and effective in mitigating the risk of disruption (29%). A mere 14% said their BCPs were sub-optimal and did not help much, and only 5% said that their BCPs were not effective and did not help mitigate the risk of disruption.
A related question was regarding their teams’ effectiveness in responding to the pandemic. Half of the service providers were “very satisfied” and another third were “satisfied”. The remaining 5% were “not satisfied”. Of service providers, 62% deployed laptops and other equipment to more than 60% of their personnel who had the infrastructure to support WFH. Only 9% of the service providers responded that they took no specific action to provision laptops to their people. These responses correlate well with our earlier finding that only 2% of the service providers reported absence of laptops as a cause for disruption.
A majority, 64% of buyers engage in a multi-sourcing strategy leveraging their own captive centers as well as third party providers with 22% dependent on third parties only. Over a third of the buyers felt their captives were better prepared and did a better job in minimizing disruptions as compared to their service providers, while an equal number responded that their third parties handled the crisis better than their own captives. The remaining buyers (28%) were unsure. As far as their level of satisfaction with their service providers’ response to the pandemic, 57% of the buyers said they were either “satisfied” or “very satisfied”, 29% were “dissatisfied”. The remaining 14% were ambivalent on their level of satisfaction. Asked if there were any service providers they would like to recognize for their excellent response and service levels during this crisis, buyers named TCS, Accenture, Capgemini and Infosys.
Thank you to all the buyers and service providers who participated in the survey.
Download the full results from the survey: