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How is the outsourcing market responding to COVID-19 in APAC? | #EndureTransform

The COVID-19 crisis has had dramatically upended the global economy. The Asia Pacific region, however, looks set to fare better than many western nations.

The economies of APAC nations may have slumped in the first two quarters, but the region’s pandemic preparedness, rapid outbreak response and wide-ranging monetary and fiscal interventions have placed the APAC region in a comparatively strong position for a quick recovery.

Deloitte reports that in APAC the “very weak first half of the year is likely to be followed by a strong second half, laying the foundations for a vigorous revival of economic dynamism in 2021,” while Wavemaker and Kantar research suggests a V or W-shaped recovery.

Such bullishness is a positive sign for businesses in APAC, even amidst this terrible global health and economic crisis. The question within our industry is how will this impact the outsourcing market across APAC nations?

To get a better grip on the outsourcing market outlook in APAC, I recently spoke to Kapil Sharma, CSO at Collabera Technologies. Kapil is both a staffing industry leader and Guidant Global partner, with extensive experience and knowledge of the outsourcing market in APAC.

This article is a short summary of our in-depth virtual conversation. If you’d like to see the video in full, click here.

Q: What’s the current state of the outsourcing market, and what can we expect in the near future?

Kapil Sharma:

Prior to the pandemic, Singapore, India, The Philippines and Malaysia were the outsourcing hubs for most western countries and two of the most developed nations within the region APAC — Japan and Australia. This is unlikely to change.

In terms of the future of these outsourcing hubs, all predictions point to a V-shaped economic recovery. If you look at today’s economic landscape, the economies of these outsourcing hubs aren’t in great shape. But the pace at which they pick up is likely to be rapid. From our (Collabera’s) understanding of the market and the COVID-19 situation, lockdowns will end by or during June, with the market to begin its recovery soon after.

Q: Which outsourcing hubs are in the best place for growth as we begin to recover from COVID-19?

Kapil Sharma:

India and The Philippines remain the hot destinations as far as outsourcing is concerned especially when we look at the cost-saving initiatives that most of the Fortune 500 companies must be contemplating at this point in time.

Why? Looking at the dollar to rupee conversion, India, in particular, becomes a compelling destination from a cost-saving and business continuity perspective. The same can be said for The Philippines. I’m very bullish about these two markets in particular.

The same can’t be said for Singapore’s outsourcing market, which was already experiencing tough times even before coronavirus hit. Malaysia will surely benefit from Singapore’s struggle.

As you know Doug, Malaysia is a shared services hub for a lot of regional headquartered clients. This, the low costs of doing business in Malaysia, and its rapid response to COVID, will mean that Malaysia’s outsourcing market will see significant growth over the next 12 to 18 months.

Q: How are APAC businesses adjusting to a contractor base which is now working from home, and do you think remote work will become a 'new normal'?

Kapil Sharma:

Our observation is that clients experienced different problems initially. Some struggled with planning, some struggled with infrastructure, and some struggled to acquire and install the hardware necessary to allow workers to reliably connect from their homes.

Today, a lot of companies have stabilised and this is becoming, as you say, the 'new normal'. 

Companies like TCS, Infosys and IBM are currently assessing how working from home impacts their overall productivity. All the research suggests it has no negative effect. At Collabera we’ve not seen any drop-off in productivity during the lockdown.

If previous research and our own experiences are reflected across businesses in APAC, the chances are we will see significant shifts going forward. Prior to the pandemic, India didn’t have a working from home culture. That’s unlikely to stay the same.

Q: What technologies will come into focus for APAC businesses post-pandemic?

Kapil Sharma:

Today, we see tremendous demand for security technology — for IT security, network security, and software security. It seems clear that security technology is going to be a booming industry going forward.

The other area which will blossom is cloud technology. A lot of companies are going to be utilising the cloud, especially as companies look to embrace remote and distributed work on a larger scale as we live through and exit the coronavirus crisis.

We’re also seeing a lot of movement in automation. Though automation was already on the agenda prior to COVID, CIOs will now be looking for automation to become part of their business to ensure that they can continue to operate during future shocks. Digital engineering could rise too, as could customer experience technologies.

But at this point in time, I’d say that security and cloud technologies are where I see the most focus for companies operating in APAC today.

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