by Greg Hall

5 steps to assess offshore support risk (and 5 steps to address critical needs)

Apr 24, 2020
IT LeadershipOutsourcing

To ensure continuity of critical operations, all businesses should take these practical steps to engage, assess, and partner with offshore service providers.

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Credit: Thinkstock

Companies all over the globe are experiencing the impacts of the current pandemic first-hand, including service providers.  Beyond their focus to protect their workers, service providers are now further challenged to meet support commitments to their clients.  Unlike the stock market crash of 1929 or the financial bust of 2008 where the economy was drastically impacted, today’s COVID-19 pandemic is impacting the lives of service providers’ employees and contractors.  The effects are most pronounced where service providers are contracted for offshore Run support to their clients as they, themselves, adhere to government-imposed orders to restrict movement, adhere to curfews, and even stay-at-home. 

While it is likely many companies have already reached out to their offshore service providers, there are five critical and practical steps all companies must take as they engage, assess and partner with their providers to ensure continuity of critical operations through this very challenging time. 

1. Current state assessment of manpower.   A host of countries have issued either stay-at-home orders or some form of movement control, lockdown, or curfew orders, and all countries have quarantine orders for suspected and known infections. This has caused a level of uncertainty of the Run support capacity offshore service providers have actively engaged with their accounts.

Reach out to your service providers to understand the extent of the available Run support resources for your environment.  Understand how support is being provided today and what risks your provider sees in being able to sustain support in the near-term.  Note that many service providers and their employees are facing challenges with telecom infrastructure, connectivity to their own facilities, and even equipment access (WiFi, broadband, laptops/desktops).  Assessing the available base of people who can provide your support is crucial.

2. Data privacy and security concerns. Most countries don’t have strong, if any, data privacy laws.  Ask very specific questions of your service providers about how they are maintaining security procedures and data privacy commitments for your most critical applications and data.  Gain assurances that no one is accessing your company’s secure data from unsecured locations.  Be prepared to make critical decisions on taking application support in-house for any areas where sensitive data cannot be compromised.

3. Business continuity plans and actions taken to date.  Dust off documentation on your service provider’s business continuity plans (if they exist in your agreements today) and request updates. Determine if these plans are being acted upon and discuss gaps and open concerns with your service providers.  Perform a review with your service providers of key resources and determine their availability.  Seek to understand how they would backfill those key positions in the event that one or more key resources becomes ill.

4. Prioritization of support needs. As you learn more about the manpower capacity of your service providers, you may need to prioritize your support needs.  At a minimum, you should plan for resource reductions and provide prioritization of work efforts should manpower availability fall below minimum thresholds.  Focus your service provider’s efforts to the most critical support needs of your organization to mitigate the effects of available resources.

5. Documentation currency. Amidst the uncertainty of the health and safety of your personnel as well as your service provider’s, make it a priority to assess your system’s documentation (i.e., procedures, runbooks, business continuity and disaster recovery plans).  Request full access to this documentation to assess its current state.  If gaps are identified, set clear expectations for when you expect these gaps to be addressed.  Addressing and mitigating these gaps will benefit both parties should resources need to be replaced or work assignments changed.

As your offshore partners work to ensure minimal disruption in the level of services they provide to your company, they must balance these commitments with the safety and well-being of their employees and contractors.  As many companies look to their vendors for financial relief, understand that the service providers, too, are looking to preserve their base commitments.

Following is a series of practical steps all companies can take that not only address the most critical needs of their business operations but also demonstrate compassion and partnership as we all deal with the impacts of this pandemic.  

1. Economic adjustments to costs. Service providers are acutely aware of the economic toll of this pandemic.  They, themselves, are seeing project-based work either being placed on hold or cancelled.  Requests for reductions to existing contracted support costs will meet with varying levels of resistance.  Service providers know that companies can’t simply or easily just terminate support contracts, so they know they have some leverage.  Practically, though, as I’ve seen first-hand from my experiences during the economic downturn of 2008, service providers know they must make some concessions to protect their base.  You want to be fair and try not to take undue advantage as you seek relief.  Early indications suggest service providers are willing to provide short-term relief with discounts on current services, but these are offered with time limits. 

As companies seek to value concessions offered by their service providers, it is important to first assess current rates to market.  Invoke benchmarking provisions in your existing support agreement if you have them.  Even if your agreement doesn’t contractually allow you the right to benchmark your provider’s services, credible benchmarking results, once obtained, cannot be ignored by the vendor.  Remember that temporary concessions are just that — temporary — and will “snap-back” at some point.  When they do, it will be important that provider costs remain competitive.  Establishing market rates now will prevent yet a second round of negotiations once we get past the current pandemic and the economy works its way back.  Relationships built on transparency and fairness will focus on working collaboratively to find appropriate near-term solutions that will position both parties to succeed when conditions turn for the better.

2. Extend the term of your support agreement. As companies look for any and all means of reducing their costs, now is a great time to look back at provider performance and determine if extending your support agreement is a consideration.  The leverage you can generate in offering stability and extended commitment to your service provider by extending your agreement can create leverage and a win for all in this time of uncertainty and economic stress.  Double down on your relationship to empower your service provider account representative with a positive message to take back to their organization as they look to address your request for rate reductions and any short-term concessions that are requested for immediate financial relief.

3. Temporary adjustments to service level response and resolution timeframes. As you learn more about the availability of support resources, both in quantity and skillsets, consider offering temporary adjustments to service level response expectations.  Stress the importance of where and when such expectations can and cannot be adjusted.  Acknowledge the reduced capacity of your service provider’s resources and demonstrate a willingness to adjust expectations, which will only strengthen the resolve of your providers to deliver those services most critical to preserving the stability and support of your systems and applications.  

4. Temporary relief from service-level penalties. It is reasonable to expect that service providers will request relief to service-level penalties as they adjust to having a remote workforce.  Companies should give fair consideration to these requests as a partial offset to any cost adjustments offered but should hold fast in areas deemed most critical to business operations.  This is yet another way to demonstrate your willingness to partner with your providers.

5. Reduce discretionary work/enhancement hours. Resources already familiar with your systems and applications may already exist within your pool of discretionary work and/or enhancement hours.  Consider redirecting those resources to core support.  Their knowledge of your systems and applications will help to ensure the quality of support remains high.

If you haven’t already engaged in this level of dialogue with your service providers, it is critical to start now.  All companies are affected to varying degrees during these very challenging times; open communication is key to identifying gaps in support and working in partnership with your service providers will help to mitigate them.  It will take efforts on both sides to work together to find solutions.