Investment & Finance

Coronavirus Sends Outsource Workers Home, Causing a Ripple Effect

WSJ
The shift to home employment has introduced complications that are hurting many multinational companies

The road leading to a major technology center in Bangalore, India, was nearly empty on Monday. PHOTO: JAGADEESH NV/EPA/SHUTTERSTOCK

The road leading to a major technology center in Bangalore, India, was nearly empty on Monday. PHOTO: JAGADEESH NV/EPA/SHUTTERSTOCK

Millions of workers in India and the Philippines do everything from writing computer code to fielding customer calls for companies across the globe. Now, with the new coronavirus hitting, they have been sent home to work.

The shift has introduced complications that are hurting the ability of the companies they work for—many of them major multinational banks, insurers, hospitals, retailers and airlines—to extend new loans, change and refund travel tickets, process claims, fill and cancel orders and bill for services such as health care.

The change also threatens technology and outsourcing hubs that have become economic mainstays, providing huge numbers of jobs and critical foreign currency.

“This is an unprecedented environment,” said Sangeeta Gupta, chief strategy officer at Nasscom, a trade group that represents 2,800 companies in India’s technology sector, including many that provide network outsourcing and computer programming to overseas clients.

In India, industry officials and analysts estimate that as much as 90% of the 4.1 million workers in the Indian IT and business-processing industry—which generates $180 billion in annual revenue—are working at home after the country announced a nationwide lockdown last week. In the Philippines, where the IT and business process management industry employs 1.2 million people, companies are scrambling to distribute computers and install high-speed internet in employee residences. Lockdowns beginning mid-March have made it impossible for many workers to commute.

The industry in India has been designated as essential to the economy, and therefore still able to staff offices that play critical roles in operations. In the Philippines, call centers are also allowed to continue to operate with reduced staff and agents sitting far apart, as long as they provide temporary sleeping accommodations for workers near the offices. However, given the difficulty of arranging this, many companies are encouraging workers to work from home.

Vodafone New Zealand, a telecommunications company, operates call centers in India and New Zealand, and has customer support personnel in the Philippines, but is now transitioning employees to work from home. “Now all three countries have implemented increased Covid-19 containment measures, restricting movement around cities, we are having to adjust our customer service approach,” the company said in a statement. “We have equipped a large number of staff to work and answer calls from home, deploying laptops and diverting calls.”

But suddenly moving outsourcing and call-center work to these employees’ homes is a far more daunting work-from-home challenge than in many Western countries.

Many workers live in cramped spaces crowded with extended family. Few have computers, and many lack basic electricity and broadband internet at home. Client contracts have to be revised or suspended to allow work to be done outside the office. Many companies normally forbid workers from having their mobile phones—and even a pen and paper in certain cases—accessible while they work. Some companies have had to purchase chairs or desks for employees at home.

Thousands of software contractors in India are hired by Western firms to build apps or fix bugs, through agencies or via online platforms like New Delhi-based Truelancer Internet Pvt. Ltd.

By having programmers work from home, communications have slowed, said John Gikopoulos, global head of artificial intelligence and automation at Infosys Consulting, an arm of the Indian outsourcing giant Infosys Ltd.

“We are seeing delays,” he said. “We are seeing times of the day when the communication cannot be as seamless as required.”

Mr. Gikopoulos said 12 members of his team of data scientists were based in India supporting projects overseas. So far, no projects had been seriously disrupted or stopped, he said.

For tasks that cannot be done at home, some companies are rotating shifts to reduce the number of people in the office at one time and providing private cabs for commuting, said an employee at one Bangalore-based company.

Ace Estrada, a Filipino businessman who runs an online business support company in Baguio, a city four hours from the capital Manila, said most of his employees now work from home, except for five workers who handle sensitive data for an international accounting company.

Sensing a business opportunity, he has built enclosed single rooms with fast internet at a separate co-working facility he operates. Call-center workers without internet at home can lodge with him and work.

“Everyone has to wear a mask inside,” he said.

Slow internet speeds and insecure connections have hampered some companies’ ability to manage quality controls to assure compliance with the regulations in the overseas banking and health-care industries where their clients operate.

“This has forced us to go back to a decades-old system of manual processing. We have gone back to the age of ledgers,” said an official of an overseas bank who works closely with the outsourcing companies.

Nitin Rakesh, chief executive of global service provider Mphasis Ltd., said the company is trying to find ways some work can be done at home.

“We have worked with clients to enable the ability to work remotely, keeping in mind technical requirements, stringent security protocols as well as absolute regulatory compliance,” he said in an emailed response.

Meanwhile, some clients of outsourcers are trying to “re-shore” work back to their home markets.

“For many U.K. businesses the problems in India risk key functions going offline,” said Andrew McIntee, managing director at New Street Group, an industry consulting firm. “That’s added to the chaos at many U.K. operations and delivery centers.”

Some workers’ advocates say shifting work out of offices hasn’t happened fast enough, and too many are endangering themselves by coming into the office to work and collect pay.

“The risk of contracting the virus is a lot higher than at home,” said Mylene Cabalona, head of a Philippines call-center industry employees’ association. She said not all companies had equipment set up for workers to work from home.

WSJ

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