The Impact of Covid-19 on outsourcing Financial Services
Updated: Jan 16, 2021
At the time of writing this article many countries are again struggling due to a new strain of Covid-19 which has alarmingly increased infection rates. As a result, stricter measures have been introduced to counter the new strain including new lock-downs, curfews, and travel restrictions, most notably in the United Kingdom which has entered into another lock-down and banned travel from South American countries and Portugal where another strain of the virus has evolved.
The impact on the business world has been significant and is changing as a direct result of the Covid-19 crisis, impacting large corporates and small companies alike. Many businesses which had started to return to office-based working have returned to WFH (the new acronym for work from home) whereas many businesses simply had not yet returned to the office since the previous lock downs.
There is currently a lot of uncertainty as to how long these restrictions will last and when life and office working will return to normal although, on a positive note, various versions of the vaccine have started to be rolled out across the globe, initially to people most at risk and those caring for the more vulnerable.
One thing which is certain is the business working model has already changed and this change is expected to be permanent. WFH will presumably continue post Covid-19 and many well-known multi-national organizations have already taken measures by committing to this arrangement either on a full time or several days a week basis.
The Economic Times
"The ‘2020 Global Managed Services Report’, based on a survey of 1,250 executives in 29 countries including India, said that 45% organizations will outsource more than insource in the next 18 months."
This remote working model has proven extremely effective during the crisis as businesses and employees alike have been required to adapt to this new way of working. It has been proven that businesses can operate virtually and can interact through Zoom, Microsoft Teams and other video conferencing platforms. Certain countries such as Cayman and UAE have even introduced remote working visas allowing people to live in these countries whilst working for a business located in a different country. The need to be physically present has been dissipated and consequently many businesses will now operate virtually meaning less physical interaction, reduced office space or hot-desking in down sized offices, paperless businesses, less physical servers, and more cloud-based working.
On the personal side, remote working has enabled to positively reestablish work-life balance as it increased time people have been able to spend with immediate family and in particular with their children. Many people prefer this new lifestyle which allows them to work from the comfort of their home and be present for their children. Time spent commuting to and from the office has been eliminated and remote working has arguably led to more efficiency. This is especially important in a world in which people value their leisure time more and more and are seeking increasing convenience in their lives wherever possible.
This opens a real opportunity for outsourced service providers. The traditional belief that back office staff should be present in the office is no longer the case. Similarly, cross border virtual relationships will increase meaning businesses can benefit from using service providers located in different countries. As a result of the crisis, we have witnessed over the course of the pandemic large redundancies which led many people becoming more entrepreneurial and even for some starting their own businesses. These newly introduced startups require easy, cost effective solutions to enable them to launch quickly, efficiently, and at a low initial cost.
Importantly the survival of many small and medium enterprises (SMEs) may depend on outsourcing in order to reduce overall costs and overheads. Outsourcing not only reduces costs but also provides the flexibility to scale resources up and down as the business evolves. It also enables companies to fill any gaps there may be in internal expertise, as well as business time, and reduce the effort it takes to recruit additional staff. It should be applied in a way that allows companies to focus on their core areas; developing and selling their products and services.
Undoubtedly, companies and firms providing outsourced services have a great opportunity to capitalize on such demand. In particular, those providing an array of services such as accounting, financial forecasting, financial consulting, payroll, statutory filings and more in an “all in one” package will thrive.
My2 provides outsourced financial consulting and accounting services. The founders have 30 years of experience in finance and in employing the services of numerous outsourced firms. As such they understand from a client’s perspective both the advantages and risks of outsourcing.
We aim to act as a true business partner to our clients so that our services, reports, analysis and guidance are customized and tailored to their business and management style.
This approach is delivered by us proactively interacting with our clients to gain a full understanding of their business and sharing the same care and passion for their success.
My2 business model is truly adapted to today’s challenges in these ever-changing times.