Corner OfficeExpert Opinion

COVID-19 is Accelerating Virtualization in Organizations

Today, the term “New Normal” has become synonymous with almost all aspects of our lives. Be it an individual, family, community, organization, state or at country level, there is a near unanimity that the post pandemic way of life is unlikely to be the same as before. Though turbulent in the short term, we are expected to undoubtedly emerge stronger and resilient than before, charting a new direction for the future. Given the scale and democratic nature of the pandemic, the future is likely to be shaped by changes happening simultaneously at multiple levels of our societal and organizational construct starting with the individual. 

Organizations, as we know are seeing an accelerated digital transformation to change the way they operate. The typical orthodoxies around productivity, work culture, physical proximity requirements and hierarchy have been broken and rapid changes are underway to combat the short term impact of the pandemic. The ‘Agile’ way of working which was usually confined to technology companies or new age start-ups is now being seen as indispensable for organizations of all “age, cuts and sizes”. Agility is being enforced not only in workforce management but also across digital enablement and process design. 

With innovation at its core, there would be multiple technology collaborations in near future that will help gear the organization towards adopting more automation solutions across their existing value chains – right from building logistics tower to see real time goods movement data to shifting sales strategy focusing on direct to customer channels. 

There are several plug and play solutions being developed that can be quickly customized and deployed to channelize automation initiatives such as leveraging Artificial Intelligence (AI) for identifying defects in product packaging, forecasting commodity prices, optimizing trade spend, etc. These are primarily driven by an increased focus on agility, reduced cost and analytics.

Virtualization is a term borrowed from the IT industry which typically means using an abstraction layer on computer hardware (processing power, storage, memory) to generate efficiency, reduce down-time and accelerate provisioning of virtual machines. In the same vein, virtualization in the business context aims to realize increased efficiency, availability and reduced costs within the realms of organizational work, workforce and workplace. It helps to provide a workplace experience that can flex the necessity of physical interactions to deliver outcomes. While the broader trend of virtualization was already being adopted over the course of last few years, the pandemic is seen to have significantly amplified the need and accelerated the move.

Organizations over the past few months have rapidly deployed short term mechanisms to counter the prolonged turbulence. These include timely activation of Business Continuty Planning (BCP) measures, instituting Work-from-Home (WFH) for support and non-field roles, pro-active communication with stakeholders, enabling social distancing norms, and staggering shifts at manufacturing locations as common interventions. While these have been effective, these are unlikely to be sufficient from a long term perspective. Given the future is expected to be increasingly digital; organizations need to consider proactively instigating fundamental changes in the way they operate. A key enabler would be IT infrastructure which would need to ensure seamless connectivity and access through cloud and mobility platforms. The trifecta of infrastructure and network availability, end-user support enablement and collaboration, and best-in-class security for the virtual workplace are likely to be the key to long term sustenance of organizations. 

In a global CEO survey conducted by Deloitte, 40% CEOs have identified IT Infrastructure/platforms as their primary priority going forward. Automation is no longer a choice. Routine infrastructure management, provisioning and monitoring of network components are expected to rapidly get automated along with security mechanisms like automated firewall application or automated patch and software update. Similarly, end user support is likely to be increasingly managed through tools like chatbots, workflow management systems and automated incident routing. Collaboration which has already manifested through platforms like Zoom, MS-teams, Webex are expected to become omnipresent and take on shape and form which are yet unimagined. Cloud adoption is set to multiply with organizations swiftly deploying majority of their applications and services on cloud rather than managing them on premises. 

While some of these changes will be top-down and visibly driven with management attention, systemic changes will be ushered in as to how employees and broader workforce adapt for the future. Organizational structures are expected to rapidly evolve with an increasingly mobile and remote workforce leading to transforming the existing skilling and engagement models as well as re-looking compensation and benefits. 

According to a report by World Economic Forum, 49% of experts believe that large scale structural unemployment is a likely consequence of the pandemic. This will call for rapid re-skilling of the workforce to be future-ready to meet emerging talent requirements while also generating indirect cost savings. According to research conducted by Josh Bersin, a leading Human Resources expert, it can cost as much as six times more to hire from outside than to build from within. With cost reduction at the center stage in current time, some companies have proactively instituted internal training programs to impart new-age technical skills alongside broader competencies. At the same time, the workforce is gearing itself for the future, which is reflected in the massive demand for online courses and proliferation of companies providing them. 

Hiring models for contingent workforce who were primarily relegated for back-office and transactional roles or for temp staffing are likely to see broader acknowledgement across middle and senior management roles including specialized project based staffing. These will primarily be driven by an increased focus on agility, reduced cost and access to talent. The short term barriers around diminished travel and mobility could soon be outweighed by long term advantages of a global talent pool deployed at a fraction of cost and time. 

Eventually, these will manifest with changes in organizational policy and procedures to ensure risk and compliance while gradually integrating with the broader legal and regulatory framework over the next few years. No doubt, the pandemic has been devastating but it presents a rare opportunity for the organizational ecosystem to leap forward into the blue skies of the future.

 (The authors are Viral Thakker, Partner; Sushant Kumaraswamy, Director and Ashis Kumar, Associate Director, Deloitte India and the views expressed in this article is their own)

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