A Resurgence for Services

A Xamcor Commentary

2020 has been a challenging year for every company in every business sector. The COVID -19 pandemic has touched all our lives and our businesses in many ways. While it remains an incredible challenge, we are seeing many companies getting back to whatever the “new normal” may be.

In speaking with business leaders in a variety of industries and government organizations, we have heard a similar theme. While they had an effective disaster plan, it proved to be a disaster with COVID!

There were two major areas that proved to be problematic for many. First, all organizations we spoke with had no problems getting employees to work remotely. However, the challenge they found is that home internet is typically not secure, and much of their communications required very secure systems. So many companies scrambled to solve that problem, and not violate HIPAA, Government and other requirements or SLA’s in contacts.

The second issue, and the major problem expressed by CEO’s, was they forgot about the mailroom and paper! In almost every discussion, mailrooms became a major bottleneck. Mailrooms, which receive both paper and digital communications, are a hub for incoming information. After being received, all information needs to be examined and directed to the proper people for action. The mailroom still serves as a hub and starting point for many functions and critical business processes for many organizations.

Xamcor strongly believes that the COVID-19 crisis will force many companies and government organizations to re-examine all their mission critical functions and processes. With continued uncertainly about both the end of the pandemic in 2020, a possible 2nd wave, and its probability for a resurgence in the future, as COVID-19 or a new strain of Virus or Influenza, all organizations are now seeking ways to assure continuity for the future. They also, at the same time, are seeking to enhance knowledge worker productivity, no matter where the knowledge workers reside.

We believe these issues will last for a number of years. We predict there will be at least two major beneficiaries:

I. Solutions Software Providers

These providers, who have to ability to provide seamless, easy to implement solutions which empower secure workflow and information sharing, will be in high demand. A key success factor will be the ability to quickly automate mission critical business processes, allowing high levels of productivity no matter where employees are located.

The key to successful sales of these solutions will be an approach that is comprehensive and can be implemented rapidly with little customer training needed. They should be highly focused on digitizing and serving key mission critical application areas. A fully implemented Cloud solution will be required to provide the security and remote access needed.
We also believe this would be a great opportunity for a software offering to differentiate itself through its ease of use and performance. A company could create a winning name and brand for these solutions, and by doing so could create a de-facto standard in user’s and prospect’s minds.

As an example, until COVID-19, Zoom was one of many Video Conferencing companies. When the pandemic began in the US, Zoom took early and strong initiatives to allow free or low-cost usage of their platform for businesses, schools, and higher education institutions, as well as families and other key markets.

As a result, the Zoom service became adopted quickly in school systems and by many organizations and families around the US. Before the pandemic, Zoom was not well known outside the business community. In a few short months, they are now the most recognized name in Video Conferencing!

II. BPO Service Companies
For a common understanding, we view these companies as those who can digitize and automate an entire business function, capturing both paper and electronic information sources. In many cases, this process starts with capturing paper information, indexing it, and sending it to the proper workers through a smart workflow process. More than just paper, it would also capture emails and other digital information.

Xamcor believes true BPO services will be a very strong growth area right now, with the growth lasting far beyond a normal upturn in business. Unlike the growth we saw in this area after 9/11, we predict this growth spurt will span a number of years. Companies now realize the extent of the problem and need to implement solutions that will allow business to fully function no matter what happens with COVID-19 and post COVID-19 issues.

As with a software solutions company, a key driver for success for a service company is to package a comprehensive solution that fully solves the business problem and is easy to implement and enable. In some ways, it should be a plug and play solution that takes little training to use, as it captures all industry terminology and standard procedures.
More importantly, companies that are doing scanning and indexing currently, without building solutions around the captured information, need to rapidly move into being a true BPO solutions provider. The industry will become more digital, and simple scanning will not be in high demand.

Like in our software company example above, the better that a service company can differentiate their offering, the faster growth and profitability will accelerate. In addition, these solutions will become extremely “sticky” providing true recurring revenue for a decade or more. The key will be to create, brand and sell a compelling offer that performs mission critical services for a user, freeing up their reliance on in-house processes, and making their business “Covid-19 proof.”

Currently, the BPO market is scattered, with several very large companies, but no true sector leader. Just as important, there are no “go-to”, de facto standard solutions that control the market. We believe that there is a real opportunity here to take a leadership position and enable extremely rapid growth. If a company can show true differentiation, make their solution easy to implement and use, and brand it well with a compelling name and identity, growth opportunities are strong.

One other impact of the COVID-19 crisis lies in the importance and value of a BPO solutions provider. Boardrooms are now placing increasing importance on the security and continuity that a mission critical BPO solution can bring to their company and their shareholders. As a result, we see the value of these services increasing, and the valuation rising despite current problems in the economy.

Xamcor would be happy to speak with you or answer any questions you may have. Contact:

Paul Carman
[email protected] +1 (518) 605-2455