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COVID-19: the challenges and opportunities for NZ service providers

COVID-19: the challenges and opportunities for NZ service providers

Analyst firm IDC takes a close look at the New Zealand IT market amid the coronavirus pandemic

Credit: Photo by Pawel Janiak on Unsplash


Among the challenges flagged by IDC is the potential for IT service providers’ resilience coming under increased scrutiny, with organisations that manage IT internally watching how IT services providers cope during the outbreak to determine whether to move to an IT service management (ITSM) model or retain services inhouse. 

“Those providers that maintain customer engagement and business continuity throughout the pandemic will be the ones that survive, if not thrive after the pandemic restrictions are lifted,” IDC said.

Additionally, pandemic restrictions on offshore services and the insource-outsource model could become more polarised as customer experiences reshape views about the delivery risk.

“[IT service providers’] workforce are not only curtailed by the New Zealand lockdown, but also by restrictions imposed in offshore markets where partners — such as call centres — fulfil local services,” IDC said. “For example, lockdowns in India, Philippines and Malaysia will not only affect delivery during the lockdown, but customers will review the offshore resilience of their outsourcing partners, post crisis. 

“Customers will also realise how leveraged the provider call centres are and this will create greater operational costs driving the potential for a focus on AI based solutions,” it said. 

At the same time, COVID-19 is causing hardware and infrastructure supply chain constraints, with IDC predicting that many customers will either delay deployments or even cancel projects entirely, electing instead to move to cloud infrastructure and take the device-as-a-service option. 

“The New Zealand government publicly warned government agencies they are likely to face delays in acquiring new IT hardware,” IDC satd. “However, the government has also taken steps to minimise hardware deployment disruptions, such as, announcing that it will extend the IT hardware procurement contract which is due to expire in September.

Regardless, IDC also said it believes that COVID-19 can create an opportunity for IT services providers to differentiate themselves on capabilities, resiliency, customer engagement, contract fulfilment and trustworthiness. 

For example, IDC reckons that new areas of growth will emerge. Indeed, the analyst firm suggests that the IT services that will lead regrowth in the months after the pandemic has passed will be collaboration services, business continuity and crisis management consulting, cloud migration and network management services. 

Integration services, meanwhile, are expected to get a reboot, as businesses seek to integrate technologies rapidly deployed prior to and during the lockdown.

Business continuity and crisis risk management are also an area of great opportunity, and for good reason. According to IDC, early indications are that very few businesses have a business continuity plan in place that accounts for pandemics. 

“In previous events where business continuity has been tested, there has been an upswing in investment around business continuity and risk management strategy development,” the report said.

At the same time, the security issues that will emerge and face deeper interrogation over the next six months will be identity, home security and remote working solutions. For IDC, the massive shift to working at home in such a short space of time has exposed a number of security weaknesses for organisations that will need to be addressed urgently. 

This means that security solutions will be highly sought after, even before the crisis has lifted, to overcome security issues related to mobility including mobile device management, collaboration tools and data, VPNs, and end-point encryption. 

“There will also be an increased need for collaboration tools, requiring associated services, to minimise business disruption,” IDC said.

Unsurprisingly, cloud technology is expected to be an area of great opportunity, according to IDC, with organisations that migrate to the cloud solutions quickly during the lockdown period set to seek to strengthen cloud management and integration with core services. 

“These customers will be seeking to engage with cloud service providers for a longer term more robust cloud strategy when business resumes to relatively normal conditions,” the report stated. 

“Accelerated adoption of the cloud will put pressure on IaaS providers to ensure that they hold the capacity to deliver to the increased market demands. The service providers themselves will lean more towards global solutions such as IaaS and SaaS.”

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