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When disaster strikes an outsourcing hub: Manila & Mumbai

Last week was particularly noteworthy for natural disasters: an earthquake hit Indonesia, another one triggered a tsunami in Samoa and finally the Philippines was hit by two typhoons with Typhoon Ondoy (International designation: Ketsana) proving as devastating to certain parts of Metro Manila as hurricane Katrina was to New Orleans. To put Ondoy in perspective, Metro Manila’s average rainfall for September is 391.7 mm (15.4 inches) while Ondoy’s rainfall during a mere 6 hour period was a record breaking 341.0 mm (13.4 inches) and the rainfall that fell during a 24-hour period was a record breaking 455 mm (17.9 inches). The result: 80% of the city was flooded, over 300 people were left dead (Ondoy then slammed into Central Vietnam leaving another 100 dead and causing more massive flooding) and both local and national authorities were overwhelmed. Luckily though, the disaster hit on a Saturday morning allowing plenty of time for most parts of the city to recover and most Filipinos went back to work on Monday – although it will be months before some of the hardest hit areas of the city recover full.

Of course and unless you are Filipino or have relatives in the Philippines or you are like me and happen to also live there, Typhoon Ondoy has probably already been forgotten after being on the news and in the international papers for a few days. After all, do you remember the so-called Maharashtra floods of 2005 that left Mumbai at a standstill and over 1,000 people dead across the city and the region? In that particular instance, the eighth heaviest rainfall (994 mm or 39.1 inches) ever recorded during a 24-hour period fell – shutting down the international airport for 30 hours along with most rail and highway links to the city and affecting millions of ATM, land line and mobile users.

Both incidents would probably have gone even more unnoticed if it weren’t for the fact that both cities are not just the major business hubs for their respective countries but they are both major global outsourcing hubs – Mumbai for BPO and shared services operations mostly for the financial services industry and Manila for BPOs/call centers and shared services operations serving a variety of industries. However, both Manila and Mumbai are no strangers to disasters or disruptions – after all, Manila during colonial times was repeatedly leveled by earthquakes (and is overdue for another major tremor) while Mumbai had the November 2008 terrorist attacks and both cities have had their share of political or sectarian related disturbances. Moreover, if local and national authorities in the USA cannot respond in a timely and organized manner after a natural disaster (hurricane Katrina), don’t expect local and national authorities in developing countries to respond any better.

What happens when a major and far more destructive natural disaster (such as a major earthquake) hits an important outsourcing hub? Certainly the big outsourcing vendors who have global footprints in multiple cities and countries will be in a better position to shift work around globally. However one must remember that some of the biggest outsourcing or shared services operations may have more than 10,000 employees spread across multiple sites in the same city. And if that city should be hit by a natural disaster on a scale (think New Orleans) that makes the recent flooding in Manila and Mumbai pale in comparison and effectively closes the city for business for weeks or even months (again, think New Orleans), the impact will be felt by us all.

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