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COVID-19 and the impact on KIBS

Ian Miles is Emeritus Professor at Alliance Manchester Business School

 

Knowledge-Intensive Business Services (KIBS) are likely to play a key role post COVID-19, says Ian Miles. He is Emeritus Professor at Alliance Manchester Business School. 

Knowledge-Intensive Business Services (KIBS) provide expert support for business processes across the public and private sectors, often providing highly customised solutions. While their key employees are professional and associate professional workers who can often carry out their work at a distance, KIBS programmes have traditionally involved periods of close contact with clients. So how will KIBS fare in the wake of the COVID-19 pandemic?

Impact

Beyond the drop in demand immediately produced by disrupted economic activity, impacts are manifold. However some KIBS support measures can directly address the pandemic such as: marketing, consultancy and social research firms involved in monitoring and modelling population behaviour; programmes involved in technical testing and laboratory support: and those involved in the management of logistics and other complex problems confronting firms and public authorities seeking to tackle matters of public health. More generally, as organisations of all types continue to face new problems (e.g. around hygiene and social distancing), increased KIBS support may be required.

However even if we do not see a substantial recurrence of COVID-19 some social distancing measures will continue to apply. With new awareness of the threat of future pandemics, organisations of all types will require contingency plans and preparations.

Social distancing and travel restrictions render many longstanding KIBS practices problematic. Face-to-face contact with clients is typical in problem definition and the implementation, delivery, and evaluation of solutions. It enables the building of trust with clients who need to share confidential information and engage in dialogue with the KIBS firm. Furthermore, team working is common within KIBS, underpinning the training and mentoring of less experienced employees.

Going digital

Ways of working with clients and other team members through digital means have suddenly risen in prominence, and consultancy services were early in reducing their (famously heavy) use of air travel.

However despite much effort to restructure services around more digital production and delivery, more innovation is required to effectively accomplish initial marketing, trust-building, and service co-production. Industry opinion tends to be that the larger established KIBS firms will tend to be more resilient. But new services assisting firms in addressing organisational, design and other problems associated with social distancing may promote new entrants and specialisms.

Accountancy services often demand less face-to-face contact than most KIBS, providing fairly routine reporting/tax returns for clients. For instance many are now actively supporting clients confronted with regulations concerning furloughs, loans and other government support.

However KIBS can also engage with more complex financial, legal and managerial issues connected with bankruptcy, downsizing, and supply chain disruption. While court processes have been slowed down during the crisis, legal challenges of various kinds may now be raised about changes in work content and conditions, or inadequate social distancing and hygiene measures, for example. Various organisations (not least those delivering health and social care) may be seen as responsible for exposing individuals to the virus, making insufficient allowance for ill-health or concerns. Organisations confronting these claims - and insurers facing claims related to business disruption - will deploy legal KIBS to address these issues.

IT services

Many IT services firms have already experienced increased demand from clients dealing with social distancing and reduced travel. There has of course been explosive growth in the sorts of remote work, cloud-based services, and videoconferencing that these firms have long advocated.

Some computer-related consultancy services support users in adapting to the use of such tools have been relatively underdeveloped, but KIBS addressing a range of related management issues can advise clients transitioning to much greater digitalisation.

Marketing KIBS have a role too as organisations of all sorts will need to enhance communication capacities. Customers, clients, business partners and other stakeholders are likely to require information about the implications of disruption to services and supply chains, their options, and so on.

Meanwhile adaptation to digitalisation will be easier for those KIBS producing more routine and standardised services. Thus some KIBS firms will shift from highly customised to more standardised services.

Long-term view

The pandemic will have longstanding impacts. KIBS are liable to face many demands from clients as businesses face long-term market disruption, while both regulations and support from government evolve rapidly.

KIBS will support design of facilities and work processes to embed routine systems of social distancing, high hygiene, and/or capabilities to rapidly apply such practices when needed. Social distancing accreditation systems, pandemic readiness auditing, and pandemic-related resilience and recovery planning services, could become commonplace.
Future prospects will vary across KIBS of different sectors, sizes, locations and specialisms. Many KIBS firms will themselves face severe difficulties - especially if they seek to restore something like business as usual, assuming that normality will be restored.

But alongside the pressures to adapt to new ways of working there will be many opportunities for new services and possibly new markets. Many assumptions about how KIBS services are produced and delivered are liable to be undermined.

*This article summarises a longer piece on the subject of KIBS which you can read here.