Outsourcing sector goes against strong pandemic current with resilience

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THE Philippines’s business process outsourcing (BPO) industry began with a handshake—via a modem, that is—and offered basic programming services. More than four decades later, it has blossomed into a burgeoning sector with multiple skill sets—and it shows no signs of slowing down, even bucking the overall downtrend in pandemic.

The BPO sector, given its impact and reach, has been touted as a life vest for an economy that has been drowning since the pandemic punched holes into it and threatened to sink it. In fact, the industry has been allowed by the government to maintain full operations despite lockdown measures.

Doing so is seen to help the economy bring in more revenues, in addition to generating more job opportunities. Both have been among the country’s primary goals given the poor state of the economy and soaring unemployment.

“Through decades of change and periods of ambiguity, the Philippine IT-BPM [information technology-business process management] sector has consistently demonstrated its resilience and agility,” IT and Business Process Association of the Philippines (Ibpap) President and CEO Rey E. Untal said in a recent event.

“In the face of challenges like natural disasters, the financial crisis and, most recently, the Covid-19 pandemic, the industry has been able to sustain its annual growth both in terms of jobs and revenues,” Untal added.

Business continuity

UNTAL, chief of the 17-year-old Ibpap, said that demand from several industries has helped the industry not only stay afloat but also register some growth.

These sectors include healthcare, e-commerce, retail, banking, financial administration and even telecommunications, he enumerated.

Untal said the surge in demand from mentioned industry verticals helped offset the contraction booked in hospitality and travel. These sectors are significantly affected by travel restrictions and mobility curbs applied to stem the Covid-19 infection.

“We also observed a notable upturn in IT outsourcing in the latter part of 2020 as clients invested heavily in digitization to mitigate remaining issues caused by the pandemic and as a way to enhance their business continuity plans,” he said.

The employment in the industry grew last year by 1.8 percent to 1.32 million while revenues rose by 1.4 percent to $26.7 billion.

The industry group noted that the firms were able to show some signs of recovery during the fourth quarter last year after most of them regained their footing by September.

“We were marked as an essential industry early on and received quite a bit of concession that helps the sector mobilize, both cargo and personnel,” Untal said. “This then allowed us to achieve enhanced operations alongside our service providers while ensuring the health and safety of our employees.”

Employee assistance

LIKE any sector, the BPO industry was forced to make some adjustments amid the lockdown measures to keep the ground running.

The Ibpap official said they resorted to a hybrid work scheme—a mix of work-from-home and on-site labor force. The scheme allows them to have safe and continuous operations.

“There has been a growing requirement for work-from-home delivery as clients realized and accepted that remote work can be done without necessarily sacrificing employee activity and quality,” Untal said, adding that this working scheme also helps in optimizing costs.

Currently, the industry has an average ratio of 64 percent-36 percent for work-from-home and on-site staff, he added. More than a hundred companies are even implementing a 90-percent to 100-percent remote working arrangement, Untal said.

Apart from this, the industry also allocated additional budgets for employee assistance in pandemic.

Swedish Outsourcing firm Transcom WorldWide AB, for example, spent about $7 million to $8 million to support its Filipino employees.

Transcom Global CEO Mark Lyndsell had said earlier this year that the assistance covers hotel accommodations to house their employees, extra allowances such as hazard pay and point-to-point shuttles to transport the workers.

Greenwood Village, US-headquartered Startek Inc., which has 15,000 employees across the Philippines and Australia, has also been extending support to its workers, including hotel accommodations and transportation since last year. It also sent out computers for work-from-home setups.

Startek Chief Operating Officer for Philippines and Australia Parikshat Nagpal previously said that the firm makes sure to look after the welfare of its employees while assuring the clients of business continuity at the same time.

Inclusive growth

BUT the BPO sector’s impact is not confined within its industry and related segments. Untal explained that the outsourcing sector has a multiplier effect for the Philippine economy.

“The sustained growth of the industry over the years has also triggered a multiplier effect in other business sectors. It spurs commercial real estate development and consumption spending,” he said, noting that the sector is among the major source of foreign exchange as well.

The IT-BPM sector has also been driving the real estate market, particularly office spaces, Untal said.

According to Leechiu Property Consultants, 127,000 square meters (sqm) or nearly 44 percent of the total demand in the real estate was accounted for by the BPO sector.

The CBRE Group, meanwhile, noted that the IT-BPM sector occupies 86,000 sqm—comprising 45 percent of the demand—of real estate as of first half.

“In relation to job openings and opportunities within the sector, we’ve also monitored that they continue to come in,” Untal said.

Citing data from JobStreet, Untal said that the IT-BPM industry offered 60,000 job openings in the first half, which is 11 percent of the total postings.

“If you look at it purely from the skills standpoint, the IT and BPO skills demand easily accounts for close to 20 percent of the overall job postings currently,” he said.

Moreover, Untal pointed out that the industry has helped in achieving inclusive growth. There are also well-established IT-BPM hubs outside the capital region, he added.

The Ibpap official said nearly 30 percent of the sector’s total headcount operate in the regions.

More traction

WHILE voice-based BPO services are synonymous with the industry, another emerging segment is expected to gain more traction: online creative freelancing.

This, as about 1.5 million Filipinos are already participating in the gig economy, according to Creative Economy Council of the Philippines (CECP) President Paolo A. Mercado.

The CECP official said earlier that 1.3 million to 1.5 million Filipinos are already on international online platforms for freelancing services, majority of which comprises creative work. These include web design and multimedia content and editing.

He said that digital creative services and digital contents were the least affected segments in the creative sector last year amid the flexibility to work from home. Some of the digital creative services identified by Mercado are digital marketing, web and graphic design.

The CECP submitted in 2019 to the Department of Trade and Industry and Board of Investments a “Creative Economy Roadmap.” It sets five development sectors for the creative economy, including advertising, film, animation, game development and design.

The roadmap aims to make the Philippines the top creative economy in the Association of Southeast Asian Nations region by 2030 in terms of size and value of creative industries, as well as competitiveness of talent and content.

The trade department noted that total creative exports reached $6.8 billion in 2019, which was 6 percent of the total exports. Industry investments in the same year amounted to P281 million based on the data from investment promotion agencies.

Another segment

ANOTHER segment of the BPO industry that has a bullish outlook is healthcare information management system (HIMS).

According to Healthcare Information Management Association of the Philippines (Himap) Vice President Vincent Remo, companies have been dealing with rising cost and margin pressures, making outsourcing a viable choice for them during the pandemic.

The rollout of Covid-19 vaccination programs also “means the volume of transactions will dramatically increase, and there will be a need for more workers in the HIMS sector,” Remo added.

Apart from demand, the Himap official said the industry growth will also be driven by the large pool of professionals in the medical field, including US-licensed nurses.

He noted that some 42,000 from medical and allied courses are graduating yearly in the country.

“Lately, the services offered from the Philippines have also expanded to cover higher value services, such as clinical research, analytics and life sciences,” Remo said.

The HIMS sector, which comprises over 10-percent of the BPO industry, provides services to companies processing medical billings, doing medical coding, case management, and all aspects of revenue cycle management; companies doing benefit management and fraud and abuse management; and, pharmacy benefit management, among others.

Gain access

UNTAL expects further growth for the sector despite the ongoing economic and health crises.

“As we move forward, we are, in fact, cautiously optimistic. The sector will continue growing amid the lingering impact of Covid-19,” he said.

Untal, in an interview with the BusinessMirror, explained that IT-BPM markets across the globe have made several adjustments to their operations due to the pandemic.

“For example, many enterprises have started to consider multiple aspects of their location to optimize costs, enhance their business continuity plans, and gain access to alternative talent pools,” Untal told the BusinessMirror.

“This has naturally caused some movements in terms of accounts and clients across certain delivery locations, including India and the Philippines,” he added.

According to the Ibpap survey, the majority or 87 percent of the IT-BPM firms are expecting to book 5 percent to 15 percent growth while 13 percent are anticipating flat growth this year.

Increasing employment

IN terms of employment, the vital role of BPO operators has been underscored after government last year closed borders between cities and provinces, nearly tanking the economy.

In fact, the Philippine Statistics Authority (PSA) reported a big jump in the employment numbers for the administrative and support services sector, where the BPO industry belongs to.   After a month of the enhanced community quarantine (ECQ) in April 2020, about 2.63 million individuals were employed in the sector, an increase from the 1.66 million reported in January of the same year. The growth was sustained into the pandemic’s first year, with the sector employing more than 3.19 million people in March 2021.

This display of resilience has not only attracted adult jobseekers but also young aspirants who are hoping to earn a little extra, as the prolonged lockdowns have already taken a toll on the earnings of Filipino households.

Students Fia Ortega and Jolo Camiguing are testaments to this.

Needs increasing

CAMIGUING is the youngest of three siblings and the only one left living with his parents. His mother is a government employee, while his father (already a senior citizen) has stopped working as a family driver.

Ortega has a similar story as she became the family’s breadwinner after both her parents lost their jobs last year. They started a small-scale online food business. But their household expenses, including her and her brother’s schooling, cannot keep up.

This situation prompted her to apply for a job while, at the same time, meeting academic requirements.

Camiguing and Ortega reflect the rebound the country has seen in terms of youth employment numbers in the first quarter of this year. Youth employment numbers are back at around 6.80 million as of March, following a sharp decline of more than 2 million between January and April 2020. Some of the contributors to this recovery are BPO companies, where Camiguing and Ortega are currently employed.

After all,  these firms need all the manpower they can possibly get, as the needs of their clients are  also rapidly increasing due to the online shift in doing business.

Application process

ACCORDING to TaskUs Philippines Inc. Senior Client Services Manager Neysa Palacio, hiring students “was not really a deterrent for us because we hire based on skills or profile.”

“It is possible that, even if you’re a student, you are fit for specific clients that look for specific traits,” Palacio said.

But with the limitations on physical interaction brought about by the pandemic, companies had to reconfigure their recruitment processes.

Work experience—specifically, the lack of it—is no longer a determining factor for employment in call centers. Palacio says that because of the urgent need for more agents, the policy has been relaxed to accommodate more applicants. Those who will apply would also need to be at least 18 years old and/or in their second year in college.

Connecting employers and jobseekers have now become easier, thanks to technology. On one hand, there are various Facebook groups composed of aspiring employees where they share information about company hiring.

Training, expectations

ORTEGA found some call center firms she initially applied for via social networking platforms. Camiguing, on the other hand, found his employer through digital advertisements.

The initial phases of the application process itself are also more convenient.

Both Camiguing and Ortega said they submitted their résumés and basic information online while their initial interviews were done over the phone. These included a backgrounder on the applicants and tests on English language fluency and customer handling.

Applicants who hurdle past the interviews and the onsite training will then be presented with a variety of work arrangements. They are allowed to choose which setup works for them, including the work schedule and whether they will be working from home or in the office.

In TaskUs, for example, employee’s expectations are set before they are deployed to the production floor to avoid possible conflicts with matters outside of work. As for students, this is in the form of their academic responsibilities.

Infection scare

EVEN with the flexibility afforded by BPO companies, the weariness caused by the job has a noticeable effect on working students. As work hours in these companies follow office hours overseas, the time allotted for their school tasks are bound to be affected.

Camiguing said he comes home around 7 a.m. or 8 a.m. just in time for his 10 a.m. class.

Maliit lang yung tulog ko. Ang dami ring  readings,  patong-patong siya. Binabasa ko sila sa  break time  para makahabol,” Camiguing added. [I get little sleep and I have piles of reading materials to go through, some of which I read during break time so I can catch up.]

Some of his coworkers have even filed for a leave of absence or stopped attending school permanently to focus on work. Ortega, meanwhile, struggles to attend her synchronous classes as these happen mostly while she is on work duty.

There is also the fear of catching Covid-19, as some would still prefer to physically report on site than work from home. This is common for starters who, as previously mentioned, are undergoing on-the-job training.

Ortega had a virus scare after she came in close contact with one of her superiors who tested positive for Covid.

Volume of benefits

THESE inconveniences are outweighed by the compensation they get from working as call center agents.

According to job review site Glassdoor, the average starting salary for call center agents in Manila is at around P17,000 (about $342.26 at current exchange rates). The amount can still increase due to holiday pay, night differentials and other bonuses and incentives.

Some companies also offer other benefits such as health and accident insurance packages, whose coverage includes the employee’s dependents.

Most firms also provide generous assistance to workers who catch the virus. Both Palacio and Ortega said the companies they work for cover the costs for the swab tests of all employees who need to physically report to the site. They also shoulder Covid-related hospitalization expenses, and grant paid leaves to employees who are afflicted with the virus.

BPO companies are also securing Covid-19 vaccines for their employees. The firms where Palacio, Ortega and Camiguing are employed in have committed to inoculating their workers for free. This is on top of the recent inclusion of call center workers in the government’s priority list for vaccination.

Essential industry

THE vaccine rollout increases hope of returning to pre-pandemic “normalcy” sooner.

But Palacio said that while they are unlikely to go out of business after the pandemic, the return to “normal” might signal the end of the massive growth that BPO companies enjoyed since the past year.

“Honestly, I don’t think [the growth will continue] because businesses will be changing as well. They will revert back to what works for them, just as how [they] change [with what] happened now. It might not be good for us but, at the end of the day, we still benefit from it,” she said.

This is backed up by how some working students like Camiguing view their employment as something temporary.

He said that even with its “tempting” benefits, getting his undergraduate degree is still more important than working. Besides, he fears he can no longer keep the gig going, especially when face-to-face classes resume.

For others like Ortega who live in a cash-strapped household, it would be harder to let go of the stable income and insurance packages that come with the employment. She wants to continue being a working student not only to finance her and her brother’s studies, but also to help in paying for their household expenses.

Mahirap din yung pasok ng pera ngayon,” she says. [Cash hasn’t been easy to get these days.]

While the BPO industry has mixed predictions about its future, one thing is for sure at present: the industry is essential, and it will exist even after the pandemic.

This assurance is more than enough for students and other jobseekers in search of stable financial support in these uncertain times.

https://businessmirror.com.ph/2021/09/15/outsourcing-sector-goes-against-strong-pandemic-current-with-resilience/