By Beting Laygo Dolor, Contributing Editor
The Philippines’ niche as a hub for business process outsourcing (BPO) – commonly known as the call center industry – is in peril.
BPO executives point out to the country’s internet infrastructure, which continues to lag behind other countries in the region.
With thousands of companies in the US – the primary market of the country’s US$24.8 billion BPO industry – forcing their employees to work from home due to the coronavirus pandemic, the Philippines was expected to grab an even bigger share of the pie.
The 1.2 million Filipinos currently working in the BPO industry should have been captured a larger market but it was revealed in the last few months that the country’s two telcos – Smart/PLDT and Globe Telecom – are unable to accommodate more work-from-home employees.
Kristine Romano, managing partner for McKinsey & Co. Phils., told media that local BPO companies can lose some of their business since only 40 percent have staff working from home at best.
By comparison, she said, India BPO firms have anywhere from 60 to 80 percent working from home. Ironically, the Philippines overtook India as the world’s top BPO provider a decade ago, thanks in part to the Filipinos’ better command of American-style English.
Romano said contracts won by Philippine companies may shift to other countries where operating costs will be lower. The higher the percentage of employees working from home, the lower a BPO company’s operating costs.
Furthermore, US companies may also “re-shore” jobs by hiring Americans at home.
The sheer number of Americans who have lost their jobs due to the pandemic is estimated at more than 30 million and many are expected to take call center jobs at relatively low pay in order to make ends meet.
Rainero Borja, president of Alorica Asia, noted that some American companies are already bringing offshore jobs back to the US. He, however, expects the local BPO industry to bounce back considering that huge investments PLDT/ Smart and Globe Telecom have been pumping into their infrastructure.
Also, the third telco player, Dito Telecommunity, is expected to roll out later this year, a potential competition to break the existing duopoly of the existing telcos.
For her part, Romano said that the global experience vis-à-vis the pandemic is showing the biggest companies which offshore operations are still viable and which ones are better off returning to the US.
“There’s now an additional consideration on resilience,” she said.
Another country which avails of the services of Philippine BPO companies is Australia. Sharon Melamed, managing director of Australia-based Matchboard, said the big companies from her country now understand the limitations of internet coverage in Manila’
“Unless that dramatically changes, they may have to look for alternative destinations,” she said.
The 123 member companies of the Contact Center Association of the Philippines had originally eyed a five to six percent growth in revenues for 2020 but admitted that this figure will have to be reviewed in light of the Covid-19 pandemic.
The government allowed the BPO industry to continue operating normally after the Luzon-wide lockdown was implemented in mid-March. This helped keep the economy above water, since the purchasing power of the industry’s 1.2 million workers remained intact but not all companies could operate at 100 percent capacity.
Workers in the industry had been credited with boosting real estate sales, mostly in the form of condominium units, as well as new car sales. They are also seen as the Philippines’ new middle class, with stronger purchasing power than their parents.
While it is not yet clear what the “new normal” will be once the pandemic runs its course, industry observers believe the BPO industry will survive and continue to flourish in the short to medium-term. But only if the country’s internet infrastructure can meet global standards. Otherwise, competition from other countries such as India can recover the market that they lost to Philippine call center companies.