No industry was spared by the effects of COVID-19. The lockdowns and quarantine measures imposed by governments calls for a drastic change in doing business. The BPO (business process outsourcing) industry has been adapting changes to fulfill obligations to overseas and local clients.
Global research and consultancy firm Oxford Business Group (OBG) looks into how the BPO sector can overcome this current setback, especially as the majority of US clients opt for project cancellations and deferments due to the rising cases of COVID-19 and retrenchments and the ECQ expected to last at least until May 15 in some areas of the country.
While not in the category of the essential workforce, BPO is one of the backbones of the Philippine economy with a significant contribution to the gross domestic product and employing millions of Filipinos. These reasons alone are enough to give the industry limited exemptions so as not to disrupt the flow of revenue for the economy.
When quarantine measures were first imposed across Luzon on March 17, BPO companies were allowed to continue operations if they could utilize a skeleton workforce, maintain social distancing, and provide staff with temporary accommodation or reliable shuttle service to homes within the immediate vicinity.
BPO firms and other export-oriented companies were given a deadline to implement satisfactory work-from-home arrangements for employees.
While many employees welcome the flexibility and safety of working from home, BPO firms were largely unprepared for a total work-from-home model and had to overcome challenges related to internet access, equipment transfers, and clearance requirements from clients. In the latest Speedtest Global Index, released in March, the Philippines was ranked 104th out of 139 surveyed countries for average fixed broadband speeds.
After solving capacity challenges, some BPO firms then had to contend with declining demand due to project deferments and cancellations.
Although a surge in flight cancellations, e-commerce orders, and financial service inquiries may have temporarily boosted activity for operators with related contact centers in the Philippines, a significant proportion of the BPO work undertaken in the country is imported from the US, which is currently suffering from the world’s highest number of Covid-19 infections and record jobless claims. This highlights the need for further diversification of BPO clients and activities to hedge against future disruption.
Industry associations, according to OBG, are still optimistic post-COVID-19.
The IT and Business Process Association of the Philippines (IBPAP) claims that while threats from autobots and artificial intelligence abound, BPOs must now focus on developing English-language proficiency and customer service skills and solutions that are innovative and cost-efficient. IBPAP also sees an increase in demand for services in the health care, gaming, and animation sector, all of which fall under its roadmap for 2022.
The “downtime” also serves as a time to rethink strategies and shift if necessary as preparation for the next wave of growth in the global BPO industry.
Prior to the outbreak, the Philippines was already established as a leading offshore/nearshore location for health care services delivery. In its November 2019 assessment, IBPAP forecast revenue growth in the segment of 7.3-10.8% through 2022, as well as revenue growth of 7.3-12.3% in gaming and animation. This compares to the projected revenue growth of 3.3-7.4% in contact centers over the same period.