The Outsourcing Week in Review: Thursday, August 4, 2022

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Welcome to Inside Outsourcing: The Outsourcing Week in Review

THE WEEK IN REVIEW

The Information Technology and Business Process Management (IT-BPM) industry in the Philippines is expected to grow further to ​​$29.1 billion by year-end. According to Department of Trade and Industry (DTI) Secretary Alfredo Pascual, the sector’s potential “is even greater now” due to the heightened use of digitalization and online services post-pandemic. He added that IT-BPM is among the sectors that the DTI is focusing on in terms of investment promotion efforts. In 2021, the Philippines’ IT-BPM sector grew by 10.6 per cent.

Speaking of employment, more than one million IT-BPM and “green” job opportunities are expected to open in the Philippines over the next six years. Department of Labor and Employment (DOLE) Secretary Bienvenido Laguesma said that this will be part of the government’s comprehensive employment plan following the opening of the new administration. Industry body IT and Business Process Association of the Philippines (IBPAP) already committed to opening an additional one million jobs until 2028 to address the growing demands of the local outsourcing market.

Office leasing volumes in the National Capital Region (NCR) climbed to 21.2% in Q2. Real estate services firm JLL Philippines explained that the demand is divided among non-IT-BPM services, IT-BPM firms, and returning Philippine Offshore Gaming Operators (POGOs). JLL Philippines Head of Research and Strategic Consulting Janlo de los Reyes said that the return-to-office (RTO) mandate of several employers will help sustain the real estate market’s recovery in Q3, as well as the “no-more lockdowns” promise of President Ferdinand Marcos Jr. during his State of the Nation Address (SONA). At the same time, property consultancy firm Colliers Philippines recorded about 45,100 square meters (sq.m.) of net absorption of office spaces from April to July — its highest record since Q1 2020. During its recent market briefing, the firm also revealed its prediction of a sustained absorption in the office market for the rest of 2022, hitting 350,000 sq.m. by year-end. Colliers Philippines Associate Director for Office Services-Tenant Representation Kevin Jara said that this growth will be “supported by a robust return of outsourcing demand, strengthening US dollar and the improving COVID-19 situation” in the country.

The office demand from POGOs is also set to bounce back to its 450,000 to 550,000 sq.m. pre-pandemic record upon its comeback in the Philippines. Colliers said that POGOs are re-setting up their operations as pandemic restrictions are lifted to their most-relaxed level in key cities and the country’s borders have reopened to foreign travelers. However, the industry will have to deal with Republic Act 11590 or the POGO Tax Law — which imposes a five per cent tax on gross gaming revenues (GGR) of offshore gaming licensees and a 25% withholding tax on foreign employees — to continue operating in the Philippines.

In other news, Japan could be a potential outsourcing market for Filipino talent. According to Dr. Wilson Ng, president of total solutions provider Ng Khai Development CorpJapanese firms are set to outsource more of their services as the country’s young population continues to dwindle. Ng added that Filipinos could grab opportunities in the anime, gaming, and creative industries in the East Asian country.

Locally, Business Process Outsourcing (BPO) company Cloudstaff Philippines opened a 4,000 sq.m. facility in Angeles City, Pampanga. Named the CRK14-15 Office, the new facility houses two virtual reality caves for software testing, a network operations center, and a first-class lounge where staff can relax, and is expected to house at least 500 employees. Cloudstaff CEO Lloyd Ernst said that the company experienced a “COVID title win” as remote work and outsourcing became more mainstream during the pandemic. Meanwhile, digital customer experience (CX) innovator TELUS International launched its global learning curriculum that will help equip its talent with the most in-demand skills in the market.  Through the global learning innovation program, TELUS International team members can learn and further specialize in areas such as Cloud ComputingStructured Query Language (SQL)Python, and React. It also teaches soft skills aids, including assertive communication, email etiquette, time management, and effective delegation, among others. TELUS International has eight CX and IT delivery centers in the Philippines and employs more than 26,000 individuals in the country.

The creative industry could contribute to the Philippine economic recovery as it reclaims its “path to development” post-COVID-19, said DTI’s Pascual. During the Creative Futures 2022 Conference, Pascual said the pandemic took 90% of the sector’s revenue as operations and jobs took a pause. Now, with the newly-ratified Philippine Creative Industries Development Act and the Creative Economy Strategy of the Philippines (Crest PH) in place, the DTI chief said that he is confident with the sector’s reopening and further development. Pascual added that the Philippines aims to be the top creative economy in Southeast Asia by 2030. At another event, Pascual stated that the private sector will play a “crucial role” in accelerating digital adoption in the Philippines. He explained that the private sector’s “agile mindset and disposition” will have a key role in implementing the digital transformation of enterprises and the government itself. Pascual added that a private-public collaboration “is effective in promoting priority initiatives.” The Marcos government had already issued policies to encourage investments in digital technology including Executive Order 170 s. 2022, or the Adoption of Digital Payments for Government Disbursements and Collections and Commission on Audit Circular No. 2021-014, or the Guidelines on the Use of e-Collection and e-Payment for Government Transactions.

The Department of Information and Communications Technology (DICT) is urging Congress to prioritize the passage of two legislative proposals that will open opportunities for universal connectivity. In a recent interview, DICT Secretary Ivan John Uy said they are pushing for the passage of the Better Internet Act which requires telco providers to comply with a minimum download speed for their internet service and cover all unserved and underserved areas within three years from the passage of the bill. The DICT also voiced its support for a bill that seeks to direct property developers to allot telco space for network infrastructure in their projects. Uy said that this bill will guarantee a seamless connection anywhere — whether on elevators or parking spaces. In line with the goal of better connectivity, the DICT is looking to deploy the Starlink broadband service to the Philippines by Q1 2023. Uy said that Starlink’s service will provide a cheaper and better internet connection to unserved and underserved areas in the country. The government official also revealed that they will initially cover the cost of providing Starlink service in remote areas to help Filipino farmers and fisherfolk to participate in the digital economy.

The Jupiter Cable SystemPhilippine’s newest international cable system, went officially online last Friday, June 29. In a statement, telecom provider PLDT said the new cable system will “immensely boost” the country’s international data capacity and advance digital infrastructure. PLDT added that the capacity offered by the new cable system will assist in promoting the Philippines as a global hyper scaler location and position the country as the “new digital hub in the Asia-Pacific.”

Having a stronger internet connection will help realize the Makati City government’s goal of becoming the Silicon Valley of the Philippines. According to Makati City Mayor Abby Binay, she intends to attract more IT firms by providing a competitive environment, tax breaks, and business registration assistance to those who will consider setting up, expanding, or relocating to the city.  The city’s infrastructure investments, particularly the Makati Subway, are also expected to lure more investors as an efficient mass transit could provide better productivity and profitability among workers and businesses. Currently, about 40 IT buildings in Makati are registered under the Philippine Economic Zone Authority (PEZA).

All these positive developments could possibly be derailed by the resurgence of the COVID-19 virus in the Philippines. According to the Department of Health (DOH), a total of 24,100 new COVID-19 cases were recorded from July 25 to July 31, 2022, up 24% from the previous week. Daily average cases also jumped to 3,443 with 76 people tagged as severe or critical cases. The DOH also reported that it has detected the country’s first two cases of a new Omicron subvariant called Centaurus. To prevent an uncontrolled spread of the virus, the DOH and Inter-Agency Task Force (IATF) for the Management of Emerging Infectious Diseases agreed to put Metro Manila and other key cities under Alert Level 1 until August 15.

Keep safe, get vaxxed and boostered!

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Thursday, August 4, 2022

NEWS THIS WEEK

 

03 August 2022

02 August 2022

  • IT-BPM expansions to drive up office demand to pre-pandemic levels – read article…
  • Makati City aims to be PH’s Silicon Valley – read article…
  • New customer service robot to help improve Aboitiz’s operations – read article…
  • PH’s COVID-19 new cases up 24%, NCR to stay under Alert Level 1 – read article…

01 August 2022

`29 July 2022

28 July 2022

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Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.