The Outsourcing Week in Review: Thursday, November 3, 2022

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Welcome to Inside Outsourcing: The Outsourcing Week in Review

THE WEEK IN REVIEW

While you’re all trick-or-treating, Inside Outsourcing is hard at work collating all the outsourcing news you need to know. Even the Halloween holidays can’t spook the outsourcing sector…

Half a million call center jobs are expected to be created across the Philippine countryside by 2028. According to the Contact Center Association of the Philippines (CCAP), full-time call center employees could increase from 1.3 million to 2.3 million with annual revenue of $49 billion in the next six years — half of which will be coming outside Metro Manila. CCAP President Mitch Locsin said this scenario could be achieved “with the right support and policy landscape.” The Philippine contact center industry now constitutes more than 40% of the global customer experience management (CXM) market and remains a very far number one market leader.

At the same time, Business Process Outsourcing (BPO) firms continue to lead office space absorption within and outside Metro Manila. In its latest market briefing, property consultancy firm Colliers Philippines revealed that office deals in Q3 reached 168,700 square meters (sq.m.). Outsourcing firms and traditional occupiers took 29,700 sq.m. of that total count. Colliers added that net absorption would revert to positive by year-end as the Philippine office market sustains its recovery from the pandemic.

Speaking of office usage, the Philippine Economic Zone Authority (PEZA) is giving its BPO members until December 31, 2022 to process their transfer to the Board of Investments (BOI). PEZA OIC Tereso Panga reminded the firms that the agency would keep their investment facilitation and revenue generation functions as well as their monitoring and reporting functions. Companies must also maintain an office inside PEZA-registered buildings or facilities. The transfer from PEZA to BPO will allow BPO firms to keep their tax perks while extending their work-from-home setup.

Accounting talent provider TOA Global recently appointed Chico Inong as its Country Manager for the Philippines. TOA Global CEO Craig Mansell said Inong’s appointment reaffirms their commitment to a “globally local leadership” and creates new global opportunities for Filipino accountants and bookkeepers. Before joining TOA Global, Inong held leadership positions over the last 20 years in multi-site operations, service delivery, and customer excellence. Meanwhile, call center services provider Executive Boutique Call Center (EBCC) and its sister company Select VoiceCom (SVC) received their SOC2 certifications. Both firms said that this certification highlights their commitment to providing “a robust level of computer security and information technology” to their clients. In addition to achieving the SOC2 milestone, EBCC and SVC also had their PCI and HIPAA certifications renewed, enabling the companies to continue handling their clients’ credit card payment information and private health information.

The demand for flexible workspaces could increase due to changes in the work-from-home (WFH) regulations in the Philippines. According to Collier’s data, flexible workspace vacancy in Metro Manila was at 20% in the third quarter, down from Q2’s 38%. Submarkets with significant seats available include Makati CBD, Fort Bonifacio, and Quezon City. Colliers stated that the increased remote work set up under the BOI should compel developers and tenants to “zero in on opportunities” in the flexible workspace market.

Calls for the shutdown of Philippine Offshore Gaming Operators (POGO) are intensifying! In a joint statement, the Foundation for Economic Freedom (FEF), the Makati Business Club (MBC), and the Management Association of the Philippines (MAP) said that POGOs “provided little economic benefit to the Philippines while leading to a spike in crime and earning the ire of mainland China.” While tax revenue from POGOs reached P4.44 billion (US$76 million) between January and August, it still falls short of the expected P32.1 billion (US$547 million) cited in the revised POGO bill signed into law by President Duterte in September 2021. Other property experts agree that a possible POGO ban will not negatively impact the office market. Real estate firm JLL said that a POGO exit would contribute to the rise of vacancy rates, but not in a sizable amount. Colliers Philippines added that transaction activity and demand in other sectors could easily offset the vacancies left by POGOs in the country.

In other news, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said that the Philippine government would continue to create a more enabling regulatory and investment climate to support businesses in the country. In his remarks at the US-ASEAN Business Council meeting, Balisacan highlighted the government’s reforms and policies to further stimulate investments, especially from the foreign business sector. The NEDA chief also stated that the government is looking to address the binding constraints in boosting growth and job creation in the manufacturing, construction, agriculture, tourism, IT-BPOs, and high-tech and creative sectors.

In line with this, the BOI is promoting the amended Foreign Investments Act (FIA) to attract more foreign investors in the country. Signed by former President Rodrigo Duterte, the amended law allows foreign investors to set up and fully own domestic enterprises in the Philippines. The BOI added that the amended FIA would also establish the Inter-Agency Investment Promotion Coordination Committee (IIPCC), which integrates all the investment promotion activities of various Philippine government bodies. Concurrently, PEZA aims to attract more investments in high-technology industries from Taiwan. PEZA’s Panga said the country could benefit from Taiwan’s tech advancement — particularly in electronics, machinery, petrochemicals, energy, and ICT products. He added that these planned investments would provide “ecozone product sophistication, export diversification, labor-intensive and high-skilled jobs, knowledge transfer, enhanced local supply chain, and creation of industry clusters.” As of July 2022, 108 Taiwanese companies are registered in PEZA, with total investments amounting to P32.87 billion (US$ 562 million).

The House Committee on Ways and Means declared their commitment to work with the Department of Trade and Industry (DTI) in setting up a Digital Investments Program. The committee’s chairman Albay 2nd district Rep. Joey Salceda said American investors requested this initiative during the US-ASEAN Business Council. Salceda also expressed that the new digital investments initiative could be a section of the DTI’s Strategic Investment Priorities Plan (SIPP).

The Philippine digital economy rose eight percent year-on-year to P1.87 trillion (US$32 billion) in 2021 as digital adoption continues amid the pandemic. According to data released by the Philippine Statistics Authority (PSA), the digital economy contributed 9.6% to the country’s gross domestic product last year. Meanwhile, PSA also revealed that the number of digital economy employees increased by 11.6% to 5.59 million individuals last year from 5.01 million employees in 2020.

The Philippine economy is on track to hit its 2022 growth target of 6.5% by the end of 2022 despite a “higher-than-target” 5.5 percent inflation. In its October market report, First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) Capital Markets Research said consumer spending would continue through Q4 in preparation for the Christmas season. The higher peso incomes of overseas Filipino workers (OFWs), BPO employees, and exporters are also expected to mute the negative effect of inflation. However, financial intelligence firm Moody’s Analytics said the inflation rate could accelerate faster in October to 7.4%. Moody’s Analytics Country Analyst for the Philippines Sonia Zhu said that their projection was based on “transport fare hikes and higher food prices amidst the typhoon season, which caused [extensive] damage to crop yield and disruption to supply chain.” Zhu also explained that “the easing of global energy prices may help to offset utility prices, but the impact of overall headline inflation will be limited.” The PSA is scheduled to report the October 2022 inflation no later than November 4.

Mask wearing is now voluntary across the Philippines. According to Executive Order (EO) No. 7, face masks will now be optional in outdoor and indoor settings. President Ferdinand Marcos, Jr noted that the country’s Southeast Asian neighbors and various governments worldwide have liberalized their mask mandates “with no significant increase in the number of Covid-19 cases recorded.” However, face masks will still be mandatory in healthcare facilities, medical vehicles, and public transportation.

Finally, we can see smiles across the country again!

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Thursday, November 3, 2022

NEWS THIS WEEK

 

02 November 2022

28 October 2022

 27 October 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.