The Outsourcing Week in Review: Wednesday, July 1, 2020

Welcome to Inside Outsourcing: The Outsourcing Week in Review

THE WEEK IN REVIEW

With COVID continuing to ravage the global economy the outsourcing and economic news presents a mixed picture this week.

President Rodrigo Duterte announced late Tuesday night that Metro Manila will remain under General Community Quarantine (GCQ) for another two weeks until July 15. Under GCQ, most industries may operate, albeit under tough restrictions  and capacity limitations. Leisure and amusement services remain closed.  Most of the country is lowered to Modified GCQ (MGCQ), while Cebu City, due to an increase in cases, remains at the stricter Enhanced Community Quarantine (ECQ) level.

Philippine government agencies are on a charm offensive in efforts to encourage further foreign investment into the country.  In a conference this week, Energy Secretary Alfonso Cusi offered the country as “your gateway to the Asia-Pacific region”, cited the recent “A-“ credit rating upgrade from the Japan Credit Rating Agency and added that “there will be many new opportunities for investors to explore as a result of the country’s increasing power demand, expanding industries and growing population.”

Despite the positive signs, the International Monetary Fund (IMF) projects that the Philippine economy will contract by 3.6% this year due to the pandemic. The projection is a downgrade of 4.2 percentage points from its earlier forecast of 0.6% growth this year in its April report. The Board of Investments (BOI) is expecting capital inflows to recover by the second half of the year, as investment projects that were pledged before the quarantine will be rolled out by then. Trade Secretary Ramon Lopez said that the investments are the usual BPO investments on financial services, but most of the leads are really focused on manufacturing.

According to Labor Secretary Silvestre Bello, four million – or 10% to 15% – of the country’s workforce will potentially lose their jobs by the end of the year due to COVID-19. Despite this, Bello is optimistic that the government can offset the negative impact, as the country is looking into the possible resurgence of workers in the Business Process Outsourcing (BPO) and construction industries. Initial growth of 6,000 jobs in the BPO industry is expected to put a “silver lining on job opportunities,” as many companies abroad are eyeing offices in Metro Manila, Clark, and Cebu areas. In addition, Singapore-based outsourcer, Everise has announced a 70% expansion of its Manila operations with aims of adding 2,000 work-from-home (WFH) employees.

The BPO sector has remained optimistic throughout the pandemic. The IT and Business Process Association of the Philippines (IBPAP) said almost half of the companies it surveyed are still optimistic about growth this year, with strong demand from the healthcare, telecoms, e-commerce and logistics sectors. Teleperformance, for example, is planning to open a new office in Cavite by the third quarter of the year. The firm is also planning on expanding its existing operations in Quezon City.

While most companies are looking forward to a ‘new normal,’ there are still apparent issues of labor abuse related to the WFH arrangements implemented by businesses. The Makabayan bloc – a coalition party in the PH House of Representatives – filed House Resolution No. 997 this week to conduct an inquiry on the matter. The resolution focused on the BPO industry and cited the issues faced by WFH employees such as lack of logistical assistance, longer working hours, and passing on of internet and utility expenses onto workers, among others.

For those interested in tax incentives ‘for a good cause’, basic education committee chair Roman Romulo has offered corporations to donate online learning tools to public school students – in return for a 150 per cent tax-deduction via the Adopt-a-School Program (ASP). BPO companies are encouraged to donate brand new or second-hand desktop computers or laptops, and those in the telecom sector can sponsor free data plans to facilitate remote learning over the internet. Editor’s note: We aren’t sure if PEZA is onboard with this with their complex disposal rules for hardware.

Speaking of taxes, the POGO sector is now realising that they aren’t eligible for a free ride.  Two more Philippine Offshore Gaming Operators (POGO) have left the country – with 13 sub-licensee service providers also closing shop – and more poised to exit amid tax “issues” with the government. The Department of Finance claims that government revenues from POGOs should have generated as much as P20 billion annually, but collections only reached P6 billion in 2019. POGOs have argued that they should not be subject to such taxes as they are non-resident corporations.

Following the dramatic loss of US$2.1bn and subsequent collapse of longstanding fintech, Wirecard, it seems like the Philippines is off the hook at least.  The German payments company is now under investigation for serious fraud, the CEO is under suspicion and the company now admits that US$2.1 billion it had booked in its accounts “likely never existed.” The Philippines’ Anti-Money Laundering Council (AMLC) has said it would conduct a “swift and thorough investigation” into the matter, while the Bankers Association of the Philippines (BAP) released a statement saying that the Philippine financial system is stable despite the financial scandal.

In other news, the 32-year old Filipino-Australian Melanie Perkins has become Australia’s third-richest – and youngest – billionaire.  The founder and CEO of Canva – an online design platform –  recently raised $60m funding at a company valuation of US$6bn, valuing Melanie’s stake at $1.3bn.  The lesser-known story about Canva is that the company has been largely built and operated by a Filipino team based out of Manila.

Starting from humble beginnings in 2014, Canva opened its Manila office with just eight staff and has since grown to over 250 people. Thanks to Canva’s world-class Philippine operation, Perkins has achieved her goal of “provid[ing] a free platform that anyone across the world could use.” As of June 2020, Canva has over 30 million monthly users worldwide.

Wednesday, July 1, 2020

NEWS THIS WEEK

30 June 2020

• POGO firms keen to exit PH, says PAGCOR – read article…
• Private businesses urged to donate online learning tools for tax perks – read article…
• BPO firm to continue WFH until September this year – read article…

29 June 2020

• New BPO jobs to propel Cebu’s recovery in office supply and leasing – read article…
• Canva CEO hailed as Australia’s youngest billionaire, thanks to outsourcing – read article…
• Economic growth to bounce back by 9.4% – read article…

26 June 2020

• DOLE, IBPAP to help OFWs get BPO jobs – read article…
• Many BPO firms expecting growth and expansion despite COVID-19 – read article…
• BPOs scale down upskilling program to 1000 employees – read article…
• Gov’t encourages firms to invest in the Philippines – read article…

25 June 2020

• Teleperformance plans to set up Cavite office – read article…
• 4M Filipinos may lose jobs and 2K firms to close shop this year due to COVID-19 – read article…
• BOI expects investment recovery by second half of the year – read article…
• IMF projects PH economy to shrink further by 3.6% – read article…

24 June 2020

• Singapore-based BPO firm to hire 2000 Filipino staff – read article…
• 6K BPO jobs available to cut down unemployment, says Bello – read article…
• POGO revenue forecast set at P20B; actual 2019 collection only P6B – read article…
• House prioritizes BPO sector in seeking inquiry regarding WFH-related issues amid pandemic – read article…

Read more Inside Outsourcing Newsletters here:

1. The Outsourcing Week in Review: June 24, 2020
2. The Outsourcing Week in Review: July 8, 2020