The Outsourcing Week in Review: Wednesday, November 25, 2020

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THE WEEK IN REVIEW

On November 15, the Philippines joined the Regional Comprehensive Economic Partnership (RCEP).  What does the RCEP mean for the Philippine Business Process Outsourcing (BPO) industry?

Last week, the 10 Southeast Asian countries, as well as South Korea, China, Japan, Australia and New Zealand signed up to the RCEP, forming the world’s largest trading bloc which covers nearly a third of the global economy. While the RCEP remains promising for regional trade, the Philippine BPO industry relies mainly on clients from the US, UK, and other major developed countries that are external to the RCEP region. How can the Philippines utilize its RCEP membership to the utmost advantage of its economy and outsourcing industry?

>> Read the full article: RCEP and the PH Outsourcing Industry

US President-elect Joe Biden has released anti-outsourcing statements in the past, and his protectionist stance could dampen the prospects of the Business Process Outsourcing (BPO) sector. In a BusinessWorld article, Outsource Accelerator CEO, Derek Gallimore allayed concerns, saying that outsourcing still has good potential to grow possibly despite the new president as businesses across the globe will need to slash costs in the face of the COVID-induced recession and outsourcing is a perfect solution for that.

The IT and Business Process Association of the Philippines (IBPAP) revised its targets for the outsourcing industry for 2022. The association now expects a 2.7 to 5 per cent headcount growth in the period – or a new total of 1.37 million to 1.43 million full-time employees. In addition, it projects industry revenues to amount to $29.09 billion with a compound annual growth rate of 3.2 to 5.5 per cent in the next two years. Further, IBPAP’s commissioned study with The Everest Group revealed that the country’s BPO sector will perform better than the Philippine economy this 2020. Not everyone is celebrating though. On a more sombre note, ING Bank projected that Philippine economy will remain in recession until at least 2021 amid the COVID-19 pandemic, as the country’s Gross Domestic Product (GDP) contracted by 10 per cent from January to September.

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According to tech hiring company Kalibrr, if continued hiring activity is any indication, the outsourcing industry is currently going through “robust” growth amid the pandemic. CEO Paul Rivera said the sector “has been growing during this pandemic,” as BPO job opportunities have reached 50,000 to 75,000 so far in Metro Manila alone. Hopefully, more opportunities make its way to the Philippines, as the country once again proves its outstanding English proficiency. International company Education First’s English Proficiency Index 2020 ranked the Philippines’ English competency as second in Asia (next only to Singapore), and 27th on the global proficiency index.

Things are also looking up for the Philippines, as the Philippine Economic Zone Authority (PEZA) recently approved 34 projects that are expected to generate close to P15 billion in investments and 3,893 employment opportunities. Of the 34 projects, 10 are for export activities, seven are in the information technology (IT) sector, seven are for facilities enterprises, two are for logistics, and eight are for the development or operation of economic zones or IT centers. In addition, the promotions agency approved the construction of four new BPO towers at the SM City Clark complex in Pampanga. The towers’ expected date of completion is May 2021.

PEZA continues to give out perks and discounts to encourage investors and retain existing enterprises. Registered companies under the agency can now avail the five per cent gross income tax incentive to include COVID-related expenses as direct costs to maintain operations during the quarantine period. Temporary housing or accommodations to employees, shuttle services, port charges, disinfection requirements and personal protective equipment (PPE), as well as coronavirus disease (COVID) tests for employees are considered as direct costs. Additionally, BPO companies are allowed to continue earning 90 per cent of their revenues from work-from-home arrangements until September 21, 2021 – when apparently the state of national calamity in the country is scheduled to end.

Speaking of alternative work arrangements, the House of Representatives recently approved – on second reading – a bill seeking to allow employees in the private sector to work for 35 hours a week maximum. Under the bill, employers may implement a 35-hour workweek, provided that terms and conditions agreed upon are not less than the minimum labor standards set by law.

In other news, Tata Consultancy Services (TCS) announced its new IT deal with leading home improvement company Kingfisher Plc in the UK and Europe. Through its Machine First Delivery Model (MFDMTM), the company will provide consolidated application management and infrastructure support services to accelerate Kingfisher’s transformation to be a digital-first organization.

Overseas, in an unusual development, Mexico’s President Andrés Manuel López Obrador called for a ban on outsourcing. According to the president, he will propose legislation to Mexico’s congress that would ban subcontracting or outsourcing of jobs by private companies, except with government authorization. The proposal drew criticism from business groups when López Obrador first mentioned it in late October, saying that the change would further harm Mexico’s economy when it is still reeling from the effects of the pandemic.

 

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Wednesday, November 25, 2020

NEWS THIS WEEK

 

24 November 2020

23 November 2020

20 November 2020

19 November 2020

18 November 2020

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