The Outsourcing Week in Review: Wednesday, November 4, 2020

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THE WEEK IN REVIEW

Metro Manila is at risk of record-high office vacancy rates as the outsourcing industry, Philippines Offshore Gaming Operators (POGOs) and regular businesses shed space in the COVID-19 aftermath.

According to property consultancy firm Colliers Philippines, vacancy across Metro Manila could reach 8.3 per cent as they predict a spiralling downward trend in leasing – precipitated mainly by a vast exodus of POGOs – with a negative net take-up in the third quarter of 2020 of 191,300 square meters (2.1 million square feet). These views are supported by the third quarter property market report by real estate services company KMC Savills.  The report revealed that office occupancy in the metropolis declined for the second straight quarter, with nearly 47,800 square meters of office space vacated during the period. KMC Savills managing director Michael McCullough said that if tough lockdown protocols would be reimposed, the vacancy rate could worsen to 15 per cent.

Metro Manila’s office real estate sector isn’t the only one struggling. As reported by global real estate firm JLL Philippines, the pandemic has softened the demand for office spaces in Davao. The pre-commitment level for the office segment in the city declined. However, the firm is seeing a more diversified demand profile for the area in the next couple of years, led largely by outsourcing and offshoring companies.

Despite rising vacancies, the Business Process Outsourcing (BPO) industry seems to be thriving under the new normal. This week, outsourcing giant Teleperformance launched its 22nd facility in Bacoor, Cavite. It also started the expansion in Quezon City that will open up at least 3,000 new jobs for Filipinos. At the launch of its Cavite office, Teleperformance COO Mike Lytle projected that the country’s Information Technology-Business Process Management (IT-BPM) industry will grow five to seven per cent in 2021. In addition, US-based BPO company Afni Inc. formally opened its third active site in Quezon City. Afni President and Chief Executive Officer Ron Greene said that continuing to expand their Philippines’ operations is “key to Afni’s long-term growth strategy.”

In the Visayas region, Cebu IT-BPM Organization Foundation Inc (Cib.O) President Gregg Gabison said that the sector continues to blossom despite the challenges brought by the pandemic due to the leeway granted by the Philippine Economic Zone Authority (PEZA). Gabison noted that in spite of the restrictions the industry has shown resilience and innovation, citing one large outsourcing company which had established four mini pop-up sites outside of Cebu City to better accommodate their employees coming from other areas.

The Philippines “seems to have flattened the curve with daily virus cases down to below 2,000 in the past two weeks.” With this, former senator and Philippines’ richest man Manny Villar thinks that the relatively low figures should prompt the government to further reopen the economy “to restore jobs and prevent thousands of small establishments and retail outlets from permanently closing down.”

The Bangko Sentral ng Pilipinas (BSP) is projecting the inflation rate to fall below the two-per cent level for the last month of December extending up to January next year. BSP Deputy Governor Francisco G. Dakila Jr. explained that inflation below two per cent vis-a-vis a three-four per cent target is only temporary.  RCBC chief economist Michael Ricafort has forecast a sustained rise of the country’s balance of payment (BOP) surplus which rose to USD6.88 billion in end-September, benefiting the peso and the foreign reserves. In a report, Rizal Commercial Banking Corporation (RCBC) the economist said that “going forward, the sustained BOP surpluses may lead to new record high [gross international reserves] well above USD100 billion in the coming months, thereby providing greater cushion/support/buffer for the peso exchange rate vs. the US dollar especially vs. speculative attacks.”

Overseas, a coronavirus outbreak was reported to hit the AT&T call center in Tustin, California. One-fifth of the 150-strong workforce have tested positive for the virus, including one person who may have died of the disease. Employees held a demonstration outside the AT&T call center building, complaining that the telecommunications giant “has not done any contact tracing.” While AT&T spokesman Jim Kimberly in an email said that the company “has implemented stringent safety procedures,” employees said that they feel “disillusioned and let down.”

US authorities have also charged 60 people in a widespread magazine telemarketing scam that have netted $300 million from more than 150,000 elderly and vulnerable people across the country. U.S. Attorney Erica MacDonald called the scam the largest elder fraud scheme in the country, which has been operating for over 20 years.

Wednesday, November 4, 2020

NEWS THIS WEEK

3 November 2020

• Quess revenue growth reaches US$352K – read article…
• IT-BPM companies in Cebu thrive under the new normal – read article…
• BPO firm Afni opens newest site in PH – read article…
• Receding PH infection rate justifies further reopening – Villar – read article…

30 October 2020

• $494M net ‘hot money’ exited Philippine in September – read article…
• CTA junks BPO firm’s P17-M VAT refund claim – read article…
• BSP sees below 2% inflation in December, January – read article…
• Metro Manila faces highest office space vacancy since global financial crisis – Colliers – read article…

29 October 2020

• 2 BPO operators to hire thousands of employees for new job locations – read article…
• BPO sector to grow up to 7% in 2021 – read article…
• Office space vacancies continue to rise in Metro Manila – read article…
• $300M nationwide telemarketing fraud scheme operators arrested in Kansas – read article…

28 October 2020

• Davao office market weakens amid pandemic – read article…
• PH now allows 100% foreign ownership in large-scale geothermal projects – read article…
• Economist eyes sustained rise of BOP surplus – read article…
• COVID outbreak hits Tustin call center; employees frustrated over work conditions – read article…

Read more Inside Outsourcing Newsletters here:

1. The Outsourcing Week in Review: October 28, 2020
2. The Outsourcing Week in Review: November 11, 2020