The Outsourcing Week in Review: Thursday, May 12, 2022

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THE WEEK IN REVIEW

Ferdinand “Bongbong” Marcos Jr. is set to be 17th president of the Republic of the Philippines. Despite his landslide victory, Eurasia Group Practice Head for South and Southeast Asia Peter Mumford said that this does not guarantee that he will be a “popular and/or effective leader.” Mumford stated that it will be interesting to see if Marcos Jr. would address the concerns over the increasing “corruption or cronyism” in the country or if he will appoint close family and friends to key positions in the country. Bongbong’s win will mark the Marcos family’s unprecedented comeback to the highest leadership role in the country 36 years after they were ousted for their authoritarian rule and corruption during the EDSA People Power Revolution.

At the same time, economic research giants believe that a Marcos-led administration could bring potential risks to the Business Process Outsourcing (BPO) industry in the Philippines. Capital Economics Ltd Emerging Markets Economist Alex Holmes said that Marcos’ plan to mirror President Rodrigo Duterte’s projects and programs could lead to the economy “underperforming again” in the global market. Both Pantheon Macroeconomics and Nomura Global Research stated that the presidential hopeful’s family ties, disqualification, and tax evasion cases could impact the Philippines’ attractiveness to foreign investors. Lastly, think tank IBON Foundation is questioning Marcos Jr.’s lack of economic platforms and involvement in passing laws while he was seated as a senator from 2010 to 2016.

Meanwhile, Senatorial candidate Francis “Chiz” Escudero is urging BPO companies to consider expanding to Mindanao. Escudero said that BPOs are the “best source of employment” as they have shown to be “nearly crisis-proof” despite the pandemic. The politician added that the local government units (LGUs) can work with BPO companies for job matching and skills development to spread out employment opportunities across the regions. According to the latest report by the Philippine Statistics Authority (PSA), the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) registered the lowest labor force participation rate (LFPR) at 55.6%.

In other news, the demand for new office spaces in the Philippines is projected to spread outside the National Capital Region (NCR) in the next few months. Leechiu Property Consultants (LPC) Executive Director Phillip Anonuevo stated that most companies — especially call centers — are looking for new labor markets outside the capital and are keen to transfer at least 20% of their operations in case of another potential lockdown. Property investment firm Colliers projected that, aside from NCR, the 2022 office space demand will be focused on Cebu, Pampanga, and Iloilo.

Since we are now on the topic of expansions, New York-based Information Technology (IT) company Mphasis Corp. is planning to set up its BPO operations in the Philippines following suggestions from their banking and insurance clients. Mphasis Chief Executive Nitin Rakesh said that they are looking to recruit up to 2,000 IT call center employees in the country. Department of Trade and Industry (DTI) Undersecretary Ceferino Rodolfo stated that Mphasis could tap into education institutions or returning overseas Filipino workers to look for skilled employees to add to their workforces. The Philippines accounts for 13% of the global IT-BPM market. Meanwhile, outsourcing firm Alorica is also hiring at least 400 people for their first-ever connection hub in the Philippines. Alorica Asia-Pacific Operations President Bong Borja said that this recruitment activity is a “demand-driven opportunity” that could potentially increase to 2,000 opened job positions. Located in Candon, Ilocos Sur, the connection hub will be a centralized location that will connect them to remote teams that are tasked with recruiting, training, IT support, culture, and engagement activities, among others.

Global business solutions provider Eastvantage (EV) recently launched its second inspiration center in the central business district of Ortigas as part of the company’s 5-year Strategic Plan (5YSP) to increase its local and global footprint. EV Vice President for Shared Services Beth Ballesteros that the new office location allows the firm to readily expand as they are expecting an influx of demand for offshore services from both existing and new clients. Ballesteros added that Ortigas’ “central location, community of professionals, along with commuter-friendliness” gives Alorica the advantage to attract top-notch talents from both the North and East of Metro Manila and even beyond.

Despite these new ventures, the Philippine Economic Zone Authority’s (PEZA) investment approvals dropped by 67.9% to PHP8.14 billion (US$`55 million) in Q1. PEZA Director-General Charito Plaza said that they are expecting this decline given the ongoing pandemic, the Russia-Ukraine war, and the upcoming national elections. Plaza explained that investors are waiting for the final election results to know if new policies will be adopted by the upcoming administration. PEZA also sounded the alarm on “underground” IT-BPO companies that were competing for talent with PEZA-registered firms. Plaza stated that the salaries that these unregistered entities give — ranging from P30,000 to P40,000 (US$571 to US$762) — and the opportunity to work-from-home (WFH) are attracting applicants more than registered businesses. Due to this, Plaza emphasized the need to institutionalize the WFH arrangement for IT-BPO firms to compete with underground agencies, as well as other countries that are adopting remote and hybrid working arrangements.

DTI Secretary Ramon Lopez is leaving this decision to the next administration. In an interview with ABS-CBN News Channel, Lopez said that although they want to support hybrid work, their “hands are tied” since PEZA law mandates the activities of its member companies to be conducted within economic zones. The DTI chief suggested that firms who want to continue their hybrid model also have the option to register with the Board of Investments (BOI) because the agency has “no limitations in terms of location.”

For our weekly dose of good news, online hiring in the Philippines grew by six per cent in March 2022. According to data from Monster Employment Index (MEI), the IT and BFSI (Banking, Financial Services, and Insurance) sectors led the online recruitment activity with 55% and 21% y-o-y increase, respectively. On the other hand, the education and courier/transportation sectors dropped by 22% and 24%, respectively. Meanwhile, online demand for professionals increased in eight out of 10 functional areas monitored by the index.

The Philippines is set to return to its pre-pandemic growth levels this year as the country continues to recover from the effects of COVID-19 to the economy. During the Philippine Consulate General town hall meeting in New York City, National Economic and Development Authority (NEDA) Director-General Karl Kendrick Chua said that the “solid fundamentals” implemented during the Duterte administration helped the country rise from the adverse economic impacts brought on by the pandemic. This includes signing the Executive Order (EO) No. 166 which fully opens the economy, reduces travel restrictions, and accelerates the vaccination program in the country. The NEDA chief also cited the amendments made to the Retail Trade Liberalization Act, Foreign Investment Act, and the Public Service Act, which opened company ownership to foreign nationals. Additionally, all regions in the country reported positive economic growth in 2021 following great contractions last 2020. According to data from the PSA,  Region IV-A (CALABARZON) led the economic recovery with 7.6% while NCR — which accounts for around 40% of the country’s gross domestic product (GDP) — went up by 4.4%. PSA-NCR Regional Director Paciano Dizon said that the capital’s slow growth is mainly due to the strict lockdowns and restrictions in the region during the year.

Circling back to the elections, financial services company Moody’s Analytics said that whoever wins the presidency will have to deal with managing the country’s rising inflation. In a commentary, Moody’s stated that the incoming president will need “to treat inflation as a top economic priority” as its management is slowly becoming the key policy point in the country’s economy. This comes after the Bangko Sentral ng Pilipinas (BSP) announced a potential June 24 Monetary Board adjustment of the policy rate.  Last month, the Philippines’ inflation rate surged to its highest reading since January 2019 to 4.9% on account of the impact of the Russia-Ukraine war on the prices of oil and non-oil commodities.

The Philippine Stock Exchange is expected to react to the outcome of the national elections. Philstocks Financial Senior Supervisor Japhet Tantiangco said that PSEi’s 50-day exponential moving average (EMA) already crossed below its 200-day counterpart “which signals a possible further decline ahead for the local bourse.” Aside from looking out for the next administration’s policies, Tantiangco noted that investors are set to observe the Philippines’ Q1 GDP to see if it kept its momentum after the 5.6% growth last year.

And now we begin, yet another chapter!

Thursday, May 12, 2022

NEWS THIS WEEK

1 May 2022

• Office space demand to expand outside NCR — LPC – read article…
• IT, BFSI boost PH online hiring to 6% – read article…
• EVIDA to attract hi-tech investments to PH – read article…
• PEZA flags ‘underground BPOs’ – read article…

10 May 2022

• Pre-pandemic growth to be restored in 2022 — NEDA chief – read article…
• Initial count shows Marcos set to be next PH president – read article…
• Election results to impact PSEi – read article..
• New PH president to deal with high inflation — Moody’s – read article..

06 May 2022

• Marcos presidency will pose risks to PH’s BPO industry – read article…
• BPO expansion in Mindanao will boost employment in the region — Gov. Escudero – read article…
• Next admin could accommodate hybrid work requests in ecozones — DTI chief – read article…
• PEZA investments approval down 67.9% in Q1 – read article…​

05 May 2022

• Eastvantage launches new inspiration center in PH – read article…
• Alorica opens 400 jobs in Ilocos – read article…
• NY IT firm Mphasis Corp to set up BPO operations in PH – read article…
• ​PH regions reached economic recovery in 2021 – read article…

Read more Inside Outsourcing Newsletters here:

1. The Outsourcing Week in Review: May 10, 2022
2. The Outsourcing Week in Review: May 17, 2022