The Outsourcing Week in Review: Wednesday, July 8, 2020

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THE WEEK IN REVIEW

The Philippines’ private and public sectors have combined efforts to lay out the latest roadmap for a national rollout of the outsourcing industry. The five-year “Digital Cities 2025” program identifies cities that will be prioritized for internet connectivity, re-skilling efforts, and digital education for the talent pool and outsourcing development.

And it’s not just the provinces migrating online – last week the nation’s outsourcing captains of industry went online for an international webinar promoting Philippine outsourcing to the world. In the webinar entitled “Philippine IT-Business Outsourcing Opportunities: Global Business Processes Powered by the Philippines”, The IBPAP President Rey Untal, said that “the options will be immense for anybody who will choose the Philippines as a premier location to base their operations in.”  The event was opened by the Philippine Ambassador to the US, H.E Jose Manuel G. Romualdez. Watch a replay of the webinar and read the presentation slides here.

As economic uncertainty grips the country, there is a renewed plea for more new economic zones for Metro Manila.  Since the second half of 2019, Malacañang has banned any new economic zone commissions in Metro Manila in efforts to encourage more BPOs to set up in the provinces. While the concept of encouraging provincial penetration is good in theory, David Leechiu, CEO of Leechiu Property Consultants has announced that this strategic move will only benefit India. He said that the Philippine BPO industry would become uncompetitive to India because it would not generate enough office space to support any increase in new investments in the country.

The government is now starting to lean towards prioritizing economic recovery in the COVID fight.  The Department of Trade and Industry (DTI) Secretary Ramon Lopez said that they may allow the opening of more sectors or increase the capacity of those already open even without moving to the modified general community quarantine (MGCQ).  Separately, the Department of Finance (DoF) called to move Metro Manila and Calabarzon – which accounts for 67 per cent of the economy – to the lower-grade MGC Quarantine. The Bangko Sentral ng Pilipinas (BSP) agreed, with BSP Governor Benjamin Diokno announcing that at least 70 per cent of the Philippine economy should now move forward despite the threat of COVID-19. And last night, Presidential Spokesperson, Harry Roque, announced ‘no alternative but to reopen economy amid a spike in new COVID-19 cases’.

Moving forward may not necessarily mean going back to your physical office. This week, Senator Imee Marcos has filed a new bill proposing that mandatory work-from-home (WFH) arrangements be offered to employees “whose physical presence in the workplace is not necessary for the completion of his/her job, and who has been with the company for at least one year.” Should the bill be passed, employers have less power to require physical attendance at ‘work’.  The bill proposes that employers can only require ‘employee attendance in the workplace within office hours during weekdays should the physical presence of the employee be necessary for a particular task, but it should not be more than twice a week’.

However, four months into the lockdown, some WFH employees are still being challenged by the Philippines’ limited internet connectivity. According to the Department of Information and Communications Technology (DICT), the Philippines has the slowest internet speed among the five original members of the Association of Southeast Asian Nations (Indonesia, Malaysia, Singapore, and Thailand). To speed up the digital transformation, Alibaba Cloud, the digital technology division of Alibaba Group, announced the formation of the Alibaba Cloud Philippines Ecosystem Alliance. The alliance is a joint initiative with local ecosystem partners to promote cloud adoption and utilization of analytics intelligence.

In Cebu City, the Philippine Economic Zone Authority (PEZA) assures its stakeholders of unhampered operations in the Mactan Economic Zone (MEZ) amid stricter border controls in the province. According to PEZA general director Charito Plaza, extra expenses like temporary employee housing and shuttle services during the community quarantine can be deducted from the locators’ five per cent Gross Tax Income Incentive. In Davao City, the local government is monitoring all BPO establishments on health safety protocol compliance as more workers return to their offices. Bacolod City, on the other hand, is proud to be part of the top “Centers of Excellence” for IT-BPO along with other five key cities, as recognized by the DICT.

Overseas, subsidiaries of Indian firms in China are caught in a crossfire. India has released a strong anti-China sentiment by announcing a temporary ban on 59 Chinese apps on Monday. Companies fear that these actions could lead to retaliatory measures, with experts saying that Indian software service providers in China now risk losing projects.

In the UK, outsourcing giant Accenture is cutting 900 UK-based jobs due to the current economic climate. In a message, Accenture said, “We went into the crisis with an overcapacity of people relative to demand. The crisis has caused additional strain on the business due to lower demand and reduced national attrition.”

Ending with some bittersweet economic news – according to a new report by First Metro Investment Corporation, despite the Philippines seeing its first annual GDP decline in 22 years there growing optimism that there will be a strong rebound in 2021. The report predicts that the country may reach an impressive eight to nine per cent GDP expansion next year (though much of the growth is just the V-shaped recovery of the prior year’s contraction). Inflation is also continuing its downward trajectory, dropping to 2.1% in May 2020, compared to 3.5% in May 2019.

Wednesday, July 8, 2020

NEWS THIS WEEK

7 July 2020

• Accenture to lay off 900 UK staff – read article…
• Areas under GCQ may shift to a more relaxed lockdown by July 16 – read article…
• Majority of businesses increase or maintain digital transformation spend amid pandemic – read article…

6 July 2020

• Davao City monitors all BPO firms’ health safety protocols – read article…
• More sectors possible to reopen even during GCQ – read article…
• BPO sector goes online to promote the industry to the world – read article…

3 July 2020

• Over 70% of PEZA firms enjoying tax perks resume operations – read article…
• Central bank says 70% of PH economy can move forward – read article…
• Alibaba Cloud Philippines Ecosystem Alliance formed to accelerate digital transformation – read article…
• Bacolod City still ‘Center of Excellence’ for IT-BPO – read article…

2 July 2020

• Subsidiaries of Indian firms in China get caught in crossfire – read article…
• Employees struggle with WFH in internet-challenged Philippines – read article…
• PEZA assures stakeholders of ‘unhampered’ Mactan ecozone operations – read article…
• PH may hit nine per cent GDP expansion in 2021 – read article…

1 July 2020

• Proposed new bill aims WFH arrangement to be mandatory – read article…
• ‘Digital cities’ partnership seen to attract P70 billion in investments – read article…
• POGOs can leave if unable to pay taxes – Roque – read article…
• Metro ecozone ban likely to benefit India – read article…

Read more Inside Outsourcing Newsletters here:

1. The Outsourcing Week in Review: July 1, 2020
2. The Outsourcing Week in Review: July 15, 2020