Outsourcing sector lost P120B due to lockdown

outsourcing sector lost p120b due to lockdown - Outsourcing sector lost P120B due to lockdown
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The outsourcing sector suffered around P120 billion in losses due to missed opportunities and unplanned expenses during the lockdown. — BLOOMBERG

THE OUTSOURCING SECTOR lost around P120 billion due to missed opportunities and unplanned expenses during the lockdown, an industry group said.

Information Technology and Business Process Association of the Philippines (IBPAP) President and Chief Executive Officer Rey E. Untal said the industry has been spending on employee accommodations, shuttle services, and work-from-home requirements in the past eight months of lockdown. 

The amount also includes revenue losses due to reduced operational capacity, Mr. Untal said at the first day of the International Innovation Summit 2020 on Wednesday.

The government allowed outsourcing firms to continue operations during the stricter lockdown, provided that they offer accommodation and shuttle services to employees working on-site as safety measures during the public health crisis. Organizations were also encouraged to implement work-from-home measures.

Mr. Untal in June said that companies were not able to scale operations to full capacity because of limitations in internet and data protection for at-home work.

But operations have since increased, with over 95% of employees working either at home or on site, Mr. Untal said at Wednesday’s summit. Only half of the outsourcing workforce were productive at the start of the lockdown in March, with 40% working from home and 10% working on site.

The pandemic could, however, further temper the industry’s revenue projections, which were lowered last year.

IBPAP in November last year tempered its revenue target to a 3.5-7.5% compounded annual growth rate to $29-32 billion for 2020 to 2022. The goal was originally set at nine percent in 2016, but was revisited due to the effects of geopolitical changes, automation, protectionist policies, and rapid transformation of business models on the industry.

The industry made $26.3 billion in revenues last year, or 7.1% higher than the previous year. This put growth at the higher end of the industry group’s tempered projections, Mr. Untal said.

“But as we enter 2020, we were confronted with a new set of obstacles that affected not just the Philippines but the rest of the world as well,” Mr. Untal said.

“The rapid spread of the coronavirus disease pushed governments to implement strict lockdowns that curtailed economic activity and severely impacted unemployment, which unfortunately, had immediate and devastating effects on global economies,” he added.

IBPAP may release its new official revenue and employment projections by Nov. 20, but a “pulse” survey on 70 member companies in June found that 18% of respondents expect revenues to contract and 36% sees business will remain flat this year.

The companies that expect contraction represent four percent of the total employee headcount of the polled companies, as Mr. Untal explained that smaller companies have a “difficult time” because they are harder hit by the loss of contracts.

Around 46% of the surveyed companies anticipate 3-7% growth this year.

Although the sector is not quite back to “business as usual,” Mr. Untal said the industry is one of the sectors that remained operational and continues to provide employment.

“There are over 30,000 job openings across the different sub-sectors, and since we’re basing this off on what is only available as public information plus select conversations with some country heads, we believe this number to be actually higher.”

The number of full-time employees in outsourcing grew 5.8% to 1.3 million people last year. The compound annual growth rate of employment for 2020-2022 was tempered in November last year to 3-7% to 1.42-1.57 million full-time employees, compared with an eight percent previous projection.

An outsourcing workers group in August asked the government to impose stricter penalties on companies that violate workplace health safety. — Jenina P. Ibañez

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