June 30, 2020 | 12:34 am
Many business process outsourcing (BPO) companies expect flat growth or a contraction this year, while some big businesses still hope to grow by single-digits amid the pandemic, according to an informal poll conducted by the Information Technology and Business Process Association of the Philippines (IBPAP).
The IBPAP polled more than 70 member companies earlier this month, wherein 18% of the respondents said they expect revenues to contract and 36% see business to remain flat this year.
The companies that expect contraction represent four percent of the total employee headcount of the polled companies.
On the other hand, 46% of the companies polled anticipate about 3-7% growth this year.
IBPAP Chief Executive Officer and President Rey C. Untal in an online interview on Wednesday said they conducted this “pulse” survey, which does not serve as an official projection in the absence of a formal study.
“The smaller companies are the ones that are having a difficult time,” he said. “It’s understandable. When you are small and you have a few contracts, when you get hit in one contract, it’s very difficult to get them covered by other contracts,” he added.
Smaller companies, have struggled as the lockdown caused disruptions in their operations.
Mr. Untal noted bigger companies can better cope with the challenges, because they can shift their workforce to other projects after they lose contracts.
“‘Travel, hospitality and tourism have been really hit hard,” he said. “But healthcare companies continue to hire, while telecommunication companies thrive because of collaboration tools, he added. “People are hungry for internet capacity.”
The growth in the logistics, financial services and e-commerce industries are also contributing to outsourcing growth.
Micro-, small-, and medium-sized enterprises represent 42% of the industry’s 1,300 companies, Mr. Untal said. The industry employs more than a million Filipinos.
The healthcare outsourcing sector, as signaled by industry group Healthcare Information Management Association of the Philippines in May, is growing and boosting its automation capabilities.
IBPAP in November tempered its targets to a 3.5-7.5% compounded annual growth rate for revenue for 2020 to 2022, revisiting its projections after geopolitical changes, automation, protectionist policies, and rapid transformation of business models. The goal was originally set at nine percent in 2016.
With the easing of lockdown restrictions, more employees are able to return to work at outsourcing companies.
The June survey found 81% of outsourcing employees are productive, with 59% under a work-from-home scheme while 22% work on site.
At the beginning of the lockdown in March, 40% of employees were working from home while 10% were working on site, increasing to 58% work from home and 15% on site by May.
Mr. Untal said companies are restricted from scaling to full capacity by limitations in internet and data protection.
“There’s a limit also to how much a company can do in a work-from-home setup, because of several considerations. One consideration obviously is the infrastructure whether the reliability and speed of the internet at the location of the employees are sufficient,” he said.
Outsourcing companies also face problems with data security, as some clients are reluctant to approve a shift to a work-from-home setup.
“Those are typically the kinds of work that continued in the on-site skeletal setup,” Mr. Untal said. — Jenina P. Ibañez
Source: https://www.bworldonline.com/bpos-face-slowing-growth-this-year/