Outsourcing Industry is Cautiously Optimistic of the Future, Urges Meralco Support for WFH Strategy

De-risking strategies of global companies amid the COVID-19 pandemic can bolster the growth of the Philippine IT and Business Process Management (IT-BPM) industry, with total headcount potentially exceeding the end-2022 forecast of 1.43 million direct jobs.

The role the power distributor and its fiber internet and data solutions unit, Radius Telecoms, plays is crucial to the success of this setup and the industry overall.

Rey Untal, President and Chief Executive Officer of the IT and Business Process Association of the Philippines (IBPAP)*, told an executive session organized by Meralco on September 2, that the surge of COVID-19 infections in other IT-BPM markets has forced many global firms “to employ de-risking strategies that resulted in movements in terms of accounts, footprint, and clients to our shores and other locations.”

He said the rebalancing adapted by these companies to minimize exposure in a single country could result in a Compound Annual Growth Rate (CAGR) that’s higher than the 5.5% that was originally projected in late 2020.

Last year, the Philippine outsourcing industry had a total headcount of 1.37 million and export revenue of $26.7 billion. Untal said IBPAP forecast for export revenue is around $29 billion by the end of 2022.

“For this growth potential to become a reality, there are several enabling conditions that need to be met and appropriate interventions that must be carried out,” said Untal.

These enabling conditions include continued improvement of skills, particularly in digital technology, acceleration of the country’s digital transformation, improving cost competitiveness and ease of doing business, and infrastructure development.

Untal said it will be crucial for utilities like Meralco and its fiber Internet and data solutions unit, Radius Telecoms, to provide the necessary infrastructure to allow a majority of outsourcing companies to continue with the current work-from-home (WFH) arrangement even after the pandemic. He said the WFH arrangement could be a permanent fixture of the industry since it has resulted in greater productivity, reduced absenteeism, and lessened turnover rate among employees.

“We will never go back to what it used to be when everything is delivered from megasites,” said Untal, noting the recent development of microsites that are closer to residential areas to give employees a place to go to when the internet connection is bogged down or there is a sudden power outage.

Radius and other telecom companies should accelerate the rollout of fiber optics networks and install more cellular sites to improve both fixed and mobile Internet connections, he said.

“On the part of Meralco, it is the next watch out for us. It is not lost in our peripheral vision, the risk that we carry. Now that we have a heavily decentralized operation capitalizing on a remote, work-from-home construct, we know that the risk for outages is higher,” said Untal.

“A sustainable internet infrastructure alone is not sufficient because we also need to ensure that power is likewise sustainable and predictable. That is where Meralco can have a huge impact in,” he added.

Victor L. Risma IV, Head of Meralco Corporate Business Group - Technical Services, assured Untal that the power distributor “will always do what we can to keep the lights on in the homes and businesses of our customers.”

He said the series of discussions with various industry leaders has provided Meralco with keener insights in its customers’ needs as well as a greater understanding of its own vulnerabilities that are now being addressed.

*At time of writing this feature, IBPAP announced that Rey Untal will be stepping down as IBPAP President, effective September 17, 2021.