When you think of high-performance Business Process Outsourcing (BPO) to the Philippines, one name comes to mind: PITON-Global. The multi-awarded BPO provider has been partnering with Australian companies for two decades, providing them with industry-leading contact centre and back office solutions.
PITON-Global was founded by Ralf Ellspermann, an industry veteran with more than 20 years of BPO experience in the Philippines. Few outsourcing executives have been working in the Philippine BPO industry as long as Ralf. I had the opportunity to speak with him about the impact of COVID-19 on the outsourcing industry.
What has been the impact of the COVID-19 pandemic on the Philippine BPO industry?
COVID-19 had and continues to have a significant negative impact on the Philippine BPO industry. As in all other countries and industries, the coronavirus has altered the way we conduct business literally overnight. Adjusting to the “new normal” is, of course, not easy, and it comes with a whole set of challenges. It is very likely that the BPO industry in the Philippines will contract because of the pandemic. The loss of business comes primarily from companies that are re-shoring positions just as Virgin Media did, reducing their support programs due to significantly decreased consumer demand as seen with Uber, or filing for bankruptcy as Hertz did. There are also companies such as Postmates that have started to replace some agents with AI. With the large majority of corporate bankruptcies still being ahead of us, we can expect to see more job losses in 2021.
How soon do you think the BPO industry in the Philippines will recover?
That’s a tough question. It all depends on the progression of COVID-19. The large majority of the outsourced business is coming from globally operating companies. These multinational organisations will most likely refrain from moving large numbers of seats to the Philippines for the time being. They will very likely also reassess and change their outsourcing strategies. These changes could result in more jobs being kept onshore and in-house. Some of the seats that have been or will be re-shored might not come back anytime soon. It’d be too costly to move hundreds of seats every few months. In addition, it would be a logistical nightmare. To come back to your question, based on my opinion, I think it will probably take at least another year before the BPO industry in the Philippines will start to recover.
Will companies continue to outsource to the Philippines?
Yes, absolutely. COVID-19 doesn’t change the value proposition of the Philippine BPO industry. Companies will always look for ways to lower costs and improve operating efficiencies. This can best be achieved by migrating BPO requirements to offshore locations such as the Philippines. It will just take some time for the dust to settle. Again, it’s not a question of if but when outsourcing will resume. Our clients, for example, are mostly SMEs. Small and medium-sized businesses will very likely move much faster than larger organisations since it’s, of course, much easier to re-shore 5 to 20 seats, than, say, 500.
How will COVID-19 change BPO to the Philippines?
As I mentioned earlier, it will probably force some companies, especially larger ones, to reassess their outsourcing strategies. I think it is reasonable to assume that a lot more BPO work will be done onshore and in-house, at least over the next 12-24 months. We will most likely also see an increased use of artificial intelligence (AI). AI is getting better and bigger each and every day. I expect that in 3-5 years from now, AI will handle almost all simple and highly repetitive tasks. This will force BPOs in the Philippines to focus on higher-value and more complex business processes that AI can’t handle. COVID-19 will probably also force BPO companies to re-design their workspaces to make them pandemic-safe. That in itself poses another huge challenge that will require some time and resources to get it all done. We have to remember that it just takes one asymptomatic agent to infect hundreds of others in a BPO work environment. And this poses a real threat to the BPO industry in general, not just in the Philippines. And for that reason, a lot of companies have transitioned to a work-from-home support model, which is, of course, not ideal, especially here in the Philippines. The fact is that COVID-19 will very likely have a long-term, negative impact on the BPO industry, especially knowing that we are still in the midst of this unprecedented global health crisis. It could easily take another 1-2 years to get the pandemic under control.
What will the future look like?
I am confident that the Philippine BPO industry will manage to get through these challenging times and emerge even stronger. At the end of the day, we are all in this together, and nothing will be able to hold us back. We just have to make the necessary adjustments that are needed to cope with COVID-19 as best as we can. One thing is certain—BPO to the Philippines will continue, pandemic or not.