Palace work suspension order expected to hurt BPO industry

Malacañang’s order suspending work in all Metro Manila offices—including business process outsourcing (BPO) firms—at the height of torrential rains last week may have affected the country’s competitiveness as an investment destination.

Canadian research firm XMG said that while the safety of employees was non-negotiable, the government needed to adopt a mentality of “keeping the lights on” for some key industries, particularly the BPO sector.

“Looking back at the Japanese tsunami experience of 2011, this country’s government had a ‘business as usual’ attitude,” XMG chief analyst Lauro Vives said. “Despite the cumulative effects of the calamity and the painstaking recovery process, the Japanese government helped mobilize thousands of workers to continually keep business operations running. More importantly, the Japanese government did not deter businesses from continuing operations.”

XMG said that as more work was outsourced to the Philippines, business needs and globalization were forcing investments in real-time applications and human resources to fulfill business processes 24 hours a day, seven days a week.

As such, outsourcing service providers have put in place workable and effective business continuity plans to address “return to normalcy” practices. But Malacañang’s Memorandum Circular No. 33-A, which suspended work in the metropolis, meant that none of these plans could be implemented.

“Sustaining operations Especially in high geo-physical risk areas such as the Philippines, that is prone to major typhoons and earthquakes, is always a key-determining factor when selecting a location,” Vives said. “Not being able to support business operations sustainability during a time like this has deleterious consequences for the country.”

If the Philippines wanted to maintain its hold as a legitimate and reliable global provider of BPO services, the country would have to meet the demands of the global market at any given point in time and in any given situation.

XMG said it recognized that the Philippines had come a long way in strengthening utility infrastructure such as power and telecom services. But the company said the country has continued to struggle with other essentials such as transportation, water supply, sanitation, drainage and other critical urban infrastructures to meet the migration trends and mobilizing talents within and outside Metro Manila.

“An unexpected natural disaster such as the past tropical depression exacerbated a fundamental disconnect between the government and the needs of the outsourcing industry,” Vives said.

The BPO industry contributed $11 billion in revenue to the local economy last year. This made the industry the second-largest source of foreign exchange income for the country, next to remittances from migrant workers amounting to $20 billion a year.