The coronavirus pandemic caught everyone by surprise including the business sector. Within a few months after the pandemic struck, many businesses were forced to lay off their employees or cease their operations. For businesses that continued operating, they implemented remote work setups for their employees in adherence to health and safety protocols.
One of the sectors that continued to thrive despite the pandemic was the BPO industry. The industry has seen tremendous growth despite the threat of coronavirus. According to Rey Untal, President of the Information Technology and Business Process Association, the sector grew by 1.8 percent in terms of headcount and 1.4 percent in terms of revenue. In addition, BPOs had 70 percent of their employees working from home during quarantine periods.
Business process outsourcing (BPO) companies have been regarded as one of the pillars of the Philippine economy together with foreign remittances. For this reason, any slowdown in the BPO sector would seriously affect the whole economy. So how does the COVID-19 pandemic affect the outlook of the BPO sector?
1. BPO Sector Challenges
2. Future Trends
3. Responding To The Challenges
BPO Sector Challenges
While businesses were able to adjust to working from home, BPOs had to overcome challenges like Internet access, equipment transfer and clearance requirements from clients. According to the March 2020 Speedtest Global Index, the Philippines ranked 104th of 139 surveyed countries in terms of average fixed broadband speed. Aside from this, firms had to identify and learn how to overcome the following challenges:
Upskilling & Evolution
Most BPOs handled 50-60% of customer contact operations. But even before the pandemic, there was already a threat from AI-powered chatbots. According to the “State of the Connected Customer” survey conducted by Salesforce, 58% of customers say chatbots and voice assistants have changed their expectations of companies. Also, 77% of customers say chatbots will change their expectations of companies in the next five years.
In order to overcome the challenge, the IT and Business Process Association of the Philippines (IBPAP) launched its Roadmap 2022, a project designed to prepare members for a transition to automated services as well as more technical and creative jobs.
Roadmap 2022 aims to make 75% of the workforce achieve mid to high-skilled positions by 2022, compared to just 53% in 2016. Industry leaders predict that automation and analytics will be the next drivers of growth. As early as now, they are working towards capability building and developing services that will be needed to move forward. BPOs should consider taking on high-value outsourcing jobs such as Research and Analytics to reduce the impact of artificial intelligence.
Another challenge that BPOs must overcome is the growth of emerging segments such as health care, gaming and animation, social media, data science, and mobile app development. This has resulted in a decrease in the dependence on call centers. At the moment, there are around 1 million Filipinos employed in the BPO industry.
In its pre-COVID 19 assessment last November 2019, IBPAP predicted a 7.3% and 10.8% revenue growth for the health segment through 2022. On the other hand, gaming and animation would see an increase between 7.3% to 12.3%. The IBPAP expects growth in these segments to be higher than its pre-pandemic assessments.
As the country focuses on growing industries in both voice and non-voice sectors such as global in-house centers, healthcare information management, animation and gaming, BPO firms should set their sights on investing in high-skill level employees.
Replacement of Labor
Technology is expected to replace 40,000 to 50,000 low-skilled or process-driven jobs in the future. Robotic processing, the use of chatbots, and automation will shape the future of the industry. BPO workers need to upgrade their skills if they want to ensure their job security.
BPO companies should find ways to create technical working groups per high impact programs, raise funds for operational requirements, identify partners, synchronize sector activities, and initiate the creation of the project management office that will implement governance mechanisms that will create a positive impact.
With the disruption caused by the pandemic in 2020, BPO companies had to adjust, evolve, and implement health and safety protocols for workers to continue operations and business continuity. COVID-19 resulted in missed opportunities for the industry. According to IBPAP Rey Untal, the country’s BPO, IT, and Shared Services industry missed out on a 120 billion opportunity for 2021. Aside from uncertainties in the economic situation, businesses also experienced losses due to business disruptions in key service points in the west, government and government-mandated lockdowns as part of efforts to contain the infection.
BPO companies look at 2021 as a recovery year. The World Economic Forum has called the COVID-19 pandemic the “Great Reset.” With the pandemic, businesses had to rethink their business philosophy, economic participation, blueprints for social responsibility, and scalability of solutions. The future of businesses will depend on how they are able to adapt to the following BPO trends:
1. Remote Work
The Philippine BPO industry generated $22 billion in revenue, which accounts for 7.3% of its economy. According to the Global Gig Economy Index by Payoneer, the Philippines ranked 6th as the fastest-growing market, with a 35% increase in freelance earnings. This increasing number of freelancers resulted in a rise in the demand for flexible coworking spaces.
2. Robotic Process Automation (RPA) Solutions
According to the 2020 Workforce of the Future report by PwC, 37% are worried about automation putting their jobs at risk, up from 33% in 2014. It is because of this worry that 74% of respondents are willing to learn new skills or re-train to remain employable in the future.
3. Software Development Outsourcing
Over the last few years, software development outsourcing has seen tremendous growth. A survey conducted by Statista revealed that 64% of companies outsource their entire software development process. As technology continues to evolve at a fast pace, the demand for software development will continue to rise. Businesses are now looking to optimize and digitize their business processes. A report by Deloitte revealed that companies are now looking forward to software outsourcing to achieve their business objectives.
4. Growth in Cloud Services Adoption
With the adoption of cloud technology, businesses have an opportunity to consolidate their resources and make their organization more competitive and responsive. 90% of organizations see cloud services as crucial to their outsourcing journey. 36% of enterprises worldwide spend more than $12 million yearly on public cloud services.
5. Investments in Technical Support Outsourcing
The future of customer service interactions is automation. Servion Global Solutions predicts that 95% of all customer interactions will be powered by artificial intelligence. Customers prefer an automated website or mobile app self-service for simple customer service tasks. 63% of customers like being served by a chatbot if it includes an option to fast escalate the process with a human technical support agent.
6. Surge in Small Business Outsourcing
Around 37% of small businesses already outsource at least one of their business tasks. In addition, 80% of small businesses outsource their business tasks to gain various advantages. Aside from that, businesses contract work to a third-party provider to improve operational efficiency and access expert knowledge to support growth.
7. Social Media For E-Commerce
During the pandemic, customers have resorted to e-commerce to shop for their essential needs. E-commerce is expected to account for 18.1% of retail sales worldwide. Online retailers advertise their products and services through social media. 89% of customers bought from brands after following their social media accounts and 75% will increase spending with that same brand.
Responding To The Challenges
COVID-19 hit everyone by surprise including businesses. It caused disruptions in operations and workflows. The lack of preparedness and flexibility of BPO firms necessitated adjustments in how outsourcing firms operate. With the transition to the “new normal,” coronavirus has served as a catalyst for the transformation of traditional outsourcing.
During the pandemic, both clients and BPO firms had no playbook, plan, or rehearsal for what was about to happen. There is a huge difference between business disruptions due to natural, human-made, technology, or operational failures and those caused by a pandemic. Moreover, the differences persist due to the scale, severity, and duration of the pandemic. Here are some tips on how BPO firms can respond to COVID-19 and ensure business continuity.
Apply a people-first mindset
The safety and well-being of employees should be a top priority for BPOs during a pandemic. It can be hard for workers to focus on work responsibilities when their well-being and that of their family are in peril. You need to monitor the situation, ensure a safe workplace for your employees, and provide the support they need.
An example of employee support is access to internal and external resources such as hospitals, clinics, emergency numbers, and timely updates. You can also provide them with services like free shuttle services, medicines, or conduct regular checkups. BPOs should also provide pandemic-related training to enhance employee preparedness.
Plan for geographical segmentation of functions and activities
A pandemic can have serious consequences in affected areas and geographies. As part of their business impact analysis, BPOs should identify the chain of activities and functions and related impacts to inform potential mitigation strategies.
In planning for a pandemic, BPOs should focus on creating geographical segmentation of critical activities and functions for transfer to alternate locations and sites. Risk management entails expanding the supplier base. They should also seek out different third-party service providers to avoid power failures and increased exposure due to regional outages and geopolitical events.
Invest in technology and infrastructure for remote work and virtual collaboration
Even before COVID-19, remote work was already on the rise. According to statistics, the Philippines had the highest number of remote workers and freelancers per capita in 2018 with more than 1.5 million Filipinos or nearly 2% of the present population. In addition, data from Robert Walters reveal that 8 in 9 professionals showed satisfaction with their current working arrangements, with 9 in 10 noting an increased productivity level working at home.
With the pandemic, BPOs had to adjust and transition to a remote setup for their employees. According to the Future of Talent report by LinkedIn, companies see a permanent shift in the traditional workforce structure. According to the study, 76% of companies are likely to maintain remote work for certain days and other days for in-office work.
With this in mind, BPO companies should equip their remote workers with the tools they need to be able to effectively work and ensure collaboration. They should assess their current bandwidth, conduct periodic network testing, and identify workarounds for critical tasks not possible to perform at home.
Consider the systemic nature of pandemics
BPO firms must include resilience plans when addressing future pandemics. They need to consider those traditional strategies like relocation of the workforce, staff augmentation, and alternate sites may not be feasible as they may also have been impacted by the event.
In addition, there may also be limited availability of core infrastructures such as mass transit, telecommunications, and the internet. BPOs should come up with a strategy for arranging sub-contract work and finding alternate supply chain vendors and plan on areas of high manual intervention and concentration risks. Moreover, they should put in place a procedure around the uncertainty of terms, rates, payments, and regulatory requirements.
Assess reliance on third parties
Today’s companies have shown a strong connection with third-party providers like outsourced vendors, cloud service providers, data processors, aggregators, payment processors, and suppliers. These providers are not pandemic-proof. For this reason, BPOs should consider partnering with alternate partners.
When assessing your partnership with a third-party provider, check their capacity and bandwidth and consider the market dependencies and areas where you can explore opportunities to embed contractual clauses allowing BPOs to prioritize products and services.
Engage with customers
During times of pandemic, communication with customers should continue through multiple channels, reinforce customer interest, and provide information that will help alleviate their concerns. They may have some questions about the supply chain, especially if the resources are located in affected areas. In addition, they may have questions about the potential risks of resources to them for future use of the products and services.
Creating a frequently-asked-questions document published and disseminated through multiple channels can provide customers with a useful tool for addressing their concerns. Also, the affected customers should check in on their safety and offer assistance, where appropriate.
Develop a robust communication strategy
Effective communication during any crisis is crucial to ensuring customer trust, restoring employee morale and confidence, and retaining market stability. Implement a robust communication strategy and designated points of contact for engaging with internal and external stakeholders.
Consistency of message is key when communicating with retail and corporate customers. During a pandemic, communicating can become more complicated due to the proliferation of false news and social media narratives. Your communication strategy should clearly layout processes and protocols for engaging with various stakeholders.
Team with public sector, national, state, and local agencies, and health officials
COVID-19 is a public issue first and a business issue second. BPOs should work with the public and private sectors to provide an adequate and comprehensive pandemic response. BPO firms should leverage advisories, resources, and health safety measures prescribed by international, national, and local agencies and health officials and refrain from circulating conflicting materials as this can sow confusion and fear among employees.
BPO firms can provide grants and financial assistance programs to help employees and communities experiencing financial distress during the pandemic.
Increase rigor and complexity testing
Companies should boost the complexity of current scenarios used for testing and simulations to assess preparedness for pandemic events. Conduct simulations against scenarios evaluating their response to extended periods of outages, total facility shutdown, increased absenteeism, multiple outages.
BPO firms should rehearse crisis management governance and response. Third-party providers should also be involved in the simulation for them to better understand their interdependencies and points of coordination, to better determine the effectiveness of your resiliency plan.
Leverage pandemic command center
A pandemic of epic proportions like COVID-19 will add more pressure on existing resources, infrastructure, and technology resulting in a huge degradation of products and services. Due to constrained resources, it is important for firms to constantly re-prioritize the delivery of products and services that are absolutely crucial to meeting customer needs and ensuring market stability.
Also, you need to have a complete understanding of activities that you need to remove from your priorities to allow effective repositioning of available resources. You must have a clear framework of prioritization, inclusive of associated risk tolerances with a robust governance process to make risk acceptance decisions.
Why Outsource with airisX?
By outsourcing to a leader like airisX, you will be able to scale up quickly by getting the right resources, processes, and technological infrastructure. No matter what your scaling requirements are, airisX will give you the best-optimized solution so you will be able to focus on servicing your customers and building your business. Your back-office operations will be simplified, giving your customers a high-quality customer service experience.