How Has The Pandemic Affected Contact Centres In The Philippines?

Contact centres generate around $25 billion in annual revenue in the Philippines, which is about 10% of the entire national economy, employing over 1.3 million people. This is clearly a region where contact centres are strategically important because of their enormous contribution to the wider economy.

But the Covid-19 pandemic dramatically impacted the Philippines contact centre industry. National lockdowns and quarantine measures caused chaos and severely disrupted operations in over 50% of all sites. Contact centre agents were often forced to work from home (WFH) where possible and those sites that remained operational had to reduce capacity to create a socially-distanced work environment.

Back in August, I wrote an article that asked how nations such as India and the Philippines could continue to dominate the global contact centre industry when WFH would now be normalised. McKinsey estimates that 30-60% of contact centre workers will continue working from home for the foreseeable future and recent research published by the Harvard Business Review shows that countries including India and the Philippines struggle to offer the infrastructure needed for WFH operations.

Following on from that admittedly negative article I thought I would get on the phone and talk to some analysts and people working in the Philippines – to get a taste of what’s really happening out there at present. Can the contact centres make a comeback and adjust to the new normal?

Mike Lytle, the COO of Teleperformance in the Philippines explained to me just how much has changed over there since the pandemic began. He said: “Early on, it was very challenging. Not many of our employees have broadband at home as a normal day to day part of life. So a huge part was mobilising the deployment of wifi units and the installation of broadband through partnerships with the local telcos, which we have strong connections with.”

Mike also explained how some employees could not modify their home environment for work. These employees either took some time off or used a private bus service to go to the office. Mike explained: “We helped those employees come back to the modified site we’re running today with 140 shuttle buses to offset for the public transportation that’s been reduced or restricted throughout this period. Yes, we’ve we’ve learned a lot of lessons. But I’d say today, we’re largely successful and we have a large portion of our team at home.”

Don Berryman is the Executive Vice President and Chief Commercial Officer of Transcom North America. I had talked earlier to Don about the extensive delivery centres Transcom has in the Philippines so I called him to ask how they had also changed during the crisis and what might happen next. Don initially explained that Transcom had undertaken similar initiatives to others in the industry, laying on a fleet of private buses only for employees and working with telcos to get to a position where 60-80% of the team could work from home.

Don explained: “Our management team in the Philippines has been absolutely phenomenal. When the lockdown was announced we advanced two weeks salary to everyone to ensure they could get prepared to be at home more than usual. We worked with the local telcos to provide wifi for those employees that didn’t have it and it has all been a process and journey, but our clients are happy and our employees are happy because of how they were supported.”

Don explained how Transcom now uses an app that helps their agents to communicate socially with each other and also to request services, such as transport. He said: “Our team created the T:Buddy, the Transcom Buddy system. It’s a way for us to communicate with every one of our employees and measure sentiment and engagement, which is harder when they are all distributed and not in the contact centre, but it can also be used to call a private bus, kind of like a personal Uber or Lyft.”

Don said to me that he believes much of the change we have seen in the past six months is going to become permanent. He said: “I think that what we’re seeing is that there’s going to be a mix of work at home – it’s going to play a much bigger role in all of the contact centres in the Philippines. Nobody ever expected that every contact centre globally would be locked down so from both the client and employee perspective we need to focus on resilience – one day you can work from a site and the next day you can work from home and not have any interruption.”

When I contacted Stephen Loynd, the Founder and principal analyst of TrendzOwl, he voiced some concern that maybe cities like Manila are not well suited to large communities of home workers. Stephen said: “Crowded cities like Manila present very real challenges. I blogged about this on the TrendzOwl website in March (“Outsourcing: Etherized Upon a Table?”). This summer, as there was a surge of new cases and deaths here in the United States, surges in cases were happening in places like the Philippines and Indonesia as well. I’ve read recently that the urban poor are lacking food, starvation is a threat in some neighborhoods.”

Stephen went on to describe this point in more detail: “This summer, the IMF warned the economic crisis in the Philippines could reverse decades of gains in poverty reduction (when I was in the Philippines in 2016, the country’s IT-BPM sector already accounted for over 10% of the economy, according to the Information Technology Business Process Association of the Philippines, or IBPAP). By September, the country may have “flattened the curve” on fighting the virus, but nobody knows if there will be another wave, or how serious it might be.”

According to Stephen’s comments, the bottom line is corporate leadership. He said: “For BPO providers, I think the biggest question in negotiating this crisis will continue to be – what kind of leadership do you have? I just published a new piece of research that delves deeply into how Teleperformance has managed things thus far and what it may all mean for the future (“The Last Cuirassier: Teleperformance, Covid-19 & the Future of an Industry”). It seems to me that leadership is the major motif in all of this. Well-led organizations will eventually get through this. Poorly-led organizations will not.”

Peter Ryan, the founder and principal analyst at Ryan Strategic Advisory in Montreal, Canada suggested that the Philippines has a strong foundation. He said: “The Philippines is very much still in play as a CX delivery point of choice.  This will not change, given the tremendous number of workstations based in that country, coupled with a solid reputation for quality work.”

Peter warned the sheer scale of the contact center industry in the Philippines may now mean that it has grown almost as big as it can get and some executives may be thinking about international sourcing closer to home. He said: “I think that these issues have been bubbling under the surface for a while.  If you look at the 2020 Front Office Omnibus Survey, Philippines dropped from the #1 most favored location to 3rd.  The country needs to raise its collective game if it is to avoid further slides.”

After talking to these BPO industry leaders and industry analysts I reached out to the Contact Center Association of the Philippines and the IT and Business Process Association of the Philippines – the two trade bodies representing BPO and contact centres in the Philippines. Both of these trade organisations responded to my request for an interview by saying they are too busy to talk right now. I presume they expected me to publish a hit job, proclaiming that contact centers in the Philippines are finished for good.

The trade bodies should have more confidence. Contact centres globally are going to operate differently in future, not just in the Philippines. Customer interaction will need a greater focus on digital automation and WFH will become an accepted way of increasing resilience in customer service operations. Some CX will move to be closer to home, just to ensure we never see another 2020 situation ever again.

However, as Peter Ryan said, the Philippines is still in play. From my earlier negative view I found that talking to people with experience on the ground showed me that the industry is changing. Home wifi may not have been common at the start of 2020, but the BPOs and telcos are making it happen – these companies are adjusting their business model and ensuring that people can work from home and can get safely to the office when they need to.

It’s a surprise to see just how far the Philippines has come in the past six months, but then hasn’t 2020 just been one long series of surprises so far? The Philippines is still squarely in the global BPO game.

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