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Typhoon Unlikely to Have Long-Term Impact on Philippines Outsourcing Industry

By Stephanie Overby, CIO
November 22, 2013 12:21 PM ET

CIO - As the total impact of Typhoon Haiyan on the Philippines becomes clear and rescue and aid work continues, it appears that the country's flourishing IT and business process outsourcing industry emerged largely unscathed.

"In the outsourcing industry, the main issues are not loss of life or property damage. The main issues are absenteeism due to family issues or volunteer work and also intermittent power grid issues." -- Frances Karamouzis, Research Vice President, Gartner

Manila, which for around 65 percent of the nation's $16 billion IT and customer management business, was largely unaffected by the killer storm. The typhoon, which ripped across the country on November 8, killed more than 5,000 people, according to the United Nations, and displaced more than three million.

"In some cases, recovery may never take place because they have been all but wiped out," says Jerry Durant, a partner with outsourcing consultancy NeoGroup based in Manila. "But this has zero impact on sourcing as it presently stands."

The Impact on Outsourcing

"In the outsourcing industry, the main issues are not loss of life or property damage," says Frances Karamouzis, research vice president at Gartner. "The main issues are absenteeism due to family issues or volunteer work and also intermittent power grid issues."

Cebu, the second largest outsourcing hub accounting for around 15 percent of industry revenues, was closer to the path of the storm, taking an indirect hit. The city and surrounding area employs 95,000 people in outsourcing, according to the Cebu Investment Promotion Center with the 17 new outsourcing offices opened there in the last year generating 11,000 new jobs.

Some of the major providers, such as Teleperformance, Convergys, and Aegis have indicated that they have no damages to facilities and the large majority of employees are safe.

" Cognizant, which also has a Cebu facility, said it had no loss of life or major issues. But "there [has been] employee absenteeism as people are understandably checking on family and helping with relief efforts," says Karamouzis.

In addition, employees are impacted on a psychological level as they have personal ties to affected areas, says Durant.

Accenture and Country's Trade Group Need to Speak Up

The industry employs about 750,000 professionals in IT and business process outsourcing and is led by 10 to 15 very large vendors (including IBM, Cognizant, Capgemini, Dell, HCL, Genpact, WNS, Infosy, and EXL) and dozens of mid-tier providers. The biggest player is Accenture, which Gartner estimates employs around 35,000 people there.

But neither Accenture nor the country's industry trade group, the Business Processing Association of the Philippines (BPAP), has issued a public statement or regular updates on the effects of the storm that has left clients in the dark.

"This is a sign of immature approach to the current realities of this world of information, social media, et cetera," says Karamouzis, who said officials at the BPAP indicated to her that they don't feel the storm will have a long-term impact on the industry.

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