Offshore outsourcing has become an important contributor to Caribbean economies, but like many other industries, it has been affected by COVID-19. We discuss some of the impact of the coronavirus pandemic on the industry, and what the future might hold in the short-to-medium term.
Across the Caribbean region and to varying degrees, many countries have recognised that offshore outsourcing is one of the fastest ways to secure foreign direct investment, whilst also creating jobs, which are much needed, with double-digit national unemployment rates being the norm. These rates tend to double, or even triple, among the youth population, and so there has been an urgency to get people employed, earning an income, in order to better support themselves and their families.
In the era of COVID-19, where the region’s tourism and hospitality industries have been adversely affected, the job market has become even worse. Although some countries have begun to welcome visitors, in-country infections rates are likely to increase, resulting in another round of lockdowns and restrictions. Moreover, since at this point, there is no vaccine, known cure, or authoritative treatment for COVID-19, into the foreseeable future, there will be an element of uncertainty that will cuts across virtually all aspects of our personal and professional lives.
With economies across the region also in decline, and the major sector, tourism and hospitality, on shaky footing, the focus is likely to shift to other service-based industries, such as business process outsourcing (BPO). However, that industry, here, we briefly examine how the outsourcing industry has been faring during COVID-19, and what might be in store for the future.
How BPO is managing during COVID-19
Like many other industries, the region’s outsourcing space has had to make adjustments for COVID-19, but so far, it appears to surprisingly resilient. In June, Jamaican BPO firm, itelbpo smart solutions, opened a centre in Saint Lucia, and as was reported in this week’s news roundup, KM2, another BPO firm, is also looking to expand in Saint Lucia.
However, those expansion initiatives during COVID-19, can be considered exceptions – perhaps borne out of plans that had already been in the works for several months. In fact, many countries have reported a decline in their employment numbers. Growth projections for 2020, have had to be revisited, and the industry has experienced some contractions, as some contracts have had to be prematurely cancelled, due to impact of COVID-19 on business.
In order to adhere to the social distancing recommendations, many outsourcing centres have had to decrease the density of employees they have on their premises, by allowing some of their staff to work from home. However, in order to successfully implement work-from-home arrangements, a number of legal, logistics and security-related issues need to be addressed. For example, in many countries across the region, outsourcing facilities have been designated a special status, such as free zone or special economic zone, and the movement of equipment from those premises, would be in breach of the conditions of that status. Also, clients would need approve of the changes in the arrangements, which may have security implications, of which they would also need to approve.
The telecoms challenge
However, in addition to the above considerations, one of the biggest challenges that Caribbean outsourcing facilities have had to grapple with, in order to allow employees to work from home, is telecoms, specifically the lack of availability of fixed-line broadband Internet access. High bandwidth and resilient service is a crucial element in the successful execution and delivery of offshore outsourcing services. However, across the region, the fixed-line Internet infrastructure does not extend into many of the communities where BPO employees live, and as a result, mobile/cellular data services have had to be used.
Although mobile/cellular data provides a solution, there are two challenges that arise. First, is with respect to quality and consistency of the communication. Currently, mobile/cellular networks across the region are managing considerable amounts of traffic, resulting in congestion on those networks. Also, in many instances a number of mobile/cellular technologies, such as 3G and 4G. overlay each other; hence, transmissions speeds can change continually, which in turn affects the quality of the connectivity. Further, that experience can be exacerbated in adverse weather conditions, such as heavy rains and thunderstorms, which can be deleterious to the professional setting and serene experience a BPO company would like to project.
Second, and perhaps more importantly, mobile/cellular broadband Internet is still pricey across the Caribbean region. As noted in our article published last week on the price for 1 GB of mobile/cellular data, only four of the 31 Caribbean examined were in the less expensive half of the ranking of 288 countries worldwide.
Although the regional carriers, in particular, have been improving the mobile/cellular data plans that they offer in terms of price and the size of data cap, the overall price for a particular plan may still end up being substantial – in order to provide 160-plus hours of Internet connectivity per month, per employee working from home. Currently, BPO companies might not have choice with regard to using mobile/cellular data, but it is not as cost-effective as fixed-line broadband Internet, especially when a number of connectivity challenges, as outlined above, can be experienced.
What might be the future of offshore outsourcing?
In the short-to-medium term, the future of offshore outsourcing is likely to be tenuous. Although economies worldwide might start to improve, as a new normal becomes established, we will not be able to return the attitudes, behaviour and confidence that existed pre-COVID-19. Having said this, there may be new opportunities emerging, in areas such as with regard to logistics and fulfilment, which have been on the uptick, as people shop more online, and opt to have purchases delivered.
Additionally, the impact of automation and artificial intelligence on business cannot be dismissed. Its growing impact on the global outsourcing sector, over the past five years, is something countries and businesses have had to consider. Now, as outsourcing firms fight for survival – by streamlining their costs, optimising their processes, and maximising efficiency – the use of human labour will decline, which is a trend projected across virtually all sectors. As a result, countries, especially those in the Caribbean, which had been keen for the industry to absorb high school graduates, in particular, may need to implement some upskilling programmes so that current and prospective workers can be better matched to the emerging opportunities, and not to roles that no longer exist.
Finally, telecoms and ICT have become vital as we navigate COVID-19. Caribbean governments may thus need to be more proactive in shaping policy and the enabling environment, in order to improve the standard of service we receive, so that our countries can, at the very least, maintain our competitiveness.
Image credits: Mark Hillary (flickr)
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