Typhoon Milyeno: Disaster multiplied by outsourcing…

October 2, 2006 at 12:37 am Leave a comment

In the aftermath of a killer typhoon in the Philippines; Outsourcing now means it affects customer service firms in the U.S, Canada, and the UK. Global outsourcing: means disasters at one end of the globe where services are outsourced to – cause problems for firms who have hired BPO’s from somewhere else. What is the impact? With over 600 Million Pesos lost in service fee’s per hour for the down time of all BPO centers combined per DTI – the cost of Milenyo’s effective damage to business is in the billions of pesos in lost revenues. Lost taxes, lost fee’s, lost income to workers.
Also it showed international clients and service providers that – lower costs – offered by outsourcing also brings in added costs when those centers are located in disaster prone daner zones. Or are in modern facilities surrounded by 50 year old power infrastructure.

Many in particular of the hundreds of US and first world based firms that use the BPO service companies include: customer call center services, customer care hotlines, technology firms, and, service companies.

At one time – these firms found outsourcing a dream come true- allowing them to maintain small core units – and insulated from holidays and overtime costs in the developed world,

They now have to plan for Monsoon season in Mumbai, India and Typhoon season in Manila, Philippines. They worry about political upheaval and also terrorist attacks. The 7-11 bombings in Muimbai left many firms understaffed at BPO companies. But that lasted only a few hours. The Milenyo typhoon – has meant some firms who have outsourced have been having to buy or rent customer care or sales staff on demand to meet needs elsewhere.

Bright spot for economy hit by blackout:

The call center industry is the bright spot for the Philippine economy, call centers, outsourced business service firms, and, and medical as well as insurance processing claims are all in all, keeping hundreds of thousands of Filipino’s at work – and at home in the country.

For a nation where 15% of workers travel overseas to find employment it is major source of employment in the capitol region.

Relocate to purpose built cities:

But clearly there is a need to diversify to locations outside the typhoon belt perhaps like Puerto Princesa, Palawan or Davao City in Mindanao which are outside of the typhoon belt and have more proactive local leaders who can deliver better basic services than overwhelmed metro manila local officials who have millions of residents and constituents life and death struggles to contend with during disasters and the high tech firms take a back seat to constituents in times of crisis. Hence making other cites techno-hubs outside of the capitol not only makes sense – it also decongests a overcrowded capitol.

Another plus factor is lower costs of wages and living and considering that much of the infrastructure of say an East wood or Bonifacio global city could as easily be built in places like Palawan and or Davao at less cost than the Metropolis.

Perhaps its time considering the overloaded infrastructure requirements here at present in Mega Manila where normal business activities are hard enough to handle..

The number of jobs and economic impact diversity could spread better developed purpose built cities- areas where the industries can also help protect the environment by hiring more locally and creating zones of progress that widespread investment can bring to rural communities.

So far, some Investors have set up small subcontracting firms to service the booming demand for call attendants, 24 hours customer care workers, and transcription and medical paging services. Some of those outside of metro manila which did brisk business snapping up clients in need of temporary solutions..

Many of these firms cashed in over the 72 hour period when services were affected here. Others in places like India and Australia experienced upsurges in some demand to cover for Philippine centers being down or less than capable.

The risk here presented are that parent firms of those located in the country might be looking to the ‘temp locations’ as more environmentally stable – better equipped in tech infrastructure than say even the so called best buildings or technology parks offered in the country’s so called best equipped zones.

Lets face it – with an aging power grid infrastructure and mostly above ground network of phone and power cables once hit by trees and debris the very modern facilities in the specialized zones were cut off. Hence more purpose built areas are needed with a higher level of redundancy.

Many Business Process Outsource (BPO) firms in Metro Manila in some cases lost contact with clients overseas over the last three days. In this industry being down more than 3 hours can mean clients overseas start looking for new service providers.

The effects of a Typhoon Milenyo, whose international code name: Xangsane, means “elephant” in Lao language acted like a herd of wild pachyderm on the rampage. High winds snapping trees and causing widespread outages three days after the storms departure many parts of the Philippine capitol were still in the dark Sunday. I mean Sunday evening some of Metro CBD’s betters buildings along Ayala Ave. did not have stable power!

Partly because fuel stations could no longer pump gas – no diesel – no generators; No lights no computers no VIOP. No business… Even the vaunted 3G cell based networks which performed I must say perfectly though the storm failed in 24 hour period that followed.

While Multinational BPO firms scampered to recover the estimated 100,000 or more seats lost during the storm and in the 24 hours afterwards – some firms even played very strange games – in one particular building which caters to several call center- its clients went down from power outages – So it had it’s sister firms agents handle services – and reportedly deliberately kept power off in its ‘state of the art facility’ in order to steal clients of the firms leasing space from them! Amazing – even in the midst of disaster snakes still bite.

BPO Firms’ workers in some case have worked 72 hours to stay in house and keep the lines active and replace those stranded and unable to reach offices- thus you had in some places people working in tag-team fashion.

For those still capable, many stayed at company offices where power was minimal in most cases. they kept service up even as literally around them darkness was slowly beaten back with Chinese made wind up flashlights!

Overall, tens of thousands of ‘seats’ which service firms in the USA and UK were refilled by stop gap means – passing clients to other countries centers or other regions of the Philippines which are not affected by the storm. But some in Government say – damage was not as extensive as prior typhoons – leaving them to wonder if the long blackout and power resumption delays had other causes. Amongst them Political destabilization?

Or was it ineffective management at local power and telecommunications providers, and, inadequate disaster planning to cope with globally demanding 24/7 firms now located in the disaster prone zones.

Damage repaired : but client confidence lost

By Sunday, work crews restored 70 per cent of power and 90% of communication lines to many of the suburbs and affected areas – While the majority of firms based here have also taken steps to ensure adequate power backup and communication redundancy.

But some have lost clients to firms in other countries whose connectivity is more stable..

While trees and wind borne debris that ripped apart phone, data, and, power cables are easy enough to clear away. Flooded streets and crippled mass transit systems are easy to drain and bring back to life.

Client confidence lost over the 72 hours of no connectivity to large BPO firms will take time to be restored. Also in places where critical services such as emergency and medical data and message service companies have at least for now begun to rethink basing service providers so far away.

While Sunday, brought relief from at least days of no basic services to many parts of this mega city of millions of people

Government agencies and Private sector firms are now working on plans to prevent a repeat of the current dilemma. Most early Government reports on infrastructure blame poor maintenance and above ground sprawl of wires and cables as having left millions in the Philippines capitol without power and data or phone lines.

But, services failure magnified the impact of Milyeno to affect hundreds of thousands customer service clients back in the USA and Europe.

For now, firms are working to make sure the current damage is repaired and clients in critical services like Medical and emergency services are met but the in the meantime many firms and HMO’s have been looking to see if the savings of 60 to 70 per cent gained in some cases using foreign based claims and paging service workers is worth it if local infrastructure is not capable of coping with disasters and emergencies to critical sectors like the health industry in America and Europe.


Entry filed under: Arroyo, asia, china, Dubai, Filipino, filipino-american, free speech, freedom of speech, milenyo, news, News and politics, OFW, Palawan, philippines, scams, typhoon milenyo, Uncategorized, Views, war.

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