PH’s outsourcing, services industries to expand hiring

Published December 29, 2018, 12:00 AM

by manilabulletin_admin

By Madelaine B. Miraflor

The country’s outsourcing and services industries are seen to hire more employees next year as companies in these sectors struggle to keep employees for more than four years, according to a New York-based human resources consulting firm.

Mercer, a subsidiary of New York Stock Exchange listed professional services firm Marsh & McLennan Companies, recently unveiled the results of its annual “Compensation Planning for 2019” study, which identifies key remuneration trends and makes hiring and pay increase predictions for the coming year across Asia, Middle East and Africa.

In the Philippines, the shared services and outsourcing industry shows the most positive hiring outlook in 2019, with 70 percent of companies in these sector looking to expand and 24 percent looking to maintain current headcount.

In spite of positive industry prospects, Mercer’s study reveals that talent retention in particular is a struggle for many companies in the Philippines.

On an average, employees across all industries only stay in their current organization for five years. The shared services and outsourcing industry has the shortest employee tenure with employees staying an average of only three years in their jobs.

These findings represent a challenge in terms of replacement costs in the form of higher salaries for new joiners, recruitment costs and productivity loss, which adversely impacts the overall cost of operations and resulting margins.

Employees cite a lack of career path and opportunity to grow, low pay competitiveness, and unpleasant relationships with supervisors as their top reasons for leaving their current organization.

Employees have also noted that beyond competitive compensation, they also highly value focus on health and well-being, career empowerment, and a sense of purpose in the workplace.

At the same time, Mercer’s study findings show that the changing nature of work due to digital disruption is driving demand for new skills, as companies in the Philippines begin to offer a significant premium for employees in data analysis and specialist sales roles. This underscores the need for employees to upskill or reskill to stay relevant.

With the emergence of shared services operations in other parts of the world, both organizations and professionals in the Philippines need to add value in the way services are delivered so as not to lose the country’s competitive advantage in this sector.

“As the world’s engine of growth, Asia, especially in markets with young populations like the Philippines, continues to see sustained demand for skilled talent, with digital skills continuing to draw a premium,” said Floriza Molon, Career Business Leader for the Philippines, Mercer.

“To attract and retain employees, companies are going beyond offering generous incentives and retention bonuses, and taking a more holistic view of their total rewards philosophy. They are increasingly focusing on the experiential components of rewards programs to deliver meaningful career experiences and flexible arrangements, as well as programs to help manage the physical, financial and emotional well-being of their employees,” she added.

Against a backdrop of continued strong economic and real wage growth (salary increase minus inflation rate) in emerging markets, the Philippines likewise finds itself at the middle of the spectrum with a salary increase forecast of 6 percent.

The highest salary increases in 2019 are forecasted for Bangladesh (10 percent), India (9.2 percent) and Vietnam (9.8 percent). At the other end of the spectrum, Australia is at 2.6 percent, New Zealand at 2.5 percent, and Japan has the lowest expected salary growth rate at 2 percent.

“The overall hiring outlook for the country is positive, with an average of 50 percent of companies across different industries looking to grow their talent pool to seize diversification and growth opportunities in the face of ongoing digital disruption,” Molon said.