Vol. XXII, No. 81 [ BusinessWorld Online ]
Monday, November 17, 2008 | MANILA, PHILIPPINES
LOCAL BUSINESS process outsourcing (BPO) firm Advanced Contact Solutions, Inc. (ACS) has laid off about 900 workers after losing a major US-based client that had gone bankrupt.
The company has posted a net profit loss as of the third quarter due to declining demand for subcontracted work as a result of an ongoing financial crisis in the US and Europe, its parent told the stock exchange on Friday.
Local parent Paxys, Inc. said its unit had lost P100 million for the nine months ending in September from a year earlier due to slowing demand from US clients. It did not provide profit figures for the third quarter.
"[Profits dropped] due to declining business volumes from the ongoing US subprime financial crisis, as well as lingering customer concerns regarding a major US client that recently emerge from [bankruptcy]," Paxys said in a financial report.
ACS sales slid by almost a fifth to P1.48 billion from the same period last year. "This is due to a decrease in volume hours to 3.64 million in 2008 from 5.9 million in 2007," Paxys said.
As a result of the slowing demand, the company said it was forced to cut the number of employees, mainly call center agents, by a fifth to 3,316 people as of September from 4,205.
To partially offset the decline in business volume, the company said it had leased out excess call center seats to affiliated BPO companies Stellar Global Solutions Philippines, Inc., Scope-Works Asia, Inc. and WNS Philippines, Inc.
ACS made P15 million from rental fees in the third quarter. It makes up 59% of its parent’s total revenues.
The parent firm posted a net loss of P22 million in the third quarter, from a P9-million net profit in the same period last year.
For the January to September period, Paxys posted a net loss of P18 million from a profit of P207 million a year earlier.
ACS, however, remains optimistic despite dragging its parent company’s profits down.
"[The company] expects profitability to improve in the last quarter of the year due to increased contract billing rates and increasing rental revenues from the lease of ACS excess capacity to its affiliates," ACS said in the report .
The local BPO sector has been touted as one of the few bright spots of the Philippine economy, which is expected to feel the full effects of the US-led global economic slowdown next year.
The Business Processing Association of the Philippines expects the industry to contribute P9.6 billion in revenues to the economy next year from less than P7 billion at the end of 2008.
While growth targets for the year remain on track, industry officials said earnings for the next two years might fall until economic conditions stabilize. — P.L.G. Montecillo
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