VIRTUAL SEZ
HAVING FOUND workfrom-home arrangements to be beneficial to their operations, BPO firms are now lobbying for the creation of what they call a virtual special economic zone, which would require the Jamaican Government to amend the laws around SEZs.
Under the special orders issued for COVID mitigation, the business process outsourcing companies were able to set up their equipment at the home of employees.
They say the virtual SEZ would allow those arrangements to continue, and would also allow them to manage the costs that would be associated with sanitation and social-distancing protocols they have to implement when Government lifts its ‘work from home’ order at the end of this month.
Essentially, the homes of call centre or customer care operators would become virtual offices.
The BPO sector was responsible for 234 of Jamaica’s COVID-19 cases, which up to Wednesday stood at a total of 529. To minimise the spread, BPOs were ordered closed for 14 days in April, with exceptions for companies involved in healthcare, Government, telecommunications and utility businesses, which are considered essential services.
But with 32 per cent of the sector’s workforce still working from home, Gloria Henry, who is the president of the Global Services Association of Jamaica, GSAJ, told the Financial Gleaner they penned a letter to the prime minister last week, appealing for the inclusion of virtual SEZs in recommended amendments to the Special Economic Zone Act, SEZA. GSAJ was formerly known as the Business Process Industry Association of Jamaica.
The law, which is described by the industry as cumbersome, was reviewed last year by a consultant hired by Jampro. Shortly after, GSAJ passed on its recommendations regarding improvements to SEZA to the Government for consideration.
“Aside from that, we are also asking for a carveout in the act, so that it will pave the way for a virtual special economic zone. This will help us to create a digitally transformative, future-ready economy for Jamaicans working at home, and will give us access to several business segments in e-commerce services,” Henry said.
There are around 91 BPO operators in Jamaica, which employ some 40,000 workers.
E-commerce has the potential to deliver higher profit margins for the BPO sector, said Henry, and to add new jobs. It’s part of the reason the GSAJ has recommended that at least 20 per cent of BPO operations be built around a virtual space.
“This would give us a balance and create more flexibility for staff who enjoy working from home. We are also asking for an extension of the approval for SEZ companies to allow for computer equipment to remain outside of the zone.
The virtual SEZ would take some time to execute but it would be great if we could get it for the end of the calendar year,” she said.
Jamaica has been accommodative of the BPO sector because of the number of jobs and the foreign investments it represents.
Prime Minister Andrew Holness, during a COVID-19 press briefing on Monday, said his administration wanted to intensify efforts to highlight Jamaica as a
natural fit for business process, knowledge process, and global service operation.
In this regard, Holness said this will include legislative and regulatory improvements, as well as the expansion of Government investment in infrastructure for the sector, which he said has the greatest potential to replace employment that would have been lost during the COVID crisis or make up for the fall-off in other industries.
In line with the announced June 1 return to workplace activity and the reopening of the economy, itelBPO’s CEO Yoni Epstein says the sector is preparing to go after new business, and that they are positioned to do so because of the decision the Government made to not shutdown the operations of BPOs in Jamaica entirely while fighting the coronavirus.
It gave Jamaica comparative advantage relative to the region, he said.
“For the most part, the industry remained open with minimal hindrances, whereas many of the competing firms in the region have completely locked down operation. Our clients recognise that, and I think we are going to have a very positive outcome from that,” Epstein said.
“Our teams are in the middle of planning to bring people back into the office, but we are not bringing back everybody. We are going to have 50 per cent work from home and the other 50 per cent working in office,” he told the Financial Gleaner.
Still, the new protocols – which includes partitions for social-distancing requirements – have come at a heavy expense. Already, itelBPO has spent US$750,000 on recurrent costs and another US$2 million in capital expenditure in giving the Government guarantees that it can minimise the spread of COVID-19 among its staff complement, which stand at 3,000, its founder said.
Epstein added that the company will also be installing automatic doors, cameras that allows for facial recognition and temperature checks, increased ventilation and air sterilisation systems, at additional cost.
Other firms are facing similar costs, and while Epstein says the sector is not looking to the Government for a bailout, they are proposing that the stateowned Development Bank of Jamaica guarantee commercial bank loans for BPO firms looking to retrofit their office space to conform with the social-distancing protocols set out by the Ministry of Health and Wellness and the Office of Disaster Preparedness and Emergency Management.
“It’s adding up and before you know it, it’s millions of dollars,” he said.