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COVER STORY

SEZ operators to pay for work from home arrangements

New JSEZA fee-based policy coming in January

Published:Friday | June 2, 2023 | 12:51 AMAvia Collinder - Business Writer
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Kelli-Dawn Hamilton, interim CEO of JSEZA.
File Kelli-Dawn Hamilton, interim CEO of JSEZA.
Anand Biradar, president of the Global Services Association of Jamaica.
Anand Biradar, president of the Global Services Association of Jamaica.
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Jamaica Special Economic Zone Authority is finalising a new policy that will allow all firms it licenses, including outsourcing companies, to implement remote work arrangements for nearly a third of their workforce. But it will come at a cost to...

Jamaica Special Economic Zone Authority is finalising a new policy that will allow all firms it licenses, including outsourcing companies, to implement remote work arrangements for nearly a third of their workforce.

But it will come at a cost to them.

JSEZA has agreed to make permanent an arrangement that began under the pandemic, where work-from-home arrangements had become the norm. The terms ‘remote work’, ‘virtual work’, ‘work from home’ and ‘work at home’ are used alternatively.

Outsourcing firms have been among the most vocal in lobbying for the new policy, under which JSEZA has stipulated that work-from-home arrangements will be capped at 30 per cent of a company’s workforce.

The new ‘70/30 WFH Policy’ will be applicable to all firms licensed by JSEZA, which tallies to less than 150 companies. It will replace the current interim arrangement in which work from home has been permitted under a waiver that ends in December.

The current arrangement was at no cost to licensees, but come January 1, 2024, when the replacement policy goes into effect, firms seeking work-from-home concessions will be required to pay an annual fee of US$8 per remote worker.

Based on the current employment numbers in the outsourcing sector, the average BPO firm would be able to place around 200 employees on remote work arrangements, which would cost around $250,000 to $300,000 in annual fees to JSEZA. However, for a larger firm with, say, 2,000 employees, that bill would rise to nearly three-quarters of a million dollars.

And some outsourcing firms are baulking at the fee, which was an unwelcome outcome of the lobby mounted by the Global Service Sector Jamaica, GSSJ, for remote working arrangements as a productivity aid.

Enthusiasm for remote work has dampened because of poor internet connectivity and electricity outages, among other issues. As such, the imposition of the fee is being seen as just one more detraction, according to various firms canvassed by the Financial Gleaner.

Currently, some firms have more than 30 per cent of their workforce on remote arrangements, and will have to reduce the numbers over the next six months to get to the new ratio, said GSSJ President Anand Biradar.

“Generally, with the onset of the pandemic, BPO services were in higher demand globally,” said Biradar.

“In Jamaica’s case, we benefited from other jurisdictions’ inability to pivot to work at home as smoothly and quickly as we did,” he said.

However, Biradar also noted that the 70:30 ratio to be implemented by JSEZA aligned with the outsourcing industry’s needs.

JSEZA’s interim CEO Kelli-Dawn Hamilton says that under the new arrangement, up to 30 per cent of a SEZ licensee’s labour force will be allowed to work from home, while the remaining 70 per cent will be required to go into office.

The authority has also developed a specific list of equipment that firms may move from their operational base – which is technically the ‘zone’ from which they are permitted to conduct business – to an employee’s home or remote site to facilitate the arrangement.

Additionally, in order to adhere to international requirements, and safeguarding against “base erosion and profit shifting”, Kelli-Dawn Hamilton said, there would be a nominal fee payable for each employee who will be working from home.

Under the SEZ regime, outsourcing firms get tax breaks on equipment and several other savings. Under the prevailing waiver which rolls off at year end, firms are also allowed to temporarily remove assets from their zone without attracting customs duties.

JSEZA’s licensees span various industries, including food and agrotechnology, logistics and supply chain management, pharmaceuticals, creative industries and new digital media, and automotives.

There are 143 special economic zones operating in 174 locations. This includes 34 BPO firms across 64 locations, JSEZA said.

Jamaica’s outsourcing industry has 91 firms of local and international origin whose operations are spread across 112 sites and located in all parishes, excepting Trelawny and St Thomas. Those firms span various categorisations, including business process outsourcing, knowledge process outsourcing, and shared services.

The sector currently accounts for 60,200 jobs. Due to continuing demand, Biradar projects an employment growth rate of 12 to 15 per cent over the next three years.

Reliability and productivity

Yoni Epstein, chairman and CEO of Outsourcing Management Limited, which trades as itel, says 13 per cent of his workforce is currently on remote work arrangements.

However, he noted that the company has been grappling with issues of “reliability and productivity” among remote staff. As such, the company would be cutting the arrangement “even further to about five per cent,” Epstein told the Financial Gleaner.

Remote work “has certainly increased employment, but as time goes on, I believe that these work-at-home employees will end up in a facility at some point,” he said.

Ibex Jamaica currently has 400 persons on work-from-home arrangements, which Vice-President and Country Manager Tamara Ricketts-Brown said equated to seven per cent of the company’s Jamaican workforce.

The current move by JSEZA to impose a fee on the arrangement, and other challenges, have dampened enthusiasm for hybrid work, she noted.

“There are several challenges to WAH in Jamaica, including fast and reliable internet connectivity to all homes, data privacy and information security concerns. These key factors limit the amount of WAH jobs in Jamaica,” said Ricketts-Brown.

During the pandemic, Ibex “pivoted heavily” to work-at-home arrangements.

But since the lifting of pandemic restrictions, “WAH has decreased in Jamaica due to multiple factors identified above, including unreliable infrastructure and services,” said Ricketts-Brown. “In addition, the attempt by JSEZA to increase fees for BPO providers offering WAH services outside of their paid physical locations dampened demand for WAH.”

Ibex has shifted back mainly to an on-site work model at its six customer service centres, but the country manager said the company intends to continue its work-from-home policy, especially in circumstances where job recruits are not able to work outside their homes.

Vikram Dhiman, chief operating officer of ICD Group Holdings Limited, operator of the Advantage Communications outsourcing firm, said that during the pandemic, up to 30 per cent of the workforce operated remotely.

“It was definitely a plus for hiring,” said Dhiman.

“The flip side is that it is quite hard to train people on a regular basis for just work-from-home stuff. It’s best to ensure they have all their equipment and security,” he said.

Biradar, who heads up Hinduja Global’s Jamaican operations, said “slow internet connections with unstable connections in the country” hampers the ability of agents to conduct their work in real time, and remains a serious challenge.

“In spite of this, there has been a notable increase in employment and the focus that BPOs have placed on work-at-home productivity,” said the GSSJ president.

“While WAH has increased productivity, it has also increased employment in the BPO sector,” he added.

avia.collinder@gleanerjm.com