Nearshore Americas

Shorter Workweeks Gain Momentum; What Can Global Enterprises Expect?

The debate around shorter workweeks is gaining traction, and businesses which depend on offshore/nearshore workforces to keep operations running 24/7 are paying attention.

While the prediction of 2023 being the year of the shortened workweek did not come to be, the proposition keeps advancing in several countries with the support of public officials and, in a handful of cases, business leaders.

The latest catalyst for the debate came from Infosys Founder Narayana Murthy, who made headlines after lambasting India’s youth for “taking not so desirable habits from the West” and commenting that a 70-hour workweek is the road to economic greatness. 

In India –the biggest name in BPO and IT outsourcing globally–, an employed person works an average of almost 48 hours per week, according to data from the International Labour Organization (ILO). 

Workweek length is comparable in some of the most relevant markets in the Americas. Workers in Mexico, Argentina, Bolivia, Costa Rica, Nicaragua, Panama, Paraguay, Peru and Uruguay can work up to 48 hours a week. In Brazil, El Salvador and Guatemala, weekly working hours are capped at 45. When accounting for the total hours worked each year, Mexican and Costa Rican workers accumulate the most compared to employees in other OECD countries.

Though Mr. Murthy’s comments link productivity and economic growth directly to the number of hours worked, workweeks are comparably short among countries which stand atop the economic pyramid. In the US, Canada and most of Europe, workweeks tend to clock under 40 hours, with some going under 35. Even in the Philippines, another outsourcing giant, the workweek remains below 40 hours, per ILO data.

Some of these developed countries are considering axing weekly working hours even further. Four-day workweeks have been experimented with in Iceland, the UK and some states in the US. The results have been reportedly positive across the board. 

These experiments and more worker-friendly administrations in the region have generated a wave which is washing over the American Nearshore. Chile approved a bill this year which will gradually cut the workweek from 45 hours to 40 by 2028. Colombia, one of Latin America’s premier markets for CX outsourcing, did likewise with a law that will cut workweeks down from 48 hours to 42 by 2026. Peru, Argentina and Costa Rica have seen proposals to shorten the workweek. In Brazil, some startups are already undertaking the four-day trial.

Mexico could find itself in a similar boat. A proposal for a 40-hour workweek has been making the rounds in Congress. The bill is still far removed from the voting floor, however, and with national elections happening in 2024, there are doubts on whether it will be voted any time soon. 

Bracing for the Hit

Although it has yet to be normalized, a shortened workweek has leaders in the global business space concerned for what it might mean for their operations and those of their customers. 

Joel Wolf, President and Founder of CX firm Hired Support, described the possible result as “a logistical nightmare”.  

“It would mean more people are required to do the same amount of work since there would be less hours or less days worked per individual while the clients themselves fully expect to maintain standard operating hours five days a week, or sometimes seven days a week,” Wolf commented. “BPOs would have a serious challenge filling the gaps internally. The only solution would be to hire people and w<that ould make the BPOs operate at a much higher cost to fulfill client demands.”

“I would not be in favor of a shorter work week,” he added. “It would be specifically damaging to our clients and coverage demands for operation hours. We would have to have multiple people to do the role that one person was formally doing.”

“I would not be in favor of a shorter work week. It would be specifically damaging to our clients and coverage demands for operation hours”—Joel Wolf, President and Founder of Hired Support

BPO vendors are traditionally pressured for workers. High attrition levels, an increasingly tight labor market and competing industries complicate operations in the sector, which remains very human-dependent even as automation takes over much of its tasks. 

Jesus Hoyos, Chief Strategist at Solvis Consulting and Principal Advisor at CX2 Advisory

Advocates of cutting down on weekly working hours argue that more leisure allows for better work-life balance, which in turn leads to higher employee satisfaction and retention. The same argument is made in the (still ongoing) debate between WFH models and back-to-the-office mandates. 

Plenty of BPO vendors have adopted WFH and hybrid models as a strategy to cast a wider recruiting net. Shortening workweeks might push even more service providers towards those models due to a need to cover the same levels of demand with less hours available per seat. 

Jesus Hoyos, Chief Strategist at Solvis Consulting and Principal Advisor at CX2 Advisory, sees possible complications in a context where remote work has become not only an option but a necessity for companies navigating a challenging talent landscape. A shortened workweek would require “more options for on-site or remote work in order to achieve bandwidth requirements” and “[opening] more offices near to where employees live,” he commented. 

 

Robots to the Rescue?

Not everything is doom and gloom in the discussion around a shortened workweek. For BPO/CX vendors in particular, automation might end up softening the blow of less available agents. 

“If shortened weeks were to happen, more integration of chatbots and self-service would have to pick up the slack,” commented Joel Wolf. “A well configured chatbot is able to solve roughly about 50% of basic customer queries so it’s the best alternative for sure, and basically mandatory at this point.”

Automation has proven quite effective for businesses in need to scale operations in a pinch. Instacart, for example, managed to pull off a massive scale down in customer care agents and third-party contracts thanks to chatbot and self-service implementation, this amidst perhaps its biggest jump in customer volumes in a period of less than six months.

Chatbots and AI-assistants for CX agents are among the most popular applications for automation and generative AI in business. Though the AI hype train is running at a vertiginous speed at the moment, business leaders are coming to terms with the limitations of the technology as it stands today. In other words, they’re discovering which sorts of tasks will still require human minds, and to what degree. 

In that context, automation might soften the blow of shortened workweeks, but it won’t save service providers from having to deal with the effects of a reduced labor supply.

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If nearshore and offshore markets opt for shorter workweeks, it will certainly disrupt business operations in the BPO sector. Nevertheless, it wouldn’t be the first time that the industry is forced to modify its sourcing strategies under the pressure of new regulations. 

Colombia and Chile are the only two nearshore markets where a shortening of the workweek is in progress, with only the first one being a major site for BPOs. Mexico –another relevant geo for the industry– is probably next. If the trend grows stronger in other important markets within the region, expect an acceleration of trends which are already underway: automation, WFH/hybrid models and an exploration of alternative geos, mainly tier-2 and tier-3 cities.

Cesar Cantu

Cesar is the Managing Editor of Nearshore Americas. He's a journalist based in Mexico City, with experience covering foreign trade policy, agribusiness and the food industry in Mexico and Latin America.

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