Philippine outsourcing to grow over 20% in 2009

Significant growth seen in Philippines outsourcing.

These statistics are right on target with what we’re seeing here currently in regards to growth figures. this article came out in Xinhuanet which is the top news website in China, and one of the most influential sites in the world

Manila, Feb. 9 (Xinhua):

The Philippines’ business process outsourcing (BPO) industry will remain bullish this year despite the global economic crisis that has slowed down most of the country’s major industries, industry leaders and experts said.

The steady demand for lower cost but reliable information and communication technology services will spur most companies in the United States, Europe and Australia to continue to outsource some of their functions to countries with cheaper but skilled labor force, like India and the Philippines.

India now holds the biggest share (roughly 40 percent) of the global BPO market. But the Philippines will remain a key player in this fast growing industry thanks to its steady supply of competent and educated workers, improving telecom infrastructures and government incentives.

The Philippine BPO industry’s export revenues are forecast to grow by 20 percent to 30 percent in 2009, hitting over 7 billion U.S. dollars, according to Oscar R. Sanez, Chief Executive Officer of the Business Processing Association of the Philippines (BPAP).

He also expects the BPO sector to create 100,000 new jobs and continue to slice a bigger share of the lucrative global outsourcing market.

“We have a strong basis why we should still be hopeful (despite the economic crisis). The BPO industry is growing,” Sanez told reporters Monday on the sidelines of the Ninth e-Services Global Sourcing Conference and Exhibition.

The two-day conference was organized by the Philippine Center for International Trade Expositions and Missions and aims to promote the Southeast Aisan country as a destination of choice for global outsourcing companies.

Sanez said that American companies, which are the biggest clients of Philippine BPO firms, are “under pressure to cut costs to survive.”

This, despite the fact that the growing unemployment worldwide is pressuring some countries, like the United States, to retain jobs at home. But the need to reduce cost is making outsourcing a more attractive option.

Outsourcing has allowed companies to cut costs by 50 percent to60 percent. The global recession is pressuring most companies to cut cost while keeping profit margin intact.

“There’s a relentless focus on managing costs. Cost savings have emerged as a key issue for most businesses,” said Peter Bendor-Samuel, Chief Executive Officer (CEO) of Everest Group, a Texas-based research and consultancy firm.

“In many instances it’s no longer about competitiveness but about survival. That’s why most companies that haven’t tried outsourcing before are now considering accelerating their plan to outsource,” Sanez said.

Indeed, a survey done by the Canada-based research and advisory firm XMG Global revealed that companies in the United States, Europe and Australia are now more interested to outsource.

“There’s no alternative to offshoring. It’s a viable business model if done properly,” said Lauro Vives, chief analyst and founding president of XMG Global in a speech delivered at the conference.

Sanez said that it’s important for industry leaders to aggressively market the Philippines as the destination of choice. This can be done through organizing trade missions, joining conferences and placing advertisements in magazines and TV shows which cater to CEOs of companies that are likely to outsource.

Next only to India and China, the Philippines is the third top performing offshoring countries in the Asia Pacific and accounts for 6.7 percent of the estimated 326-billion-dollar global information and communication technology outsourcing market, according to data issued by the Canada-based ICT research and advisory firm XMG Global.

The Philippine BPO industry includes a number of outsourcing firms such as call centers, animation companies, software developers and medical transcription firms and is considered among the country’s sunrise industries. The BPO sector earned 6 billion dollars in export revenues in 2008, or 26 percent more than 2007. Call centers contributed 70 percent to total revenues.

Need to expand knowledge pool

More than revenues, the BPO industry is also a major employment provider in a country which has one of the highest unemployment rates in Southeast Asia. The BPO companies now employ about 400,000 workers. Sanez estimates that the BPO, thanks to its fast growth, will create 100,000 more new jobs this year.

“The BPO industry will be able to help in this crisis,” Sanez said, alluding to how the recession is slackening most businesses worldwide leading to massive retrenchment.

In the Philippines alone, the Department of Labor and Employment reported that 40,000 workers have been displaced since the economic crisis hit in the last quarter of 2008. This doesn’t include the 30,000 workers who still have jobs but were working shorter hours and with lower pay.

Sanez said that BPO firms have linked up with the country’s Technical Education and Skills Development Authority (TESDA) to train retrenched workers who are interested in working in outsourcing firms.

But while the BPO industry can provide jobs, not everyone is qualified to work in these companies.

BPO companies have been reeling from low recruitment yield, high attrition, poaching and a shrinking talent pool for lack of qualified applicants. There’s also a shortage of people who are qualified to become middle managers and help companies achieve growth targets.

And unless these problems can be addressed immediately, it will be difficult for Philippine BPOs to attain 10 percent of the global outsourcing market by 2010. Qualifying as worker in BPO is not easy. We need workers with high problem-solving and English proficiency skills,” Sanez said.

But this is not because of the limited size of the labor force. Benedict Hernandez, founding president of the Contact Center Association of the Philippines (CCAP), said there are actually individuals qualified to work in call centers. The problem is, they’re not interested to become call center agents, much less than to assume a management post in these companies.

“There’s this misconception that working in a call center means being a telephone operator,” Hernandez said. For most of the qualified applicants, highly skilled and graduates of some of the country’s top universities, working in the call centers is a “no brainer job with no future,” Hernandez said.

This is something that BPAP and CCAP are actively trying to correct. BPO companies put employment ads in newspapers and organize job fairs that present the BPO industry as a fast growing and exciting industry which offers a lot of career prospects and provide numerous perks and benefits to its employees.

Hernandez said that the “contact center is the most exciting thing for career and skill development.”

Those who want to work in software development and financial services can in fact find these opportunities in contact centers.

BPAP is also involved launching several training programs. BPAP has allied with some private universities to provide supplemental English training programs among college students. It also provide straining for work scholarships to 44,000 students in 2008.

BPAP has also partnered with elite private universities Ateneo de Manila and De La Salle University to offer diploma programs on management and leadership. These programs will expand the now slim management talent pool in BPOs.

All these programs will remain in place in 2009 as BPO firms aggressively recruit for qualified applicants.

“Education is very important. That’s why BPAP coordinates with TESDA and private universities to improve curriculum and introduce more students which are in line with the requirements of the university,” Sanez said.

Source: http://News.Xinhuanet.com

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