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8
Jul

WHAT MAKES OUTSOURCING MORE FUN IN THE PHILIPPINES? A Map to Philippine BPO Success

One side of the story, Pearl of the Orient; the other one, Pearl of the BPO industry? Today, Philippines continues to dominate outsourcing hub royalty in the world.

Well known as the Pearl of the Orient, Philippines has been a pioneer in the Business Process Outsourcing (BPO) for the past few years and still counting for the coming years. But how these started and how can we project the future of outsourcing in the Philippines.

PHL Outsourcing: the beginning

Outsourcing in the Philippines started in 1992 when an Ireland based BPO company Accenture entered the Philippine Arena followed by an American company Sykes in 1997.  Meanwhile, two alumni of Mc Kinsey & Company, Jim Franke and Derek Holley, prides the eTelecare as the first Filipino Call Center and an Indian owned Aegis People support also got into in the Philippine BPO scene that both entered in 2000.

The business continued to rise when some other BPO giants came in –PLDT/Ventus, Convergys among others.

Then the domination continues. For the last 7 years, BPO has been one of the fastest growing sectors in the Philippines and by 2010, revenues reached an estimated US$12.2 billion. And In 2012 alone, top BPO companies in the country reached a staggering P192 billion revenue.

The current topnotcher BPO company Accenture has been a pioneer in the industry since 1992 with P28.104 billion pesos in 2012 revenues followed by Convergys and JpMorgan Chase Bank with P17.281 billion and P10.805 billion revenues, respectively.

The Number Game

Based on the 2014 rankings of Tholons Top 100 Outsourcing Destinations, Philippines (Manila) exculpated India (Mumbai) at the number two spot for best BPO destination in the world. The country also occupied six spots in the top 100— lead by Cebu followed by Davao, Bacolod, Iloilo, Laguna, and Baguio City.

The numbers were fortunate enough to give birth thousands of job opportunities to Filipinos. Based on reports, an astounding 24,000 job opening for the industry has been projected this year. In addition, BPO firms are projected to add an average of 124,000 jobs annually from 2014 to 2016, or a total of 372,000 new posts for the next three years. To date, BPO industry generated 900,000 in 2013 from 777,000 last 2012.

Meanwhile, based on the 2010 Annual Survey of Philippine Business and Industry (ASPBI), half (226 or 44.7%) of the BPO activities were engaged in call centers activities (voice). Followed by computer programming activities with 169 or 33.4 percent. Data processing with 39 establishments shared 7.7 percent; Medical Transcription, 29; other IT and computer related course, 12; software publishing, 10; application hosting, 9; Motion Pictures, 6.

The Market Dynamics

•  Based on APAC, Philippine has been a global leader in Voice BPO with a 30% share in US, 15%- 20% in UK.
•  For non-voice, Philippine has been a large industry-specific opportunity; and has a credible Philippine share and an effective alternative to India.
•  In IT-ESO, Philippine has been a highly competitive market and has an emerging opportunities to penetrate ASEAN.

Lastly, reports also indicated that BPO sector is one of the country’s main sources of hard cash, generating export earnings of $13.3 Billion in 2013, a 15% increase on the previous year’s performance and as projected, it will rise up to 15% or 18 Billion in 2014 revenues. And to date, 2016 , IT BPM and BPO sector is expected to mark growth and lead the industry to meet Road Map targets and contribute to 9% of GDP, and a $25 Billion growth (Phil Export, 2014, www).

Currently, more and more business used to outsource in the country due to some impeccable reasons.

Why Outsource to the Philippines?

1. Home of highly competitive labor force. Home of educated, well equipped, and professional people, the Philippines proved that it is a pioneer and home of talents, skilled labor force. The country’s literacy rate, which is remarkably at 92.6%, shows that the country is at score with developed countries such as the United States, Singapore, among others. Novecho also stated the following:

•  400,000 college graduates produced per year creating more labor force.
•  Filipinos are naturally hardworking and creative.
•  Filipinos can easily adapt to various work processes, lifestyles and cultures.

2. Low and efficient cost. According to Sourcing Line, the Philippines is one of the most cost effective locations for IT (web design, software development, Animation, etc.) and BPO (voice and non-voice) in the world. Employee compensation costs, the primary cost component of any outsourcing operation can be a tenth to a fifth of that for a domestic US operation. Also, Novecho reports the following:

•  30-40% lower salary compared to Europe and the US, with a daily minimum wage of about 8 dollars a day;
•  50% lower electricity, telecommunication and utilities cost;
•  5–30% call center service savings;
•  35–50% software development savings.

3. Stable economic growth. According to the Business Processing Association of the Philippines (BPAP), within about a decade, the Philippines has established itself as one of the top destinations globally for IT-BPO and GIC operations. The above information on the BPO growth has been observed and projected to balloon several years from now due to increasing international client. In addition, the Philippine Government has been a supporter of these BPO milestones thus assists private corporations, local and international, to invest and make business in the country leading to a positive impact to growing economies.

Reports also said that:

•  In the World Affairs, Philippines, with two other countries, is the new Asia’s next tiger;
•  Bloomberg reports that Philippines is a Leading Asian Tiger Economy of the World;
•  In times Inc., The Philippines: a new Asian tiger is born; and
•  In World Bank, Philippines is Asia’s rising tiger.

4. Communicating is more fun in the Philippines. Colonized by American, the Philippines alongside with the Filipino language, adopted English as a major language in business processes. Also, the Philippines is one of the best English-speaking country in the world with 55.46% Literacy rates (Ticong and Vallez, 2012) making it the third largest English-speaking country in the world.

•  In Global English Education study in 2012, results showed that from 76 represented countries worldwide, only the Philippines attained a score above 7.0 making the PHL the World’s best country in business English.

5. Filipinos are totally hard working and loyal. A journal article written by Erika Joy Ticong and Anna Gale Vallez (2012) stated that Filipino professionals are hard worker, by nature. They worked round the clock; even if the clients are from different time zones. They are also very warm and patient (they answer phone calls with a smile). They also have a high degree of empathy, always eager to please and not to disappoint.

CONCLUSION:

To date, Bangko Sentral ng Pilipinas (BSP), the central bank of the country, has projected a robust growth in the BPO industry for the following years. The growth is expected to birth millions of jobs that will apparently boost the Philippine economy in the coming years. Considering the country was named a new tiger economy in Asia, it is then the time to prove what does the country has to offer the world. And since many international audience want to invest in the BPO industry, then it’s the time to show what makes outsourcing more fun in the Philippines.

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  • http://www.weboutsourcing-gateway.com/ Web Outsourcing Gateway

    Thanks Maja!