The Philippine BPO Industry (2012)

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    STRATB

    Philippine

    BPOIndustry

    The

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    Business Process Outsourcing (BPO) is a key

    driver of the Philippine economy and is now rec-ognized as the fastest-growing source of employ-

    ment and revenue for the country.

    The Department of Trade and Industry (DTI)

    denes Business Process Outsourcing as the

    delegation of servi ce-type business processes to

    a third-party service provider. This was derived

    from Gartner Dataquests denition of BPO as

    the delegation of one or more IT-intensive busi-

    ness processes to an external provider that, in

    Philippine

    BPOIndustry

    turn, owns, administrates and manages the select-

    ed process or processes based on dened andmeasurable performance metrics. 1 The BPO

    sector is just one of the four main segments of

    the outsourcing and off shoring (O&O) indus-

    try. Contact centers, medical transcription, back-

    ofce processing, game development, animation

    and digital content are services classied under

    the BPO segment.

    The Philippines has emerged as a top destina-

    tion globally for BPO services, including higher

    The

    value-added Knowledge Process Outs

    (KPO) services. The contact-center grew 23 percent in 2010 and 21 percent

    putting the Philippines in a leading positio

    global sourcing market, specically in the

    based services. In 2010, with about 400

    center agents, the country outpaced Ind

    voice-based support services given its 3

    agents. 2 Moreover, the industry was able

    erate between 80,000 and 100,000 new

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    Figure 1: Philippine IT-BPO Industry Size from 2006-2011(USD Billion)

    Table 1: The Growth of the Philippine IT-BPO Industry

    According to the Board of Investments (BOI), the

    Philippine IT-BPO Industry has a 30 percent share of the

    US market and 15-20 percent of Asia Pacic. Aside fromthe growth of its full time employees, the industry has

    also consistently increased its revenue share of

    the global IT-BPO market from ve percent in

    2006 to eight percent in 2011.

    Next to remittances from Overseas Filipino

    Workers (OFWs), the BPO sector accounted for

    630,000 workers and $11 billion in revenues in 2011.

    The BPO sector is the countrys second largest source of

    foreign exchange. Throughout the latest global economic

    shocks, remittances from OFWs and revenues from the

    countrys vibrant BPO services have helped the

    Philippines maintain a healthy growth rate.

    The table beside presents the growth of the Phili ppine

    IT-BPO services based on the outsourcing services it

    offers. It illustrates the industry progress based

    on employment rate and revenue.

    Source: BOI4

    Source: Invest Philippines5

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    The Philippines large, scalable talent poolwell-educated workforce with excellen

    communication skills - is one of thfundamentals for the growth of th

    BPO industry in the countryFigure 2: Cost Competitive Location for Voice-Based BPO

    Sources: BOI7

    Figure 3: Cost Competitive Location for Voice-Based BPOSource: BOI8

    The Competitive Edge:

    Outsourcing in the Philippines

    The Philippines large, scalable talent pool well-educated workforce with ex-

    cellent communication skills is one of the fundamentals for the growth of the

    BPO industry in the country.

    The Philippines was named as the worlds top country in business English pro-

    ciency even surpassing the United States, according to a recent study by the

    GlobalEnglish Corporation. In this study, for 2012, the Philippines scored 7.11

    (the Philippines was the only country which attained a score above 7.0 among

    76 subjects) a result representing high prociency. This indicates an abil-

    ity to take an active role in business discussions and perform relatively

    complex tasks. Other countries in the top ve were Norway (6.54),

    Estonia (6.45), Serbia (6.38), and Slovenia (6.19).

    In addition, the Philippines is cost competitive across service segments.

    It is one of the lowest cost destinations for English work and for non-

    voice and IT services work in the world6.

    The service orientation of Filipinos is also one of the pillars of the

    industrys growth in the country. The BPO industry also gets substantial support

    from the government, with attractive investment packages such as an Income TaxHoliday 9.

    A recently released report by the Business Processing Association of the Philip-

    pines (BPAP) has dubbed as Next Wave Cities or NWCs (also referred to as

    tier 2 and 3 cities) certain areas in the country.10 These places have started to

    mature and are now attracting bi g-name outsourcing rms outside the estab-

    lished and mature (also referred to as Tier 1) IT hubs of Metro Manila, Metro

    Cebu, and Metro Clark.

    The ten NWCs identied in the said report were Davao City, Sta. Rosa City, Ba-

    colod City, Iloilo City, Metro Cavite, Lipa City, Cagayan de Oro City, Malolos City,

    Baguio City, and Dumaguete City.11 IT-BPOs in NWCs provide employment and

    training to a multitude of graduates in the Philippines and at the same time, keeplocal talent in the country.

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    Providing a broader context, the Tholons 2012 Top 100 Outsoursing

    Destinations report12 considers Southeast Asia as a dominant force in the

    global outsourcing landscape. Manila NCR garnered the top spot in

    Southeast Asian rankings of the Tholons report. Some highlights for its

    growth include the citys 10.6 percent increase in IT-BPO employees in

    2011. It also remains as the outsourcing hotbed of the Philippines

    with major deliver y centers from major companies like HP, IBM,

    Dell, Convergys, and Teleperformance located in the city.

    We see the Philippines having the most number of regional destinationsthat topped the Tholons rankings. Aside from Metro Manila,

    Cebu, Davao, Sta. Rosa in Laguna, and Iloilo are seen

    as top outsourcing destinations in the country.

    The Challenges

    Despite the positive and vibrant outlook for the industry, there are challen-

    ges that need to be addressed by both government and the private sector.

    One challenge is to be able to sustain quality supply of labor force to

    support the BPO industry from entry level upwards. Recent surveys show

    that new graduates lack the skills to compete globally in the new market,with Manila estimating that only 5 to 8 percent of university graduates are

    ready for employment in the BPO recruitment mar ket upon

    completing their studies.13 An initial attempt to address this invoves a

    partnership between BPAP and the Technical Education and Skills

    Development Authority (TESDA). Here, skills and language trainings

    are offered to individuals interested in the BPO industry.

    As the BPO-KPO diversies into areas of non-voice skills such as na

    accounting, engineering and design, health-related services and creativ

    digital ar ts, TESDA also called on schools, universities, and technical

    vocational institutions to help by offering more BPO courses,particularly for non-voice skills.

    The growing number of students and

    professionals considering working overseas

    another challenge. BPAP ensures that BPO

    available employment is made known to st

    dents. The campaign Work Abroad, Live H

    meant to increase awareness of employme

    portunities in more than 20 non-voice com

    services sectors in the IT-BPO industry.14

    Then there are health and work-quality iss

    pushing Filipino workers to leave call cente

    the Philippines for locations abroad in an apparent exodus that may h

    the domestic BPO industry in meeting its jobs target by 2016.15

    BPAP cited an atrition rate of nine to ten percent that mostly affects t

    call-center sector.16The night shift signicantly contributes to the attr

    rate since call-center agents look for countries nearer to time zones

    of clients in order to avoid working late in the evening and into early

    dawn, according to CCAP, the Contact Center Association of the

    Philippines. There are also employees who hop from one call center

    to another. However, most of them leave for overseas

    destinations like Malaysia and Singapore.

    A survey recently conducted by BPAP and Outsource2Philippines (O

    revealed signicantly heightened perception of a tight labor market asfactor.17 This means that employers today compared to previous yea

    Table 2: South East Asia Rankings in 2012

    Source: Tholons (Ibid.)

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    trouble lling jobs, or that there is a longer wait to ll an available job.18 Last

    March, 43 percent of respondents said the tight labor market was their

    top concern when it comes to risk to the industry and its continued

    expansion. This year, that number jumped 20 points with 63

    percent of respondents holding such a view.

    Moreover, the study introduced an item on new skill area, values and work

    ethic, and it resonated with respondents, with 24 percent of them saying it

    was their number one priority, making it essentially as important as the

    ability to speak English. Executives seem to be concerned with the

    emotional maturity of their employees.

    This years survey showed some easing of concern over investment

    incentives. While it remains a pr iority concern, respondents appear to

    feel that government policy makers understand the industry and

    will do whatever is necessary to sustain investment.

    Moving Forward: Shifting to KPOs

    Knowledge-process outsourcing or KPO is said to be the way to go for the

    Philippines to achieve a loftier status in the BPO industry. According to theBOI, the country has a credible share of 10 percent and can be an

    alternative to India in terms of several non-voice areas.19

    KPO is the delegation of knowledge-intensive business processes that

    require signicant domain expertise , analytic skills and judgments, and

    decision-making capabilities to a third ser vice provider. The goal of KPO is to

    deliver value by providing superior enterprise decision-making as opposed

    to cost savings alone. The processes involved in KPO require research,

    analysis, and the level of expertise possessed by professionals, specialists,

    and scholars.20 These processes include Animation and Simulation; Content

    Development; Automotive and Aerospace Design and Development;

    Financial Consulting and Services; Intellectual Property (IP) and

    Patent Research; Financial Modeling; Learning Solutions; and,Writing and Content Development, to name a few.

    In addition, the Information and Communications Technology Ofce

    of the Depar tment of Science and Technology (DoST) and the BPA

    have said that there are four growth areas in the industry: (1) Healt

    information management; (2) Finance and accounting; (3) Human

    resources; and, (4) Creative process.21

    There are vast opportunities for the Philippines in KPO ser vices, as

    are numerous global companies seeking highly skilled people to per

    special jobs. Business process outsourcing, specically KPO, is a

    multibillion-dollar industry worldwide and all geographies

    are growing.22 The KPO boom, even in the Philippines, is expected

    to come with double digit growth.

    BPAP President and CEO Benedict C . Hernandez said that there ar

    basic skills most outsourcing companies are screening applicants for

    (1) English prociency, (2) learning ability, (3) computer literacy,

    and (4) speed and accuracy.23

    The opportunities are in KPO. What will have to be developed is t

    availability so the workforce can be employable. Again, the challeng

    Philippines is to produce competent and qualied talent for the ind

    According to BPAP, a factor that will slow down the growth of the iis talent and nding the competent workers. This concern therefor

    underscores the related role the Philippine school system.24

    Related to this, the international consulting rm Ovum has pointed

    there are various factors required of a potential KPO location, nam

    (1) availability of talent, (2) cost advantages, (3) infrastructure

    costs, and (4) tax incentives.25

    Moving Forward: Philippine Healthcare Informatio

    Management (HIM) Outsourcing

    The Philippines is the leading destination of choice for Medical Infortion outsourcing, one of the key subsectors in the industry. Moreov

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    country is poised to become the world leader in the global

    multi-billion dollar healthcare information management (HIM)

    outsourcing eld in 2012.

    The Philippines healthcare outsourcing sector grew 172

    percent from $102 million in 2010 to S$277 million last year.26

    BPAP has pointed out that the HIM sector has captured a

    third of industry share and continues to grow.27 And by 2016,

    Healthcare Information Management Outsourcing Associationof the Philippines (HIMOAP) projects an additional 100,000

    full-time employees and a market share of

    $1 billion for the HIM industry.28

    Aside from medical transcription, the healthcare

    outsourcing market has evolved to include high

    value services including clinical coding, disease

    management, revenue cycle management, and

    pharmaceutical benets management. However, there should be

    the availability of licensed healthcare professionals such as nurses

    in the countr y. This would ensure the steady supply of agents to

    ll in the seats for healthcare outsourcing.29 At the same time,

    nursing graduates could increase their employability in the Philip-

    pine HIM industry instead of applying overseas.

    Aside from HIM, the IT-BPO industry is looking to ll approxi-

    mately 120,000 jobs this year in a var iety of increasingly value-driven segments such as engineering, animation, and accounting.30

    With this goal, BPAP said that the industry needs nurses, anima-

    tors, game developers, accountants, and engineers to ll in the

    non-voice segment of the KPO/BPO industr y. Hence, government

    must partner with the educational and private sectors to develop

    the needed talent pool. According to the industry, the involve-

    ment of technical-vocational schools and universities has helped

    in developing talent for the BPO and KPO industry.

    There are many opportunities for the available talent pool o

    Philippines. A key factor is to infuse additional skills set31thr

    quality education. For instance, nurses and other medical p

    fessionals can build rewarding careers in healthcare informa

    management outsourcing by complementing their expertise

    IT and related skills.

    Industry Forecast

    The Philippine IT-BPO growth prospects remain strong in 2

    During the midyear economic update of the industry, it was

    reported that 100% of mid-large companies expect to grow

    2012; also, contact centers in the Phili ppines will continue to

    number one and will grow higher than the forecasted 15 pe

    cent.32The sectors of IT, Corporate Services, Global in-hou

    Centers, and Healthcare will likewise continue to grow faste

    Furthermore, a study on the BPO sector has 90 percent of

    respondents saying that their companies will expand their w

    forces this year.33This includes rms of all sizes. Many rms

    already attained substantial scale, but among 36 respondentworking in rms with 1,000 FTEs or more, all but four said t

    companies would grow six percent or more this year. Fur th

    percent of all respondents said their companies wil l grow b

    tween 6 and 50 percent.

    Compared to last year, signicantly more rms also said the

    grow between 11 percent and 50 percent in 2012. This diff

    tial was especially notable among rms that said they would

    between 16 and 25 percent. In a similar survey last year, slig

    more than 11 percent of respondents said their companies

    grow in this range. This year, close to 25 percent of respond

    said their companies will grow between 16 and 25 percent.

    According to the Asian Development Bank Outlook Report

    (ADB), among developing countries, India is a pioneer in IC

    Figure 4: Growth Forecasts of IT-BPO Companies in the Philippines(March 2011 and March 2012)Source: Invest Philippines34

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    BPO and is still a dominant player. Other countries have followed Indias lead. The Philip-

    pines and other countries are expanding their shares of the industry at Indias expense.35

    XMG said Chinas year growth is the largest compared to the next two largest playe

    India and the Philippines. It was explained that this trend reects how political insta

    the US has a smaller impact on China, which has actively sought out customers in

    the Asian market. Meanwhile, industry volume for India and the Philippines

    has historically focused on gaining share of US outsourcing.

    XMG forecasts the Philippine BPO industry to grow from $11 to $12.7 billion in

    revenues from 2011 to 2012. India continues to lead, however, growing from $59 b

    in 2011 to $63.2 billion in 2012. A close second is China with revenues of

    $45.7 billion in 2011 and $53.8 billion in 2012.

    The analyst rm added that the last three years (2010 to 2012 projections) have se

    growth in the Philippines 25.4 percent, 23.6 percent, and 15.7 percent year on ye

    This same period also saw growth by the other two primary players, India and Chin

    On one hand, India grew 13.2 percent, 8.6 percent, and 7.1 percent during the same

    on the other, Chinas numbers were, 43.5 percent, 63.6 percent, and 33 percent.

    At this point, China and the Phi lippines are each showing real growth, in terms of to

    market share, as compared to Indias current dominant position, XMG said.

    In billions of dollars, Indias last three-year growth cycle was, 54.33, 59.0, and 63.2

    successively. Chinas market share was 35.76, 45.7, and 53.8. In 2010, Indias revenues

    were $18.6 billion more than China, but by 2012 the difference was down

    to $9.4 billion; a signicant reduction.

    The Philippines modest contribution rose from $8.9 to 12.7 billion. This was a 43

    percent revenue increase, according to XMG. In addition, it was only slightly lower

    than Chinas 50 percent revenue increase.39

    Lastly, the XMG report said that the growth of the offshoring outsourcing industry w

    remain relentless. This trend suggests that there will eventually be new opportunitie

    for other players to gain market share in the global outsourcing industry.

    Because of this foreseen development, there is a need for the Philippines to have co

    nies that are more productive. In the book That used to be US by Thomas L. Fr

    and Michael Mandelbaum,40there are companies that use the tools of hyperconnec

    every way possible to produce more goods and services even with fewer people. Asame time, there must be companies that spawn decent-paying jobs. In the BPO an

    In a mid-year report, analyst rm XMG Global said that, China is on target to over take In-

    dia as the dominant BPO player in the next two to three years i f current trends continue

    in the outsourcing sector.37

    Figure 5: Developing EconomiesShares of Business Process Outsourcing

    Source:ADB36

    Figure 6: Outsourcing Revenue Per Country(in US$ Billion)

    Source:Newsbytes (2012)38

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    The rst batch of TESDA-accredited trainers that completed the TM 1 program are

    training the TM Plus trainees. They included 12 trainers from Aegis, one of the

    global IT-BPO providers operating in the country.

    I-TWSP is a key initial component of the government and the IT-BPO industrys Ro

    2016 to increase total industry generated jobs from 1.8 million in 2010 (500,000 di

    and 1.3 million ind irect) to 4.5 million in 2016 (1.3 million direct and 3.2 mill ion indi

    In 2011, the IT-BPO industry generated $11 billion in revenues. The industry

    road map seeks to increase revenues to $25 billion by 2016.

    The entire program is divided into two parts: the rst covers IT-BPO orientation an

    instruction via classroom and e-learning sessions; and the next is allotted for interns

    where trainees co-facilitate TM Plus in an IT-BPO facility. Afterwards, trainees are ass

    via tools developed by Philippine Society for Training and Development (PSTD)

    as well as TESDAs TM 1 National Assessment. Corresponding certicates

    shall be issued upon qualication.

    BPAP president and CEO Benedict Hernandez said that being a world-class IT-BPO

    employee entails more than having effective communication skills. He said that it is

    about having the right attitude and possessing a high level of competency.

    TESDAs IT-BPO training programs are designed to develop and increase the numb

    qualied hires. The course outline includes sessions such as facilitating learning sessio

    and discussions; using electronic media in trainings; electronic learning applications; b

    learning techniques; classroom management; conducting competency assessments; s

    vising work-based learning; and, application of skills and knowledge through an inter

    Moreover, the Commission on Higher Education (CHED), together with BPAP, the

    Management Association of the Philippines (MAP), their members and other

    partner associations, collectively collaborated to develop a specialized

    track in service management focusing on the BPO industry.

    Through CHED Memorandum Order 6 Series of 2012 (CMO), concerted policies

    programs focusing on building competency in human resource development were

    institutionalized. This was achieved through cooperative partnerships among

    stakeholders in government, academe and industry for planning, sourcing

    and developing a sustainable talent pool for the BPO industry,

    industry and even in other sectors, improvement of technology and infrastructure is ne-

    cessary but not sufcient. Other requirements, as also mentioned earlier, need to be met.

    Friedman and Mandelbaum ar gue that there is only one way to forge ahead: more

    innovation powered by better education for everyone. The quality of education entails

    not only adequate number of classrooms, schools, teachers, and books. It does not solely

    include improving access to education to a wider population especially in the rural areas.

    Better education means the quality of education in terms of enhanced

    curricula, system of teaching, and even better teachers.

    If the Philippines aims to further compete with other countries in the global outsourcing

    industry and improve its stake, a signicant factor would be the quality of its labor pool.

    It must put in place proper and world-class training programs and

    educational courses for its working population.

    Government and the BPO Industry

    TESDA and BPAP have recently announced a trainer s training program aimed at

    supporting talent development in the IT-BPO industry. Trainers Methodology (TM) Plus,

    the rst trainers training program for IT-BPO is just one in a series of educational

    programs developed under the P500-million worth Industry-based Training for

    Work Scholarship Program (I-TWSP).

    41

    TESDA has allocated 900 vouchers amounting to P18 million for the training program.

    TM Plus was jointly developed by TESDA and BPAP. In addition, a budget of P7.2 million

    for 804 vouchers will be used for TM 1, a rst-generation version of said TESDA course,

    which is also intended to enhance training skills. TM Plus scholarship vouchers

    will be available through selected technical vocational institutions (TVIs)

    in Luzon, Visayas, and Mindanao.

    According to TESDA Director-General Joel Villanueva, TM Plus will help ensure that the

    Philippines will have a pool of highly competent IT-BPO trainers. Those who have

    completed the training will be responsible for training the next batch of trainers.

    Through this, government hopes to achieve a multiplier effect that

    will increase IT-BPO-oriented training opportunities.

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    According to CHED, the Philippine BPO industr y has been evolving as a sunshine industry.

    The supply and availability of qualied personnel, however, remains the biggest challenge.

    It has been repeatedly argued here that to meet this challenge means keeping global

    competitiveness and a leadership position in the industry today.

    The specialized track in servi ce management following the CHED policy for

    outcome-based education aims to prepare students, from all types of tr aditional courses,

    for a career in the BPO industr y by equipping them with the required competencies

    needed for entry-level positions and for fur ther career development.

    The Service Management Specialization Track uses an integrated approach and takes into

    consideration the interrelationships among the functional areas of business, notably in

    information and communication technology as well as sensitivity to the economic, social,

    technological, legal, and international environment in which business must operate.

    It will be called Service Management for Business Outsourcing.

    The objective of the program is not simply to impart basic business knowledge but to

    instil and nurture important qualities and skills in students that are essential for future

    business leadership and organizational success in the industry within a global market.

    Recommendations:

    Education and Skills Development as Top Priority

    There are various ways by which to strengthen the BPO sector and prepare it for a

    shift to being more of a KPO service provider. These include having strong governmental

    support and, most impor tantly, educational sector modication. Given the reports and

    surveys cited above, the availability of qualied labor personnel in the IT-BPO industry

    and the quality of education are two essential factors that need to be

    addressed by both government and the private sector.

    Friedman and Mandelbaum have argued how globalization and the IT revolution

    have transformed many things. The merger of these two change processes is increasing

    global competition for key jobs. Thus, need for a person to have skills to

    obtain and retain any good job has been heightened.

    Globalization and the so-called IT revolution are broad dimensions of change that are

    affecting all businesses, schools, armies, terrorist groups, governments, and individual wor-

    kers across the globe.42 A foreseen challenge, however, is employment polarizatio

    skill-biased technological change. Friedman and Mandelbaum have explained tha

    puter or robot makes an educated person more productive but often makes a

    less-educated person less employable. Companies are learning to do more with

    so more and more old jobs are never coming back and more and more

    new jobs are being done by machines and microchips.43

    The rise of the BPO Industry and the shift to providing KPO services are both ins

    of this merger of globalization and IT revolution. It has expanded to the extent t

    everything and ever yone are being woven together into an ever tightening web, gmore people in more and more pl aces access to cheap tools of connectivity, crea

    and collaboration. At the same time, this connectivity is enabling a whole new

    category of workers to join the global marketplace.44

    As elaborated above, the merger of globalization and IT revolution can make

    economies better off or worse off. It depends on how well the new world is und

    and how effectively it is responded to. And the Philippines will be not be insulate

    this phenomenon. Eventually, more countries will get a share of the pie that is th

    outsourcing marketsomething which the Philippines currently has a major shar

    Stratbase Research Institute (SRI) recognizes the signicant contribution of the

    Philippine BPO industry to the growth of the national economy. At the same tim

    does not discount that the quali ty of the industr y is at par and, based on current

    could even be better than its g lobal competitors. However, as the extent of the

    access to technology improves and increases, the risk of losing that edge in

    the global IT-BPO industry also increases.

    By 2016, BPAP forecasts a stretch target of $25 Billion in revenues and 1.3 million

    employment.45 At the same time, there is a projected 20 percent year-on-year gr

    together with service and market diversication. According to the report, the

    industry will only be able to meet these targets if government is able to

    meet the following conditions:46

    Continued intensied Public-Private Partnership efforts in human capital

    development initiatives;

    Maintained competitive and predictable incentives, especially given curremoves;

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    Sustained regulator y environment, ease of doing busi-

    ness, peace and order;

    Address perceived country r isk issues, especially on

    disaster prevention and response; and,

    Improved country marketing given competition activi-

    ties.

    In these concluding sections, SRI recommends the institution-

    alization of training courses and programs for those who wantto enter and are currently in the BPO industry. These are

    aimed to equip the labor pool in the Philippines with necessary

    skills to compete not only for the BPO industry

    but for other sectors as well, whether

    in or out of the countr y.

    Government and the Phil ippine IT-BPO industry

    need to institutionalize talent and skills

    management and development. There must be

    measures on improving education and training

    for students and even current employees who seek

    to work for the industry. There are a lot of opportunities in

    the Philippine BPO industry but its growth will only continue ifthere is a critical number of qualied talent that

    will meet the industr ys development goals.

    Strong government support is very important in coming up

    with a successful BPO sector. This support may come in the

    form of: scholarship grants to poverty-rigged students who are

    wish to work in the sector, business subsidies, tax incentives,

    and a whole lot more. But more importantly, there should

    be support from the government in terms of its policy

    directions in prioritizing the IT-BPO industry.

    Government has made substantial progress in skills

    development, aligning educational curricula, and developing

    training programsfor instance, CHEDs Service Management

    Specialization Track and TESDA and BPAPs Trainers Methodol-

    ogy Program.47 Moreover, BOI suggests that in line with skills

    development and propagation for the IT-BPO industry, it is vital

    that the industry also considers requirements for specialized

    skills and the need for a constant pool of trained manpower,

    creating a virtual cottage industr y of skills development. There

    should also be training schools which generate more ancillary

    jobs revolving around technical training, language training, and

    other process-specic education and formation.48

    One of the countries that have been exemplary in skills devel-opment is Singapore. Its development experience emphasizes

    the role played by human capital to support a strategy for

    knowledge and skills development intensive growth.49The

    Philippines should understand the example of Singapore in

    terms of its explicit focus and consideration of the linkages to

    the demand for skills that arise from a countrys development

    strategy and the growth of industry and private enterprise.

    Government should also properly and efciently implement

    rules and regulations that affect the IT-BPO industry. In any

    business environment, good governance means good IT-BPO

    business.50 Aside from government support for education,

    there should also be locator support such as placing theseoutsourcing companies in Phil ippine Economic Zone Authority.

    Investors should also be fairly and clearly provided with incen-

    tives such as tax breaks that could make the Philippines more

    competitive than its neighbours in the outsourcing industry.

    Aside from these, government could support the industry

    through efcient, reliable and abundant low-cost and high

    quality infrastructure51in terms of real estate,

    telecommunications, electricity, and transportation.

    In addition, a partnership between the government and the

    private sector is an opportunity that could enable better and

    pertinent services. Through cooperation, the private

    sector and government, not only create prospects for revenue

    increases but also ensures business stability due to the more

    extended array of opportunities and possible solution to v

    problems that both sectors could jointly address.

    Aside from offering a competitive business environment to

    foreign investors, both government and the industry need

    address issues that are being faced by the Philippine IT-BPO

    industry. Government and the private sector must work t

    to create and sustain growth prospects for the industry.

    A recent sur vey by BPAP and Outsource2Philippines (O2Prevealed seven areas IT-BPO executives believe must be u

    addressed to ensure that the industr y continues to benet

    growing demand internationally for outsourced services.52

    A chief business development concern is availability of peo

    the right skills for knowledge process outsourcing. Non-vo

    complex outsourcing services are the fastest-growing segm

    the Philippine IT-BPO industry. This is a positive developm

    shows growing acceptance of the Philippines as a provider

    high-value services. Thir ty four percent (34%) of respond

    skill sets to support KPO is their number one developmen

    sue, up from 26 percent last year. When it comes to gene

    English competence remains the top concern which was upoints to 25 percent this year from 17 percent last year.

    As the industry grows and KPO capability and service deliv

    expands, IT-BPO executives believe a deep academic-indus

    partnership is key to ensuring talent supply, and that a mor

    regulatory environment can contribute to fostering such a

    partnership. The IT-BPO Road Map 2011-2016 calls for

    liberalization of foreign investment in education and trainin

    ensure institutions are available with the domain expertise

    necessary to prepare students for careers in IT-BPO.

    According to the same survey cited above, concern over

    perception and brand visibility of the industry also increase

    stantially this year, up from 28 percent in 2011 to 46 perce

    in 2012. This result only reects increased concern with

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    Copyright 2012 SRi Stratbase Research Institute. All rights reserved.

    www.stratbase.com.ph

    2

    availability of qualied labor, and signies the importance of

    creating positive perception of the industry and the

    opportunities it provides among students and the

    people who inuence them, especially parents.

    19 Board of Investments. (n.d.). Integrating global processes: The Philippine outsourcing advantage.

    Retrieved from: http://www.boi.gov.ph

    20 The Philippines as a KPO destination. (n.d.).

    21 Abadilla, E. (2012, February 1). 4 BPO sectors leadership targeted. Manila Bulletin. Retrieved from:

    www.mb.com.ph

    22 Reyes, R. (2012, May 21). Knowledge-process outsourcing pushed. Business Mirror. Retrieved from:

    businessmirror.com.ph

    23 Ibid.

    24 Visconti, K. (2012, October 5). Beyond English: The key skills BPOs need. Rappler. Retrieved from: www.

    rappler.com

    25 Ibid.

    26 Isip, I. (2012, August 7). Healthcare management BPOs to employ 100,000. Malaya. Retrieved from:

    www.malaya.com

    27 Newsbytes. Nurses, Engineers eyed for IT-BPO work. Retrieved from: newsbytes.ph

    28 Ibid.

    29 Ibid.

    30 Ibid.

    31 Ibid.

    32 Midyear economic update: Philippine IT-BPO industry. (September 2012). Retrieved from: http://www.

    investphilippines.info

    33 The survey was conducted in February and March. It was distributed to 621 primary and second

    representatives of BPAP and the Philippine Software Industry Association (PSIA), and 161 executives

    responded providing a 26% response rate. The condence level is at 95% plus or minus 3%.

    34 Midyear economic update: Philippine IT-BPO industry. (September 2012). Retrieved from: http://www.

    investphilippines.info

    35 Asian Development Bank. (2012). Asian development outlook 2012 update: Services and Asias future

    growth. Retrieved from: www.adb.org

    36 Ibid.

    37 Newsbytes. (2012, August 28). Chinas BPO emergence threatens dominance of PH, India. Retrieved

    from: newsbytes.ph

    38 Ibid.

    39 Ibid.

    40 Friedman, T. and Mandelbaum, M. (2011). That used to be US. Published by D&M Publishers, Inc. in t

    States of America

    41 Newsbytes. (2012, October 3). P25.2-M train the trainers program for IT-BPO unveiled. Retrieved

    newsbytes.ph

    42 Ibid.

    43 Ibid.

    44 Ibid.

    45 Midyear economic update: Philippine IT-BPO industry. (September 2012). Retrieved from: http://ww

    philippines.info

    46 Ibid.

    47 Hamlin, M. (2012, October 2). IT-BPO industry: Whos afraid of the Philippines and China?. Manila B

    Retrieved from: www.mb.com.ph

    48 Board of Investments. (n.d.). IT and BPO services prole. Retrieved from: www.boi.gov.ph

    49 Ibid.

    50 Ibid.

    51 Ibid.

    52 The survey was conducted in Februar y and March. It was distributed to 621 primary and second re

    tives of BPAP and the Philippine Software Industry Association (PSIA), and 161 executives responded

    26% response rate. The condence level is at 95% pl us or minus 3%.

    ENDNOTES:

    1 Rodolfo, C.S. (2006). Sustaining Philippine Advantage in Business Process Outsourcing. In G. Pasadilla

    (Ed), The global challenge in services trade: a look at Philippine competitiveness. Makati, Philippines: the

    Philippine Institute for Development Studies (PIDS) and the German Technical Cooperation (GTZ).

    Retrieved from http://www3.pids.gov.ph/ris/books/pidsbk06-services.pdf

    2 Tholons. (January 2012). 2012 Tholons top 100 outsourcing destinations: Regional dynamics. Retrieved

    from: www.tholons.com

    3 Board of Investments. (n.d.). Integrating global processes: The Philippine outsourcing

    advantage. Retrieved from: http://www.boi.gov.ph

    4 Ibid.

    5 Midyear economic update: Philippine IT-BPO industry. (September 2012). Retrieved

    from: http://www.investphilippines.info

    6 Ibid.

    7 Board of Investments. (n.d.). Integrating global processes: The Philippine outsourcing

    advantage. Retrieved from: http://www.boi.gov.ph

    8 Ibid.

    9 Ibid.

    10 NWCs were scored in four major factors: talent (40 percent), infrastructure (30 percent), cost (10

    percent), and business environment and risk management (20 percent).

    11 Ibid.

    12Tholons, Ibid.

    13 Oxford Business Group. (April 2012). The Philippines: BPOs rising potential. Retrieved from: www.

    oxfordbusinessgroup.com

    14 Newsbytes Philippines. (2012, March 30). Nurses, engineers eyed for IT-BPO work. Retrieved from:

    newsbytes.ph

    15 Estopace, D. (2012, April 2). BPO workers opt for jobs overseas. Business Mirror. Retrieved from:

    www.businessmirror.com.ph

    16 Ibid.

    17The sur vey was conducted in February and March. It was distributed to 621 primary and second

    representatives of BPAP and the Philippine Software Industry Association (PSIA), and 161 executives

    responded providing a 26% response rate. The condence level is at 95% plus or minus 3%.

    18 About Economics. (n.d.). Denition of tight labor market. Retrieved from: http://economics.about.com/od/economicsglossary/g/tightness.htm

    In the nal analysis, information technology as cultural-

    technological capital rests on the need to maintain a

    modicum of human resource a base of skilled

    and educated human capital.