In this BPO Corner:
RP Aims to be Big in Business Outsourcing
By Emmie V. Abadilla

With outsourcing expected to be a $446-billion industry before the next decade, the Philippines is competing hard against two of the most populous nations on earth—India and China—to be Asia’s Business Process Outsourcing (BPO) hub.

Of India’s 1.09 billion people, just a little over hald, or 59.5 percent, are literate, according to 2005 estimaes. Of China’s 1.306 billion, 91 percent are literate. Of 87.8 million Filipinos, 93 percent are literate.

The setback of both India and China—distinct cultural differences, thick accents in call centers plus unreliable infrastructure—are the Philippines’ forte, according to industry sources. Filipinos are highly proficient in American English and familiar with American culture—a distinct advantage when interacting with U.S. clients.

Some 90 percent of all BPO deals in the country have been with American companies. Contracts from the United Kingdom and Asia take up the balance.

English-speaking nations account for 90 percent of the BPO market. America accounts 60 percent of the demand and it is expected to contract at least 3.3 million jobs worth US$136 billion last year, with most of the demand coming from the United Kingdom.

In all, the global market for outsourcing is projected to grow from $305 billion in 2004 to $445.9 billion dollars in 2009 at a compounded annual growth rate of nearly 8 percent.

This year alone, the local BPO sector will rake in close to US$2-billion revenues, according to Mitch Locsin, President of the Business Process Association of the Philippines (BPA/P).

Call centers expect to haul in US$1 billion, more than double its 2004 billings of US$490 million. Operations in accounting, insurance processing, telemarketing, legal and medical transcription as well as animation will account for the balance.

BPOs currently employ 132,000 workers, of which are 69,000 are in the Customer Care department; 25,000 in legal transcription, back office and related fields; 5,000 in medical transcription; 5,000 in animation and 28,000 in software development.

And the Philippines has more students enrolled in universities than most European countries. Every year, it turns out 380,000 university graduates. Of the total, 25,000 graduates are from technical colleges qualified to do BPO work with starting salaries of US$ 1.00 to US$ 2.00 per hour.

Many firms operate BPO units in the Philippines—Alitalia, Maersk Administrative Center, Navitaire, UPS Asia Consolidated Service Center, Accenture, American Data Exchange, Headstrong, IBM, Hewlett-Packard, SPOI Technologies, Chevron-Texaco, Time Warner, Procter & Gamble, AOL-Time Warner, Barnes & Noble Online, Federal Express, Caltex, AIG, Amex and Citibank.

European companies likewise outsource processes here, among them a handful of Dutch firms—Getronics, ING Group, KLM Royal Dutch Airlines and ABN AMRO.

British companies, such as Standard Chartered Bank, Sykes and Ambergris solutions, are outsourcing operations in the country as well.

Even Indian BPO firms, who are on a buying spree, are eyeing the Philippines, Thailand and Malaysia after snapping up small to medium businesses in the US and Northern Ireland.

HTMT, which has controlling interest in c3, a local 500-seat customer contact center, is among those interested. The company hopes to merge the Philippines’ voice-based capability with India’s nonm-voice based capability.

Daksh eServices (Philippines) Inc. was the first independent Indian BPO to set up shop here, although several multinationals, like SPI, Daksh, Accenture, Citibank, and HSBC, have already established operations in both India and the Philippines.

Daksh, which seeks to be one of the largest BPO companies in the Asia Pacific, was acquired by IBM.

SPI Technologies acquired an Indian medical transcription services company, KG Information Services and Technologies Private Ltd., to complement its expanding medical transcription business in the US and the Philippines.

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Originally published in the Manila Bulletin on November 6, 2005.