In this BPO Corner:
RP Eyes Wider Niche in Business Process Outsourcing Market in US
By Louie Alonso Belmonte

The Philippines is eyeing a wider niche in the business process outsourcing (BPO) market in the United States as it participates in the biggest outsourcing fair in New York to further attract foreign investors.

According to Center for International Trade Expositions and Missions (CITEM), the country’s participation in OutsourceWorld New York, slated from October 18 to 19, is one way of the nation’s campaign to promote the Filipino capability on BPO.

Analysts said the United States accounts for 60 percent of the spending in the world’s BPO market, largely driven by the prosperity to outsource, cut costs and focus on core competencies. The said demand for BPO services will likely continue until 2006.

Trade Secretary Peter Favila noted that worldwide BPO demand is mainly driven by the desire of foreign companies to focus on their core competencies, improve service levels and reduce internal costs.
Based on statistics, worldwide BPO market reaches US$131 billion in 2004 from US$122 billion in 2003. By 2007, the BPO market is expected to grow to $173 billion.

"It is part of the Philippines’ strategy to partner with countries like the United States in a bid to increase our market presence and collaborate with prospect business partners in the area of IT outsourcing," Favila said.
He likewise encouraged Philippine companies involved in a broad range of e-services activities from BPO, information technology (IT), human resources services and contact centers to enlist in the country’s participation to OutsourceWorld New York.

Last year, the same event attracted over 18,000 visitors from different countries in Asia and Europe.

The Philippine participation is also seen as a platform to attract foreign visitors and IT stakeholders to the country’s most comprehensive IT outsourcing industry.

To date, some of the American BPO companies present in the Philippines are Accenture, Amex, AIG, Barnes & Nobel Online, Caltex, Citibank, Procter & Gamble and Head Strong Corp.

Favila noted that foreign companies locate in the Philippines for its very high service standards, English-speaking workforce, technology infrastructure, and abundant affordable Class A office spaces.

In its report, CITEM cited that in the 2004 Kearney Index, the Philippines was identified as among the top 10 choice for offshore operations, scoring high in the financial structure and human resources indexes.

The Philippines is the third largest Englishspeaking nation in the world outside the United Kingdom and the US. The Philippines has over 300 software development companies, the biggest segment in the Philippine eservices industry in terms of players.

Aside from proficiency in the English language and close affinity with the West, the over 10,000 Filipino IT professionals are also highly trainable with a learning curve of six to eight weeks.

CITEM likewise said that cost savings in the Philippines are 30 to 50 percent over the US operations and labor rates the most cost-competitive among 32 countries surveyed for the same IT skills, based on data from an international human resource consultancy firm.

Its employment turnover rate is less than one percent compared to other countries like India.

The Philippines has the largest pool of quality accountants in Asia, with 105,000 graduates of finance, accounting and management every year and increasing by about 3,000 yearly.

During the first quarter of 2005, there were about 113,300 licensed accountants in the country. The US’ Generally Accepted Accounting Principles (GAAP) rank Filipino accountants as "among the best int he world."

Last month, eleven BPO companies from the Philippines joined OutsourceWorld London and attracting over a dozen European firms to pour in several IT investments in the country.

Also, during the recent Software Development Expo & Conference (SODEC) in Japan, a business seminar highlighted the IT offerings of the Philippines.

"I am confident that the Philippines’ BPO share in the world market will increase as a result of this initiative to join OutsourceWorld New York," added Favila.

CITEM said that based on the country’s investment agencies, the Philippines’ BPO market share amounted to 600 million dollars.

Last year, the United States is the second top destination of Philippine exports amounting to US$6.7 million next to Japan, and number one as a source of imports amounting to US$8.2 million.

Major Philippine exports to the United States include semi-conductor devices, portable, digital automatic data processing machines and storage units, among others.

Top imports, however, include parts of electronic integrated circuits, dice of any material for the manufacture of semi-conductor devices and computer parts and accessories.

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Originally published in the Manila Bulletin.