In this BPO Corner:
The Philippine BPO Industry: Sunny Skies in 2006
By Paul Catiang

Now referred to as the Sunshine Industry because of all the jobs it has generated and the foreign investors it has attracted to the Philippines, the Business Process Outsourcing industry is where everyone from the entry level all the way up to the executive level is going. But exactly how sunny is it in the land of night shifts and international calls?

The answer lies in the combined projections of the Board of Investments (BoI), the Business Process Association of the Philippines (BPA/P), and the Committee on Information and Communications Technology (CICT), which charts the industry’s progress over the past years and projects its growth until 2010. “The BPO industry surpassed the 2-billion-dollar mark in 2005, a 137-percent growth from last year’s 1-billion-dollar revenue,” said Mitch Locsin, BPA/P president, in a recent television interview.

Of the many sectors comprising the BPO industry (contact centers, back-office operations, medical and legal transcription, animation, software development, and engineering design) contact centers—the sector popularly associated with the BPO industry—account for half of the two billion gained in 2005, with the entry of multinational companies establishing call centers in the Philippines, which include Dell, Sutherland, Siemens, Manulife and JP Morgan Chase. While the combined forecast shows that contact centers will have the majority of BPO workers until 2010, back-office operations, digital content providers and medical and legal transcription outfits are expected to maintain the highest growth rate at no less than 70 percent for year for the next five years.

In 2006, the Philippine BPO industry aims for a 52-percent revenue increase, totaling 3.4 billion dollars. As the workforce expands, growth is expected to slow down, from a projected 44-percent increase in 2006 to 35 percent in 2010. This does not mean, however, that the industry is slowing down. A total of 1.17 million people are expected to be gainfully employed as BPO workers by 2010, 303,000 of which are new employees. By this time, revenue is expected to amount to 12.4 billion dollars.

A recent study by AT Kearney revealed that the Philippines is now the fourth most preferred destination for outsourced business, trailing behind India, China and Malaysia, and moving up two spots from its ranking at sixth place in 2004. But how exactly does the industry plan on capitalizing on this advantage?

While it is known that the average Filipino still needs extensive communication skills training to work at a call center, Mr. Locsin reiterates the fact that the Philippines is culturally closer to the United States, which is currently the source of most BPOs here. When it comes to voice operations, the Philippines currently leads the pack. Still, English proficiency is an advantage that needs constant reinforcement through training programs and government support.

The buck does not stop with communication skills training. Technical knowledge must also be enriched to attract other sectors of outsourced business: medical and legal transcription, engineering design and back-office operations, all of which require specialized knowledge of its workers. Legal issues also need to be addressed: Intellectual Property Rights, especially when it comes to software, need to be respected to reassure foreign investors that their tools will retain their value if they set up shop here. Lastly, other markets need to be tapped, like the United Kingdom and Europe. These markets look for high value-added services, which have to be truly sophisticated to attract companies from these areas.

According to the AT Kearney study, the Philippines’ biggest concern is to maintain its training of the BPO workforce and keep their skills sharp and honed. With the BPA/P heading several initiatives, including the soon-to-be-launched English Is Cool program, it will take a while before Filipinos run out of instructional courses.

For now, the 3.4-billion-dollar target seems far off, but with the determination and tenacity the BPO industry has shown so far, it won’t take long before the target is reached, if not exceeded.