Seizing the Day in the Philippines
by Carmen P. Hidalgo

It’s time to seize the day in the Philippines. In the Business Process Outsourcing industry worth a whopping $255 billion, the Philippines currently holds the second largest market share…and it isn’t stopping there. Increasingly, investors—encouraged by the largely English-speaking annual turnout of 4000,000 graduates, the relatively low cost of labor, telecommunications and real estate, a conducive tax and regulatory environment, and an established history of customer service—are eyeing the country as the new BPO frontier.

At present, India holds the biggest market share in the BPO industry. This is due in large part to the advantage of scalability (in 2004 they posted a population of 1.1 billion, of which 250 million are English-speaking), and an established, unrivaled IT background. However, this position comes with its own drawbacks. With the sheer volume, for example, of a gargantuan population, comes the hazard of imprecision in recruitment and staffing. 20,000 job applicants per day make it virtually impossible to screen and train each applicant thoroughly. Also, as India has become more and more specialized in IT services such as software development, they have left the field open with regard to voice call and other outsourced services. Increasing development and industrialization in India also mean the dreaded has happened: India has become more expensive.

These are the areas in which the Philippines is prepared to fill the gap. Their long history and good track record in the field of human resource and customer care mean a more refined screening process that does not leave it up to the companies themselves to weed out unsuitable candidates. The Philippines is also known for its strong legal, medical, accounting, and artistic educational system, which equip them to provide services which do not fall under the domain of India. Examples of these services would be: accounting and finance work, medical transcription, law proceeding transcription, data encoding, electronics encoding, software application, voice calls, and animation. The Philippines is in a unique position at the crossroads of this phenomenally fast-growing industry that is BPO.

Leading human resource firm, John Clements Consultants, Inc., which staffs a good number of the major Philippine call centers, is prepared to maximize this position. In its 30 years of experience at partnering people and companies, John Clements has witnessed the rise and fall of the dotcom industry, as well as the advent of the BPO in Asia. For a period of 5 years, John Clements gained experience in the US. One of the advantages of this experience is that they know that data and the dissemination of it are essential to attracting investors.

This is the primary motivation behind a study which John Clements’ commissioned Magellan Alliance, a US-based consulting firm, to produce. This study will be on the overall potential of the Philippines in the BPO-call center-shared services sector. Titled “People and Places: Positioning the Philippines for Growth in IT-Enabled Services,” it will include research gathered on labor, telecommunications, government support, real estate and other infrastructure, not only in the National Capital Region but in over 20 provincial cities in the Philippines as well. It will also include a quantification of employment, revenue, and other benefits, as well as the development of a timeline for achieving those benefits.

One of the most surprising finds in the course of research for the study has been the wealth of potential in the provincial areas of the Philippines, evident in the high oral proficiency test scores and large annual volume of graduates from these provinces. To date, 19 call centers have been discovered outside of Metro Manila.

Overall, despite certain key issues such as country risk and employee retention, which have yet to be addressed by the Philippine government and BPO industry, the preliminary results of the study indicate that the Philippines is fertile ground for investment. Already, the Philippines holds numerous ties with the US. Around 50 Fortune 500 companies have operations in the Philippines, and approximately 120,000 Americans live in the Philippines—the fifth highest number after Mexico, Germany, Canada, and the UK. The Philippines is poised to achieve its full potential in the offshore outsourcing industry. Now it is up to investors to seize the day.