Outsourcing contact center work to offshore destinations is experiencing a rapid growth phase with key delivery centers in India, Philippines and central and Eastern Europe experiencing annual growth in excess of 30%.
A new study by the Everest Research Institute says while the global Contact center Outsourcing (CCO) market has grown to a US$55 billion, traditional CCO has reached a mature phase and is showing signs of an impending growth plateau. “The value proposition for buyers of contact center outsourcing services is demonstrating early indications of shifting from a cost savings-focused approach to an integrated approach across cost, quality and efficiency,” said Everest’s Amiya Kagalwala.
“Offshoring continues to grow aggressively in key geographic locations (India, Philippines, central and eastern Europe), while areas in Central and South America and the Caribbean are emerging as smaller-scale hubs,” he said. The study said Eastern Europe has risen to be a low-cost alternative for European buyers given language skills and proximity, while the Philippines has become a key destination for English voice-based work for the United States.
Philippine president Gloria Macapagal-Arroyo is looking for a 40% growth in the country’s Business Process Outsourcing (BPO) industry for 2008.
Speaking at the e-Services Global Sourcing Conference and Exhibition, Arroyo said while the Philippines currently employ 300,000 people in the BPO and contact center industry, she wants these increased by at least 40% to meet the growing demand worldwide. She said the Philippines at present is only second to India in terms of supplying the workforce in the BPO industry, but it has already been recognized as the “premiere global destination for these types of IT enabled services”.
“We are proud of what we had achieved but we are anxious to solidify our gains. We’re anxious not to be complacent in the face of rapid change,” Arroyo said. “For 2008, we have targeted to grow our O & O (offshore and outsourcing) workforce by 40% in order to cope with the industry demands and also to achieve a 40% growth rate in the O & O sector.”
The City of Manila has been named the second top Business Process Outsourcing (BPO) destination in the Asia-Pacific region by the International Data Corporation (IDC), just three months after the Philippines was named as the ‘Offshoring Destination of the Year‘ by the United Kingdom’s National Outsourcing Association last October.
In the IDC list, Manila was ranked no. 2, second only to Bangalore, India.
Three other Philippine cities have been included by the London Financial Times in the survey of ‘Top Ten Asian Cities of the Future‘, thus validating the country’s position as a major player in the global offshoring and outsourcing (O&O) market.
Quezon City ranked 7th, Cebu 8th and Davao 10th in the survey commissioned by the London Times, comparable with cities like Hongkong, Singapore and Taipei which were the top three.
President Gloria-Macapagal-Arroyo announced that her administration has targeted a 40% growth rate in the country’s O&O sector for this year and 40% growth target in the workforce “in order to cope with the industry demands”.
“These distinctions from the O&O sector and global ICT firms provide our investor friends, who have come to E-services Philippines, with objective third party assessments of our O&O capabilities,” the President stressed.
According to the President, the runaway growth of the O&O industry has echoed throughout the entire system, spawning impressive growth on other sectors like real estate, telecommunications, food and retail among others.
The Business Process Outsourcing (BPO) indusrty is booming in the Philippines. The most common BPO services here in the country are call centers, software development, transcription, encoding, animation, human resources, accounting and payroll outsourcing.
BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in the marketplace.
There are also a lot of new BPO opportunities, aside from the most common BPO services mentioned above, that we, as Filipinos, can embark on. Outsourced writing is one.
For a long time now, writing and editing works have been subcontracted to smaller institutions and writers which became known as Ghostwriting. Ghostwriting was revolutionized with the advent of the internet. New company websites, portals, forums and blogs are created every second. With that comes along the increased demand for content. You have to remember that Content is King.
Blogging is now commonly being outsourced. A lot of Filipino bloggers are now considered as probloggers as they have taken jobs in blogging in behalf of the companies/persons that hired them for their blogging service. Bloggerwave gives another option for bloggers. Bloggerwave will ask you for your valuable feedback to advertisers with respect to their web sites, products, services, and companies. The best part of this is that bloggers get paid!
Business Process Outsourcing, BPO involves the contracting of a task to a third-party provider. Services include call centers, financial management, software writing, medical and legal transcription of files and even animation.
Philippine’s Socioeconomic Planning Secretary Romulo Neri says the Philippines expects such BPO functions to bring in $3 billion in revenues this year, with annual revenues of $10 billion in five years.
“That is why the real estate industry has gone up significantly in the past two years,” he said.
Industry leaders have placed the Philippines just behind India as the ideal place for BPO investment, thanks to the country’s highly educated, western-oriented, English-speaking population.
The government’s Board of Investments expects there will be more than 920,000 Filipinos working in BPO centers by 2010 as businesses expand and new investors come in.
Medical and legal transcription posted the highest growth in revenue among all the sub-sectors in the country’s business process outsourcing (BPO) industry at 97% in 2005. This was shown in the 2005 baseline study of the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) on the economic contribution of information technology (IT)-enabled services in the country.
BPO industry comprises contact or call centres, medical and legal transcription, animation, software and other BPOs that include management consultancy, hardware consultancy, data processing, financial and accounting services and engineering services.
The industry’s revenue in 2005 totaled to about P109.9 billion (US$2.4 billion), which is higher than year-ago’s P74.2 billion, the survey said.
Among the sub-sectors, contact centers had the highest revenue share at 49.4 % or P54.3 billion followed by other BPOs, 29.3%, P32.2 billion; software development, 20%, P21.9 billion; animation, .9%, P939.1 million; and medical and legal transcription, .4%, P466.2 million.
Medical transcription registered the highest annual growth at 97% followed by contact centers, 65%; software development, 40.8%; animation, 35.3%; and other BPOs, 30.5%.
The central Visayas economy performed better for the first quarter this year compared to the same period in 2006 with the agriculture sector, shipping industry, tourism and ICT-related industries leading the growth.
According to the National Economic Development Authority in the region (NEDA-7), the economy of the region was buoyed by the high performance of the agriculture sector that posted a double-digit increase in production; the rosier performance of the shipping and air transportation sector couple with the continuing upward trend of the construction, tourism and IT-enabled industries in the Central Visayas area.
Investments in the business process outsourcing (BPO) and call centers particularly in Cebu remained high in Q1 of 2007. A number of existing BPO companies expanded operations in the region in the first quarter among them Sykes-Cebu and Exist Global.
With the very good economic performance of the region, inflation rate eased further to 2.5% in the first quarter from 4.2% in Q4 of 2006 and 7.0% in the first quarter of last year. NEDA-7 report said, this is the lowest recorded average year-on-year inflation rate for a quarter since base year for the consumer price index (CPI) was moved from 1994-2000.
Consul General Cecilia Rebong of the Philippine Consulate General in New York, USA reported to the Department of Foreign Affairs that a capital markets analyst has said that the Philippines is the top choice among a growing number of major U.S. companies for finance, technology, telecommunications and consumer products, and accounting business process outsourcing (BPO) services.
Consul General Rebong said this was essentially the message of Ms. Cynthia Houlton, Senior Analyst of RBC Capital Markets, in speaking on Global Sourcing and Finance and Accounting Business Process Outsourcing Services during a well-attended business networking reception organized by the Business Process Outsourcing Council, the Philippine Consulate General, and the Philippine Trade Office in New York on 23 May 2007. Welcoming the guests who were mostly CEOs, presidents, and managers of major American financial, banking, and investment companies based in New York, Consul General Rebong said, The reception is only our second offering since the creation of the Business Process Outsourcing Council one month ago, and the goal remains to be to facilitate dialogue, information, and greater understanding of the Philippines Business Process Outsourcing (BPO) sector among potential global partners.
The Philippines was selected because of the country’s advantages over alternative Asian sites: Labor costs equivalent to China; lower and more stable than India; prevalence of spoken American English; cultural and social affinity with the US; modern and stable infrastructure such as water, power, roads, telecommunications; large pool of qualified college graduates seeking white-collar employment; access to specialized skills aligned with US professional standards; government support and tax breaks for the industry; and more familiar environment for expatriate trainers and managers than other Asian alternatives.
The advantages clearly show that the Philippines’ attractiveness as a BPO destination is no longer limited to cost-reduction but also to being able to provide global partners with a human resource possessing the right skill sets and competencies supported by a sophisticated telecommunications infrastructure,†Consul General Rebong observed.
The Asia-Pacific’s Business Process Outsourcing (BPO) market is expected to be worth 8.3 billion US dollars by the end of this year compared to 7 billion a year earlier, research agency IDC said on Monday. The market is forecast to grow at a compound annual rate of 16% until 2011 to reach 14.8 billion US dollars, IDC added.
“We can essentially view the BPO market in the region as either matured or developing, and within that, English-speaking or non English speaking, each with its unique needs and characteristics,” The Business Times quoted Conrad Chang, IDC Asia-Pacific research manager as saying.
BPO end-users are demanding solutions that address their particular needs, Chang said. “Cookie-cutter approaches will not work in addressing region-specific issues.”
The research agency defines BPO as distinct from normal processing services. Outsourcing services such as checks, credit cards and bill processing are not considered to be BPO activities.
IDC regards BPO as more strategic in nature and involving transformational activities that align a company’s outsourcing engagements to corporate objectives.
