We Are No. 1!

NEWS BROKE out last week that the Philippines has surpassed India to become the world’s global leader in business process outsourcing (BPO), of which call enters are the most prominent. In its Global Location Trends annual report, IBM Global Business Services reported that in business support functions, defined to include shared services and BPO, the Philippines generated over 15,000 new jobs in 2009, against India’s 13,000. It must be clarified that the report appears to be referring only to the jobs generated within the year, and not to the total size of the industry, where India apparently remains on top. Industry figures estimate revenues generated from the BPO sector in 2008 at $6.8 billion for the Philippines, while India made $11 billion. It is thus unlikely that we’re already on top in terms of total BPO industry output—at least not yet.
But we are indeed No. 1 if we’re looking only at call centers or “voice-based support services,” according to the Call Center Association of the Philippines (CCAP). According to CCAP, there are around 350,000 Filipinos working in call centers, against India’s 330,000-strong workforce. Revenues are projected to reach $5.7 billion this year, against $5.58 billion expected for India. The IBM report points to the Philippines as an appealing outsourcing destination due to its well-educated workforce, good language competencies and a strong work ethic. In voice-based services, in particular, a paper by a US BPO executive observed that Filipinos speak idiomatic American English better than Indians, and their accent is more neutral. In seeming affirmation of this, major Indian outsourcing companies are now setting up operations in the Philippines. Last week, Tata Consultancy Services, the information technology services, business solutions and outsourcing arm of India’s giant Tata Group, opened its first BPO center in Southeast Asia at the Bonifacio Global City in Taguig City.
For some time now, BPO has been reputed to be the fastest-growing industry in the world. The broader industry goes beyond call centers to include other services such as business back-office operations, including finance, logistics and accounting; medical and legal transcription; software development and maintenance; animation; and engineering and architectural design. Around the world, the industry is seen to be still developing, as more and more organizations discover the cost-saving advantage that comes with off-shoring and outsourcing of services. A study by international investment consultancy firm McKinsey & Company valued the potential global market for BPO at $450 billion, with only 10 to 12 percent penetrated so far. Hence, the potential for growth is enormous. Recent experience also proved the industry to be resilient and relatively recession-proof; when the global economic crisis hit, many companies actually turned to outsourcing as a cost-saving coping mechanism against the downturn.
In the Philippines, the BPO industry has reportedly been zooming at annual growth rates of up to 46 percent since 2006, with call centers leading the way. Most of the BPO facilities are located in Metro Manila and Cebu, but firms have also sprouted in Baguio City, Angeles City (in Clark), Dagupan City, Lipa City, Urdaneta City and Legazpi City in Luzon; Tacloban City, Dumaguete City, Iloilo City and Bacolod City in the Visayas; and Davao City, Cagayan de Oro and Iligan City in Mindanao. The industry employed an estimated 435,000 workers at the end of 2008 (from 372,000 in 2007). The industry goal is to expand it to a $25-billion industry employing 1.3 million people by 2016.
Right now, the main obstacle to achieving that growth is a growing shortage of qualified personnel relative to the needs of the industry. The industry requires a relatively high level of education and skills, particularly high proficiency in English and computer literacy. Except for entry-level jobs in animation, almost all positions in the industry require a college education and additional training on specific areas. The problem is that the bulk of our country’s unemployed, numbering some 2 to 3 million, are mostly not qualified for BPO jobs. While jobless Filipinos are predominantly young (80 percent below age 34), statistics show that they mostly attained only a high school education or less. Sustaining growth in this industry therefore requires deliberate efforts to maintain a pipeline of trained qualified workers to respond to the industry’s growing demands. Meanwhile, BPO is not the answer to providing gainful employment to our large pool of jobless Filipinos; we need to look elsewhere for that.
While there is already a pipeline of talent in the school system, the Business Process Association of the Philippines (BPAP) estimates this to be sufficient to support growth of only about 15 percent per year. This is far short of the 40 percent annual growth needed to achieve the industry’s targets. The industry association has thus begun looking into tapping alternative labor pools, including housewives, retirees, non-graduates and career-switchers. They are also increasingly looking beyond Metro Manila, and going to the Visayas and Mindanao as well. BPAP has identified at least 13 additional locations that can support operations of more than 5,000 employees, and five cities that could serve as hubs employing up to 3 to 10 times as much.
And so, while we already lead in call centers and are poised to wrest the lead from India in BPO within a few years, there is much homework to do to get there, and even more to stay there. Meanwhile, we can now rightfully and proudly call ourselves the call center capital of the world.
Source: http://opinion.inquirer.net