[ Malaya.com.ph ] October 28, 2008
By IRMA ISIP
The global financial crisis will have mixed impact, mostly positive, on the business process outsourcing (BPO) industry, but would hit hard on smaller firms, a survey conducted among BPO firms show.
The survey said large firms or those employing from 5,001 to more than 15,000 have indicated that the global financial crisis will have a neutral or positive impact on their Philippine operations.
But the same survey said negative sentiment was apparent among respondents representing small firms employing less than 500 employees.
The survey said almost 40 percent of respondents representing firms employing between one and 100 believe the global financial crisis will have a negative impact on their Philippine operations.
The industry employed around 320,000 as of 2007 and needs to augment its workforce by 600,000 in the next three years — 150,000 to 200,000 every year — to meet its goal of 1 million jobs and $13-billion revenues by 2010.
From among the sectors, software developers of original intellectual property were the most pessimistic with almost 54 percent of the respondents in this segment, saying the global financial crisis will have a negative impact on their Philippine operations while about eight percent said the impact would be positive. About 39 percent said the impact of the global financial crisis on their operations would be neutral.
In contrast, firms in engineering services and legal transcription were the most optimistic as 75 percent of the respondents in this sector said the global financial crisis would have a positive effect on their Philippine operations, while 25 percent said the global financial crisis would have a neutral impact on their operations. None of the respondents engaged in engineering services said the global financial crisis would have a negative impact on their Philippine operations.
Overall, a significant majority or 79 percent, representing a broad spectrum of BPO sectors said the global financial crisis will have a positive or neutral effect on their Philippine operations.
Slightly more, about 44 percent of all the respondents believe that the global financial crisis will result in a decrease in demand for their services than an increase in demand, or 41 percent.
Because of this, 44 percent of respondents believe the global financial crisis will cause expansion plans to be cancelled or postponed as 31 percent of them believe access to funding will be constricted as a result of the global financial crisis and 27 percent indicated that the global financial crisis may result in difficult payment terms.
Asked on their preparedness, 88 percent of the respondents said their firms are taking steps to respond to opportunities and threats arising from the global financial crisis.
Thirty-eight percent of respondents said their firms are decreasing capital spending as a result of the global financial crisis; 28 percent said they are postponing expansion plans, while 24 percent said their firms are accelerating expansion plans, but only eight percent indicated that their firms are increasing capital spending.
Twenty percent indicated that they are intensifying recruitment, while 13 percent are decreasing recruitment efforts.
Other steps respondents’ firms are taking in response to the global financial crisis include intensifying marketing efforts and exploring new market segments.
"While the global financial crisis provides both opportunities and challenges for the Philippine BPO industry, industry players are indicating that overall, the outlook remains positive, and at least in some sectors, will become more so," said Oscar Sanez, chief executive officer of the Business Processing Association of the Philippines (BPA/P).
Firms still plan to expand their workforces in the next 12 months with 42 percent of respondents saying their companies will expand their workforces between six and 25 percent in the next 12 months and 16 percent will expand between 26 percent and 50 percent.
By sector, almost 63 percent of respondents engaged in legal transcription expect the global financial crisis to have a positive impact on their Philippine operations, while 12.5 percent said it would have a neutral impact. Twenty-five percent of respondents engaged in legal transcription expect the global financial crisis to have a negative impact on their Philippine operations.
Providers of software services were more optimistic, with 33.3 percent indicating that the global financial crisis will have a positive effect on their Philippine operations, but almost 39 percent said the global financial crisis will have a negative impact. Close to 28 percent said impact of the crisis will be neutral.
Among contact centers, 53.8 percent of contact centers primarily providing inbound services said the global financial crisis will have a positive impact on their Philippine operations, and 30 percent said the impact would be neutral. Only 15.4 percent of contact centers primarily engaged in inbound services said the global financial crisis will have a negative impact on their Philippine operations.
Sentiment was mixed among executives of contract centers primarily engaged in outbound services, with 50 percent indicating the global financial crisis will have a positive effect on their Philippine operations and 50 percent expecting the crisis to have a negative impact.
Fifty percent of third-party BPOs, which provide a variety of back office and knowledge process services, said the global financial crisis will have a positive impact on their Philippine operations, while 29.2 percent indicated the impact would be neutral.
About 21 percent said the impact of the global financial crisis on their Philippine operations will be negative. Almost 77 percent of in-house BPOs said the impact of the global financial crisis will have a positive or neutral impact on their operations in the Philippines , while 23.5 percent said the effect would be negative.
The survey was conducted online between October 21 to 25 by Outsource2Philippines (O2P), in partnership with the Business Processing Association of the Philippines (BPA/P) covering 113 responses from executives of members of BPAP and affiliates or 22.6 percent of the 499 members sent questionnaire.-Irma Isip
