Vol. XXII, No. 78 [ BusinessWorld Online ]
Wednesday, November 12, 2008 | MANILA, PHILIPPINES
BY PAOLO LUIS G. MONTECILLO
THE LOCAL business process outsourcing (BPO) sector faces an uphill battle to ensure it will have enough workers to provide targeted higher-value services by 2010, the Business Processing Association of the Philippines (BPA/P) has said.
LESS NEED projected for voice-based services. — AFP File Photo
However, export revenue targets may still be hit as the industry improves productivity and moves up to more complicated, higher-paid services, the group said.
"We are still going to hit our revenue targets without that many employees," BPAP Research Director Gillian Virata said in an interview late last week.
By the end of 2010, she said the industry is expected to employ around 800,000 people — down from earlier projections of as many as a million workers. "It will still be a big employee base," Ms. Virata said.
Late last year, the group announced its Roadmap 2010 which set the target for the industry to grow to a million people, generating $12 billion-$13 billion in revenues, growing by around a third annually, by the end of 2010.
With the targeted growth, the group said the industry would corner around 10% of the world’s total outsourcing market.
"The main stumbling block is still awareness," Ms. Virata said.
She said that, despite the industry more than doubling in size since 2004, people are still unaware of the kinds of jobs they can get in BPO companies.
She said that, with the growth of engineering and information technology (IT)-related BPO jobs, a lot of companies do not even require employees to talk to clients on the phone.
"We’re trying to spread the word that there are careers in this industry [beyond voice-based services]," she said.
"I think there are some challenges in recruitment," Bong M. Borja, president of Aegis PeopleSupport, said in an interview yesterday.
Especially for companies that offer engineering and IT-related positions, Mr. Borja said the main problem is losing talent to companies in countries like Singapore and parts of the Middle East that offer higher salaries.
"As the industry moves up [to higher values services], hiring typically gets tighter," he said.
Christina G. Coronel, president of IT outsourcing firm Pointwest Technologies, Inc., said that while non-voice outsource services have a bigger potential to grow, the challenge going forward is being able to produce the talent to support the growing demand. "We have to keep up the pace of skills development," she said.
Canadian research firm XMG, Inc. recently slashed its growth outlook for the global outsourcing sector to 24.2% from 34.7% annually until 2010 as a result of the global economic slowdown. It estimates the Philippines’ BPO industry to grow 25.6% this year, from an original projection of 31.2%.
BPA/P Chief Executive Officer Oscar R. Sañez said in a recent email that while XMG’s projections are understandable, given its research focus on the financial sector, the industry still has a lot of room to grow in other services. "The other sectors that are still untapped (retail, fast-moving consumer goods, heavy industries, IT) will be new sources of growth and will more than compensate for the decline in the financial sector," he said.
A study by global outsourcing consultancy firm Everest Research Institute dated last September said the financial crisis will pressure banks in the US and Europe to outsource more of their services to cut costs. "Most financial services companies are now sourcing [services] through captive, or exclusive, units in India and the Philippines," the group said.
The financial services industry, comprised of banking, capital markets and insurance, is the leading adopter of offshoring services and accounts for more than 40% of the world’s BPO industry, the group said.