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Outsourcing seen to grow by 20-25%

[ ] December 1, 2011

The contact center industry is expected to grow at a faster clip of 20 to 25 percent per year over the next five years, according to Benedict Hernandez, president of the Contact Center Association of the Philippines (CCAP).

In an interview, Hernandez said the industry originally saw 15-20 percent growth until 2016 despite an already high base.

"We earlier thought the growth rate would be closer to 15 percent until 2016, but now it’s in the 20 to 25 percent range," said Hernandez, adding that the sustainability of the industry has not been more prevalent than today.

He said the growth is expected from a combination of expansion and new investments in offshoring and outsourcing (O&O).

Hernandez also sees better opportunities since there are many companies that have not outsourced their needs and would now begin to look at cost advantages.

Hernandez also said there could be plenty of "captive" businesses that be brought about by the crises in the United States and Europe,

"The crises put a lot of cost pressures on these companies," Hernandez said, adding that these firms may well look beyond their shores, including the Philippines, which is already enjoying a boom in the outsourcing industry.

"Despite the volume of activities that we already have, there are still a lot of companies which have yet to outsource, both US and non-US," said Hernandez.

Based on CCAP’s mid-year assessment, the full-year target of 15 percent to 20 percent growth of revenues and workforce this year is achievable.

Hernandez said the worst crisis the industry has experienced was the financial debacle in the US in 2008 and 2009.

Yet, he said, the industry grew "significantly" during those years when bigger companies globally became aggressive in offshoring their manpower to manage their costs.

"Crisis or not, they are looking at ways to reduce costs – through offshoring," Hernandez said.

CCAP recently signed a memorandum of cooperation with the Commission on Higher Education for a five-year partnership that aims to improve college curricula, provide training programs for teachers, and evaluate student graduate skills

"We want to make a module for the aspiring call center agent," Hernandez said.

A student can take "BPO 101" as part of the core curriculum. He can also take 21 units BPO services management as a minor course.

Hernandez said that the course will be offered in selected colleges and universities by next school year 2012-2013.

However, Hernandez said the industry faces increasing challenges that could constrain growth.

The challenges include long-term sustainability of a qualified labor pool supply, talent retention, government support for the industry, favorable regulatory policies and incentives and, lastly cost concerns that include labor, inflation, infrastructures and utilities.

For this year, CCAP projects revenues will grow 18 percent to $7.1 billion, with the sector employing about 406,000 compared with last year’s $6.2 billion revenues and 344,000 workforce.

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