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Phl closes in on India as top BPO site

By Ted P. Torres (The Philippine Star) | Updated October 12, 2014 - 12:00am

MANILA, Philippines - The business process outsourcing (BPO) industry in the Philippines is
to grab from India roughly $30 billion in foreign currency earnings, according to the Associated Chambers of Commerce and Industry of India (Assocham).

In report released by the Oxford Business Group, Assocham said India already lost 50 percent of the business to foreign competition, reportedly equivalent to $25 billion.

“The majority of lost business relocated to the Philippines, where an estimated 30 percent of graduates are employable, compared to just 10 percent in India,” the business chamber said.

Graduates’ fluency in English and their Western accents have added to the country’s draw. Most of the world’s larger providers of BPO services have call centers in the Philippines, including Accenture and Convergys, which together employ over 60,000 people, as well as Teleperformance, Teletech, Stream and Sykes.

A ranking of the top 100 BPO destinations published by consultancy Tholons in 2014 listed Manila as the second-most-important BPO destination worldwide, relegating Mumbai to third place.

Although India’s southern city of Bangalore remains the top BPO destination, Philippine cities are rising. Seven Philippine cities made Tholons’ top 100 list, including two in the top 10, with Cebu ranked eighth.

Assocham has projected as much as 70 percent of incremental call center and voice business will be lost to foreign competitors.

“It is estimated that in the ongoing decade, India might lose $30 billion in terms of foreign exchange earnings to the Philippines, which has become the top destination for Indian investors,” D S Rawat, Assocham secretary general, said.

Aegis recently relocated 600 call center positions from the Philippines to India due to Indian workers’ success in sales and upselling, a technique whereby a seller induces the customer to purchase more expensive items or upgrades.

Oxford also pointed out that the Philippines’ BPO industry also struggles with a staffing gap.

The Commission on Higher Education (CHED) estimated that BPO jobs created in 2012 – around 137,000 – represented more than 25 percent of graduating college students.

In addition, the challenges of stressful, late-night work have resulted in a churn rate of over 50 percent.

The industry is increasingly shifting from pure voice services to multi-channel offerings, which combine voice, email and online chat services, using sophisticated delivery models such as platform BPO and the cloud-based business process as a service (BPaaS).

With pure voice services accounting for 62 percent of total BPO revenues in the Philippines in 2013, stakeholders have called for the industry to increase its technological uptake in order to maintain a competitive edge.

The BPO sector presently employs a million in the first quarter of 2014, from a mere 101,000 in 2004.

The IT and Business Process Association of the Philippines (IBPAP) estimates that it will reach 1.04 million by the end of the year.

The BPO sector is a major growth industry in the Philippines, with export revenues hitting $13.3 billion last year, from just $1.3 billion in 2004.

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