Survey shows improved country image can boost ITES-BPO growth

Michael Alan Hamlin

Posted on July 7, 2006

English proficiency also an impediment to growth, but image most pressing need

Outsource2Philippines recently released the results of its second Periodic Survey, undertaken with the support of the Business Processing Association of the Philippines. Entitled, “Constraints to Growth,” the results are summarized in the press statement below. The full summary is also available here.

A survey of IT-enabled services (ITES) and business process outsourcing (BPO) industry executives suggests that an improved country image can boost growth of the industry despite concerns over English proficiency.

Conducted by Outsource2Philippines.com (O2P) in cooperation with the Business Processing Association of the Philippines (BPA/P), representatives of 40 companies in six ITES sectors — contact centers, software development, business process outsourcing, medical transcription, animation and graphic design and engineering services — and support industries completed the survey. The survey had a response rate of 23.4%.

When respondents were asked whether positive perception of the Philippines facilitates client recruitment, 69% indicated on a scale of one to seven, with seven indicating “image is a significant issue,” that a positive image has a somewhat significant to significant impact on client recruitment, responding in the range of five to seven. Most responded in the range of six to seven (61%). Fifteen percent did not consider image an issue or a significant issue, responding in a range of one to three. Eighteen percent of respondents were neutral.

When asked in what areas, in the view of clients and potential clients, the Philippines should improve, the top three responses were overall country image (85%), political stability (80%), and English proficiency (55%). Technical expertise was cited by 38% of respondents, scalability 30%, and telecom infrastructure 15%. “Other” responses were concerned with governance, physical infrastructure, and peace and order.

O2P director Michael Alan Hamlin said, “It is noteworthy that improving overall country image and political stability are the top issues when it comes to areas of improvement for the Philippines, and significantly more so than improving English proficiency.”

Respondents were then asked what the Philippines should do to improve its image. The top three responses were: 1) undertake a public relations program (75%); 2) participate in major international trade shows (68%); and, 3) provide a better online presence (65%). Many respondents, 60%, also responded that the Philippines should conduct more industry conferences. Forty-three percent indicated advertise in major trade publications, and 25% in major newspapers and magazines.

BPA/P executive director Mitch Locsin said that the industry and government are in fact thinking seriously about communications initiatives to strengthen positive perception of the Philippines in general, and its attractiveness as an ITES and BPO hub in particular. “The survey is both timely and confirmation of the need to become more proactive in communicating the many positive attributes the Philippines has to offer investors,” Locsin said.

About half of respondents indicated that negative perception of the Philippines affects their ability to recruit clients. On a scale of one to seven with seven indicating “image is a significant issue,” 46% of respondents responded in a range of five to six, with 18 percent indicating seven. Twenty-eight percent indicated negative image is not an issue or not a very significant issue, responding in the range of one to three. Twenty-six percent were neutral.

English proficiency is also an urgent impediment to growth. Fifty-one percent of respondents indicated that English proficiency has a “very significant impact” on their organizations’ ability to grow. On a scale of one to seven with seven indicating “very significant impact” 89% responded in the range of five to six. Only four percent responded with a three. Nevertheless, slightly more than half of respondents, 52%, indicated that they hire between five percent and 10% of the applicants they interview. Twenty-nine percent indicated one percent to four percent, and 16% indicated they hire between 11% and 30 percent of all interviewees.

Turnover appears manageable for most firms. Thirty-eight percent of respondents indicated moderate turnover between five percent and 10%. Another 35% experience turnover between 11% and 25%. Fifteen percent reported turnover between 26% and 40%, and one reported turnover between 51% and 75%. Two respondents who selected “Other” indicated one percent and two percent turnover.

Respondents were also asked if availability of suitable office space restricted growth. On a scale of one to seven with seven indicating a “significant problem,” 43% of respondents indicated that finding suitable office space is a problem to some degree to a significant degree. Fifteen percent said it is a significant problem. A similar percentage, 41%, indicated a range of one to three, suggesting that finding suitable office space is not a major impediment to growth. Eighteen percent of respondents were neutral.

Not surprisingly, when the results were cross tabulated, responses showed that organizations that employ large numbers of people consider the ability to find suitable office space a significant problem compared to smaller organizations.

About 20% of the companies represented by respondents are in the contact center sector. Third party BPO, in-house BPO, and software development and maintenance were also 20% each. Medical and legal transcription were three percent each, and animation and graphics and engineering services represented eight percent and five percent of respondents, respectively. Thirty-five percent of respondents indicated that they also operate in other sectors, including ITES and BPO industry support sectors.

Most of the respondents (73%) have less than 500 employees. The remainder have between 501 and more than 5,000 employees. Five percent have more than 5,000 employees. The majority of respondents indicated moderate to very high growth in work force, with 75% indicating growth between six percent and 200 percent. Twenty-seven percent indicated growth of between 40% and 200%.

Nineteen percent of respondents presently occupy between 5,001 and 30,000 square meters of office space. Two occupy 20,000 to 25,000 sq meters, one 15,000-20,000, one 25,001-30,000, and one over 30,000. Thirty-one percent occupy less than 500 sq meters, 21 percent 1,001 to 2,000, and 13% 501 to 1,000. Eight percent occupy between 3,001 and 5,000 sq meters.

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