BPO outlook positive
But are we prepared for the unexpected?
Recent surveys of executives in the business process outsourcing (BPO) industry suggest that at least as far as the BPO industry is concerned, the Philippines enjoys an increasingly positive country image. In industry conferences, the Philippines is generally referred to as the number two provider of BPO services after India. In part as a result of positive perception of the Philippines among industry players, BPO has grown rapidly.
A new study of non-voice BPO service providers suggests that these sectors in the Philippines are indeed set to grow at an impressive rate next year. The study shows that providers of value-driven non-voice BPO services – which range from back office administrative services to legal support – of all sizes and in all sectors expect their workforces and revenues to expand significantly in 2009 despite concern over some looming impediments to growth.
The online survey was conducted by the Business Processing Association of the Philippine (BPA/P) and Outsource2Philippines (O2P). Ninety-six percent of respondents representing organizations that provide non-voice BPO services indicated that 2009 prospects for their organizations are good, excellent, or outstanding. More than half of the respondents, 51%, said prospects are excellent.
However, respondents acknowledged that impediments to growth are present. Chief among those threats is finding qualified personnel. Sixty-three percent of respondents representing non-voice BPO indicated that the availability of qualified workers is their biggest impediment to growth, and 88% said recruiting qualified personnel is moderately difficult (51%), difficult (26%), or very difficult (11%). Other impediments to growth include the impact of the global financial crisis in the view of 44% of non-voice BPO respondents, and rising competition (43%).
Invitations to participate in the survey were e-mailed to 583 BPA/P members and members of affiliated associations, and 190 respondents completed the survey, providing a 33% response rate. (Disclosure: BPA/P is a client of my firm, I am a director of O2P, and my firm implemented the survey.) The survey was administered over a three-week period in November.
The survey took place before the tragic terrorist attacks in Mumbai last week. Those attacks prompted Representative Joseph Santiago, chairman of the House of Representatives’ information and communications technology committee, to urge Philippine BPO providers to brace for further increased demand as investors seek alternatives to India.
It is probably true that some providers and providers’ clients will seek to relocate services to the Philippines following the Mumbai attacks, although no one doubts that Mumbai’s outsourcing industry will survive the negative impact of last week’s unthinkable disaster. Mumbai, of course, is only one of India’s outsourcing centers, and not its largest or most well known. That distinction belongs to Bangalore.
Unfortunately, Mumbai’s tragedy will probably impact Bangalore as well. Even so, Santiago probably would have better served his constituency by warning that the Philippines itself must be vigilant. A similar terrorist attack here could decimate the Philippines’ BPO industry in a way that no U.S. political campaign promise ever can. But is the Philippines any better prepared to thwart such an attack? Or to deal with one should that terrible possibility actually materialize?
In my view, the industry must now do more than encourage government to provide a welcoming environment for investors, which it has done well. While that environment needs to be protected from those who seek to refashion it in the name of rationalizing investment incentives, it has become even more important to protect the industry from physical threats by enemies of progress who mindlessly seek to harm open and free societies.
The BPA/P-O2P survey demonstrated a real sense of optimism in non-voice BPO in the Philippines regardless of size and sector with most organizations of all sizes and in all sectors providing non-voice services expecting to expand their workforces significantly. And 98% of respondents representing organizations that provide non-voice BPO services expect revenues to increase in 2009. Most respondents project substantial increases.
The survey also revealed that most Philippine non-voice BPOs provide at least moderately value-added services. Sixty-four percent of non-voice BPO respondents indicated the services they provide are high or very high in value, and another 26% said the non-voice services their firms provide are moderate in value. Only 10% of non-voice BPO respondents said their services provide only low or very low value.
All this is extremely encouraging. But it also shows that there is much at stake, and much to protect from those who potentially may seek to do the Philippines harm. And it would be a terrible mistake to take that potential threat casually.