BPO future

Michael Alan Hamlin

Posted on March 11, 2009

Although job losses in the Philippines continued to mount last week, compared to the economic chaos in the United States, conditions here appeared almost rosy. While the Dow was plunging to a 12-year low below 7,000, General Motors was nearing bankruptcy, and the US government was announcing the loss of another 651,000 jobs in February, the Philippine Stock Exchange index was moving up 2.56% from the previous week, auto manufacturers were announcing that private car sales increased in January and commercial sales fell only slightly, and BPO investors were unveiling new job-creating investments.

While it is true that the stock market has been trading in a 130-point band so far this year and last week’s rise reflected a boardroom battle for Manila Electric Company, other regional markets are trading below 2008 lows. The Philippine auto market is tiny, but it directly employs about 75,000 Filipinos and directly and indirectly supports up to half a million families according to the Chamber of Automotive Manufacturers of the Philippines, Inc. BPO directly employs many more, about 400,000, and will grow jobs industry-wide at around 30 percent this year according to the Business Processing Association of the Philippines (BPA/P).

Two developments last week underscore the health of the BPO industry and its growing impact on the economic health of the Philippine economy as overseas job growth at least slows and traditional exports plunge as a result of the global economic malaise afflicting world markets. In the first instance, BPA/P, Outsource2Philippines (O2P), and TeamAsia released the results of their latest BPO industry survey, which was notable for a number of reasons, but especially its generally upbeat assessment.

Several things stand out, beginning with growth in jobs. Over 80% of respondents said they will increase the size of their workforces this year, and almost 50% said their workforces will expand between 11% and 200%. Even firms employing 1,000 to more than 15,000 expect to grow their workforces from between six and 10% to between 51% and 75%. One company employing more than 15,000 expects to expand between 26% and 50%. These results suggest that even in large firms, workforce growth remains robust.

The second development was the launch of a 3,500-seat call center in Araneta Center last week. Telus International Philippines, a wholly owned subsidiary of Telus International, itself a subsidiary of Canadian telcom giant Telus, was originally founded in the Philippines as Ambergris Solutions, and is one of the pioneers of the Philippine BPO industry as Senator Manuel A. Roxas II noted last week during formal launching ceremonies at the new facility.

Since its founding in 2000, Telus International Philippines has expanded its workforce from a handful of employees to more than 8,000 in four sites. The newest site launched last week already employs 900 and Telus International president Jeffrey D. Puritt told reporters that the company intends to fill the new facility to capacity rapidly, possibly within the year. Other large and mid-sized BPOs – Convergys, TeleTech, eTelecare, Sitel, StarTek – have announced their own expansion plans in recent months. (Disclosure: Some of the organizations I’ve mentioned are clients and I have an interest in the two companies involved in the BPA/P-O2P survey.)

The BPA/P-O2P survey revealed other important trends. One is how the industry has expanded far beyond the original call center work it started out doing less than 10 years ago. Respondents to the latest survey work in a broad array of service sectors, from advertising services, to complex back-office processes, risk assessment, legal discovery, and software application development. The broadening of services suggests that the industry is transitioning at a rapid rate to higher value-added services.

Respondents to the survey agreed. Almost 100% said their companies provide moderate, high, or very high value-added services. And close to 70% characterized the services they provide as high or very high value-added. It was also interesting to see how the industry has dispersed throughout the Philippines. Although Manila, and especially Makati, remains the BPO capital of the country, BPOs now operate in more than 30 different locales, from Davao to Laoag.

There was a sobering side to the results, of course. Most BPOs, almost 70%, still hire only 10% or fewer of the applicants that apply for work, indicating that a significant skills mismatch continues to exist. According to the survey respondents, oral and written communication skills represent the biggest gap, followed by analytical thinking and problem solving, which reflects the industry’s move up the value chain.

As past surveys have done, the latest BPO industry survey shows that there can be a bright BPO future, but it is critical to educate the workforce properly to get there.


A breakfast briefing for the industry yesterday produced some interesting perspective on the BPO industry. See this report and this report. Also, personal auto sales were up again in February, but commercial vehicle sales continued to lag. Meanwhile, trouble in traditional exports sectors mounted and already dismal foreign direct investment fell 50%. Thank goodness for BPO.

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