Driving to global leadership
For those of you who wonder about the future of outsourcing, here’s some interesting news: The global IT-BPO market is poised to expand to as much as $270 billion by 2016 by some estimates. And the Philippines’ share of that market could-under the right conditions-more than double to 10%, generating some $25 billion in annual revenue. That’s according to findings reported in an industry road map released earlier this week at the second annual International Outsourcing Summit (IOS).
However, the road map’s authors cautioned that the industry must maintain its competitiveness and leverage government support to meet that goal. If it does, the IT-BPO industry could employ up to 1.3 Filipinos and generate 12.5% of GDP.
Dubbed, “IT-BPO Roadmap 2011-2016: Driving to Global Leadership,” the road map was developed by a joint venture between Everest Group and Outsource2Philippines (O2P) for the Business Processing Association of the Philippines (BPAP) and its partner associations. Funding was provided by the Commission on Information & Communications Technology (CICT). Work on the road map began in August and was supported by primary and secondary research, an industry survey, and extensive interviews.
(Disclosure: I am president of O2P, which is a subsidiary of TeamAsia, where I am concurrently managing director. BPAP is a client of TeamAsia. Both O2P and TeamAsia are members of BPAP.)
“We found that the industry can grow to $20 billion in annual revenues by 2016 if current conditions are sustained,” Oscar Sañez, BPAP CEO said. “But if these positive conditions are sustained and government provides new support for the industry, we can grow to $25 billion and more than double employment in the industry.” Mr. Sañez said the industry presently benefits from strong demand, a benevolent government, and strong language skills in a cost-competitive environment.
The industry and government can dramatically enhance the Philippines’ value proposition by working together in key areas, Mr. Sañez said during an IOS presentation. “This includes initiatives in the area of educational reform, enhanced visibility of the Philippine country brand internationally, and better appreciation among Filipinos of the opportunities available in the IT-BPO industry and the kinds of jobs that are being created.”
According to Everest Group Managing Partner Gaurav Gupta, educational reforms include increased openness to revising curricula and removing barriers to investment in education, particularly for local and international training schools. Increased visibility internationally is necessary to enhance awareness of the range of non-voice, complex services delivered from the Philippines and drive investment.
Because the range of jobs being created by the industry is broad-and includes complex legal, financial, analytical, and other high-level work-more Filipinos will consider career opportunities in the industry, Mr. Gupta believes. “While traditional voice services will continue to grow, if the Philippine IT-BPO sectors expand and develop the way we believe they can, we will see strong growth in non-voice services delivery and an increase in IT services demand.”
To support expansion and development of the industry, the road map identified five priority activities for BPAP, according to its executive director for information and research, Gillian Joyce G. Virata, who oversaw the project. “Priorities include driving standards and accreditation to facilitate recruitment; internal marketing of the industry in the Philippines; aggressively promoting the Philippine value proposition in non-voice services in existing and new markets; advocating public-private partnerships-such as study-to-work initiatives-to enable rapid growth and development; and, creating and pursuing an aggressive fund-raising plan with government support,” she explained.
The road map was developed in consultation with BPAP partner associations, including the Animation Council of the Philippines, the Game Developers Association of the Philippines, the Philippine Software Industry Association, and the Healthcare Information Management Outsourcing Association of the Philippines. Executives representing enabling sectors such as telecom, training and recruitment, and real estate management as well as key government officials participated in the development of the road map.
I was involved in most of the interviews conducted in support of this initiative. Recurring themes were: 1) A clear sense of enthusiasm for the industry and the Philippines as the global leader in offshore voice services, and number two in non-voice services; 2) Concern with talent supply, which must be addressed to meet the potential identified in the road map; and 3) A strong sense that the Philippines must work diligently to sustain its competitive position.
The potential is great, but much work remains to realize it. Let’s not forget that reality, or take it for granted. Too many jobs are at stake.
(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand . Write him at firstname.lastname@example.org and follow him on Twitter, Facebook and LinkedIn.). Copyright © 2010 Michael Alan Hamlin. All Rights Reserved.)