The IT-BPO challenges

Michael Alan Hamlin

Posted on December 1, 2010

For the IT-BPO industry to attain its goal of $25 billion in annual revenues and 1.3 million direct jobs in 2016, a number of challenges must be successfully addressed. Two of the challenges loom largest, in my view. Few would disagree that talent pool supply is the number one challenge for the industry, as well as for the educational institutions and agencies and training schools that strive to fill the enormous demand of the IT-BPO industry for people.

The second issue is brand visibility of the industry, both internally-which has direct implications for the Philippines’ capacity for addressing the talent pool issue-and externally, which is an important factor determining how and how fast the industry evolves and expands. The internal concern seems obvious, when it is raised, as it was in the recently launched IT-BPO Road Map 2011-2016: Driving to Global Leadership (Road Map 2016) report commissioned by the Business Processing Association of the Philippines (BPAP).

It’s fair to ask, though, why the Philippines needs greater visibility internationally for its IT-BPO industry. Recent news reports quoting industry observers say that the Philippines has overtaken India as the world’s leading provider of offshore voice-based outsourcing services. So far this year, the Philippines has recorded approximately “$5.7 billion in pure voice-based revenues” according to a report in the Asian Sentinel. India has booked $5.58 billion. (The story was first reported in The Economic Times.)

But first, let’s think about the talent supply issue. In a CEO Briefing for industry executives last week, Everest Group and Outsource2Philippines (Everest-O2P)-which together developed Road Map 2016-revealed that as early as a year from now talent demand will significantly outpace talent supply unless the industry, government, and the educational sectors move quickly and dramatically to address the shortfall. Otherwise, by the end of 2012 the industry could be short by more than 130,000 full-time employees.

(Disclosure: I am the president of Outsource2Philippines, which is a subsidiary of TeamAsia, where I am managing director. BPAP is a partner and client of both firms.)

Everest-O2P suggests that successfully addressing the talent pool supply issue will require concerted action across six areas. The first is internal marketing to stakeholders, which explains my concern with internal brand visibility. Although the Philippines graduates approximately 450,000 students from tertiary institutions annually, only 50,000 to 60,000 have the interest and the skill sets to be employed by the industry.

Most graduates have non-relevant backgrounds or lack the skills necessary to be employed in the IT-BPO industry, which aside from English include critical thinking and logic. Internal brand visibility can play a role in increasing supply in two ways. First, by encouraging more students-and their parents-who are considering a non-relevant course of study to also contemplate a career in the IT-BPO industry, and to take an appropriate course of study.

Internal branding can also have an impact on the career choices of graduates in seemingly unrelated majors, encouraging them to consider working in the IT-BPO industry. Nurses and workers in retail sectors, for example, are increasingly sought after by the industry, where they can work and leverage the knowledge and skills they acquired in school. Medical administrative and monitoring processes are a fast-growing sector of the IT-BPO industry.

To address the skills gap, Everest-O2P recommend strong partnerships with academe and relaxing the regulatory environment; standards and accreditation to facilitate recruitment, revising educational programs to reflect the fast evolving nature of the industry; removing regulatory barriers to investment in education; and increasing funding for research and information, such as the work BPAP is doing on Next Wave Cities. That initiative increases awareness of talent pools outside major tier-one urban environments. Visibility will play a major role in the success of these efforts.

A look at how the industry is evolving shows why international visibility is important. Although voice services will continue to be an important component of the industry, growing 10-15% annually, non-voice will grow faster, at 20-25%, surpassing voice services in total revenues by 2016 by at least $10 billion globally. For the Philippines to capitalize on this demand, it must increase awareness of its suitability for these services.

In fact, the reality is that the Philippines already performs extensive non-voice work from both shared services facilities and third-party BPOs in a wide range of functions. They include standard administrative functions such as finance and accounting, but also complex legal services, securities brokerage and financial information services, publishing, and civil and semiconductor design engineering.

If the Philippines works to align reality with perceived reality in relation to the country’s suitability for non-voice services, the industry will grow and develop more rapidly. Of course, it must successfully address the talent pool supply issue, and make those efforts visible, too.

(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 mahamlin@teamasia.com and follow him on Twitter, Facebook and LinkedIn.). Copyright © 2010 Michael Alan Hamlin. All Rights Reserved.)

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