The tempered enthusiasm of the Philippines’ IT-BPO industry
A record number of executives representing the IT-BPO, shared services, and allied industries gathered early one morning late last week for a regular, quarterly briefing on the industry and its prospects. Titled, “Investing for Growth: Sustaining Success with the Right Talent,” the session focused on a key development issue for industry—whether an adequate talent supply is or will be available to meet demand.
The briefing was organized by the Business Processing Association of the Philippines (BPAP)—the IT-BPO industry umbrella association representing more than 20 IT-BPO and shared services sectors—and Outsource2Philippines, a consulting firm that together with Everest Group developed the IT-BPO Road Map 2011-2016 for BPAP with the support of the Commission on Information & Communications Technology (CICT).
(Disclosure: I am the CEO of Outsource2Philippines and BPAP is a client of TeamAsia, where I am managing director.)
A quarterly survey commissioned by BPAP and O2P and conducted by TeamAsia revealed that the IT-BPO and shared services industry is optimistic in its outlook for the next 12 months, although that optimism seems to have tempered somewhat from July last year. In July, 87% of respondents said their organizations would increase headcount somewhat, moderately to significantly, or very significantly over the next 12 months.
In a survey conducted in February and March this year, that percentage decreased to 81%, a statistically valid although not necessarily significantly alarming drop. The decline doesn’t seem to be associated with demand for IT-BPO services, which is forecast to more than double between 2010 and 2016 to more than $250 billion. And growth in knowledge-based complex services is expected to expand at a faster rate than traditional process-based services.
Growth—and especially growth in value-driven service delivery—is a good thing. But it’s a sad thing if the industry isn’t able to fulfill demand, which appears to be the principal concern of IT-BPO and shared services executives in the Philippines. About 60% of respondents in the latest survey said the tight labor market—which limits the industry’s capability to respond to growing demand—is their top 1 (43%) or top 2 (16%) concern.
That’s up 16 percentage points from results a year ago. These results suggest that continued success of the IT-BPO and shared services industry has produced heightened concerns among executives when it comes to their organizational capability for meeting ever-increasing demand for their services. Yet by all rights, the Philippines—which became the world’s number one provider of voice-based IT-BPO services last year—should be celebrating: This is a problem of success.
The Philippines’ success is the product, industry executives say, of high-quality work, not services delivered cheaply. Following last week’s briefing Brian J. Johnson, who is managing director in the Philippines for a large BPO, Teleperformance, said, “The Philippines evolution from my point of view has so far been amazing and unique in many ways, not the least of which is the growth fueled by educated and talented people.”
Mr. Johnson observed that while BPO “has historically been reserved for people who do NOT have a college education or skills to find other work” in the U.S., a dearth of jobs in the Philippines has resulted in high immigration out of the country and a large pool of educated, articulate people available to the IT-BPO industry. In “the Philippines the talent is there, but the ‘other work’ is not” or wasn’t, until the IT-BP industry appeared and grew rapidly.
Now, Mr. Johnson and other industry executives are worried. The IT-BPO Road Map forecasts that unless something dramatic happens very soon the Philippines will not be able to meet demand for educated and talented people by next year. As BPAP chairman Alfredo I. Ayala told briefing delegates, “We must undertake radical transformation of the talent supply chain. We can’t achieve our objectives if we continue business as usual.”
While the IT-BPO Road Map recommends a number of ways to address this looming talent crisis, industry executives agree it is urgent that academe and government “adjust rapidly to shifts in industry requirements.” The approach will be “deep academe-industry partnership though a more flexible regulatory environment.” Mr. Johnson is more to the point: He wants to see investment in and financial support for schools that produce quality graduates.
The Philippine government and academe were well-represented in the Forum, and seemed prepared to do their parts in increasing talent supply. But Attorney Carmelita Yadao-Sison—director for Legal Affairs at the Commission on Higher Education—was also candid about the industry’s role. Atty. Sison told executives that unless they sustain pressure on government and academe, the chances of rapid transformation are dicey.
The passion for this issue demonstrated by Mr. Johnson and others suggest they won’t let up.
(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 email@example.com and follow him on Twitter, Facebook and LinkedIn.). Copyright © 2011 Michael Alan Hamlin. All Rights Reserved.)