Philippines’ IT-BPO industry continues to impress investors

Michael Alan Hamlin

Posted on April 18, 2011

In recent weeks, the Business Processing Association of the Philippines (BPAP) has made two important announcements that show the industry continues to impress investors. Last week, the association—which serves as the umbrella association for a range of outsourcing and shared services sectors in the Philippines—confirmed that the industry as a whole grew 26% in 2010 to $8.9 billion in revenue.

Employment increased 25% to 525,000 skilled workers and professionals, an increase of 100,000 jobs. Value-added, non-voice jobs grew fastest at 30%, according to BPAP chairman Alfredo Ayala. “We now employ more than 100,000 professionals in this sub-sector,” he said, “with many of these BPO employees coming from finance and accounting, legal, and medical sciences backgrounds.”

All major IT-BPO sectors reported impressive growth. “We achieved robust growth in all major sectors of the industry: voice-based BPO, non-voice business support and complex services, and information technology,” Mr. Ayala said. “Our contact-center sector grew over 20%, overtaking India and establishing itself as the largest in the world on the back of the Philippines being recognized as the most-preferred destination in the world for these services.”

According to BPAP, smaller outsourcing sectors such as IT, transcription, animation, and game development also grew as recovery from the 2009 global financial crisis took hold. According to BPAP senior executive director Gillian Joyce Virata, only engineering services failed to post positive growth because the industries it serves—construction and automotive—have yet to fully recover. Nevertheless, these sectors have increased the value and complexity of their services delivered from the Philippines.

Mirroring growth in value-added, non-voice jobs overall, software sector jobs grew at a healthy 28% in 2010 according to Nora Terrado, president of the Philippine Software Industry Association. “We earned US$725 million in export revenues last year as our clients renewed their IT spending in anticipation of expansion after a year of hesitation,” she said. Terrado said there are about 45,000 IT professionals employed in the country’s IT outsourcing sector, up 27% from 2009.

The fact that established sectors continue to post robust growth is significant. “The Philippines now leads the world in voice-based customer service,” said Benedict Hernandez, president of the Contact Center Association of the Philippines. “We have solidified our global leading position with our agents providing the best customer service in the world.” The contact center sector grew 21% to US$6.1 billion last year. Employment jumped 23% to 344,000.

An IT-BPO and shared services industry road map was developed last year under BPAP’s direction by the Everest Group and Outsource2Philippines, with funding provided by the Commission on Information & Communications Technology. It forecasts at a minimum sustained growth of 15% annually for the industry. “But with greater collaboration from all stakeholders, including government and the academe, we have the potential to grow at 25% a year. This would create 1.3 million direct jobs and $25 billion in export revenues,” Mr. Ayala said.

(Disclosure: I am president of Outsource2Philippines and BPAP is a client of TeamAsia, where I am managing director.)

An earlier announcement provided a backdrop for the industry’s 2010 results and demonstrated another emerging industry role for the Philippines: thought leadership. Ms. Virata announced that the third annual International Outsourcing Summit will take place in the Philippines October 11-12. “This year’s Summit will feature presentations and panel discussions with more than 60 top executives and analysts from leading organizations,” Raymond Lacdao, BPAP executive director for industry affairs said.

“The theme of the Summit—Global Market Leaders Addressing Global Issues—will focus on innovation and value creation. The industry is moving up the value chain rapidly, and clients expect services providers to be their partners in enhancing value for their customers,” Mr. Lacdao explained. “We will hear first-hand from industry clients what they expect. And top executives from industry will describe how they are responding.

Approximately 400 executives in the IT-BPO and shared services industry from 20 countries are expected to attend the three-day Summit and related events, which include an exhibit, gala dinners, and business matching, according to Mr. Lacdao. A website, www.internationaloutsourcingsummit.com, provides a detailed agenda, including invited and confirmed speakers.

“This year’s Summit will also review the IT-BPO Road Map 2011-2016 and the implications of recent developments on the Philippines’ position as the new leader in voice—and how it affects the even faster-growing non-voice segment for all locators,” Ms. Virata said. “With more than 20 verticals and 525,000 knowledge workers, the Philippines is the place to meet top influential executives from the industry and the industries is serves,” Mr. Lacdao said.

Yes it is.

(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 TwitterFacebook and LinkedIn.). Copyright © 2011 Michael Alan Hamlin. All Rights Reserved.)

 

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