Outsourcing sector still on growth path
THE LOCAL business process outsourcing sector remains optimistic of further growth and expansion this year, due largely to the increasing acceptance of outsourcing as a cost-saving and productivity-enhancing measure.
According to the results of a recent industry forum and a related survey, close to 80 percent of BPO companies in the Philippines expect to expand their workforce by 6 percent to as high as 80 percent in the next 12 months.
“Our previous survey showed a return to optimism in the industry. The current survey shows that sentiment achieving momentum,” said Oscar Sañez, chief executive officer of Business Processing Association of the Philippines (BPAP).
The online survey was commissioned by BPAP and Outsource2Philippines (O2P) and was conducted by TeamAsia from June 20 to July 29. The survey had a response rate of 26 percent and invitations were sent to 685 BPO executives in a broad range of sectors, including voice, back office, information technology, finance, legal, medical and creative services.
Industry executives also attributed their positive business outlook to improved perception of the Philippines following the automated national elections in May.
Almost 90 percent of the respondents indicated that the automated election had a significantly positive effect on investor and client perception of the country, while almost 60 percent cited the smooth transition to the new administration as a confidence booster.
According to BPAP, greater optimism in the regulatory and business environments following the election is expected to raise the Philippines’ profile as a stable investment location.
BPO executives also anticipate a productive working relationship with the administration of President Benigno Aquino III, it added.
“The Philippines has a window of opportunity to enhance its country brand and increase positive visibility to investors,” added Outsource2Philippines chief executive Michael Alan Hamlin.
However, respondents also identified potential hurdles to expansion, such as the tight labor market and corruption, which are still viewed as top investor concerns. Almost 60 percent of respondents cited labor as a major concern.
Further, developing and retaining capable middle managers was also identified as an emerging issue. As BPOs continue to shift to increasingly complex services, labor concerns are expected to intensify.
Competition from emerging BPO centers has likewise become a bigger threat, due in part to aggressive marketing campaign efforts. Up-and-coming centers in Africa, Latin America, and Asia, such as Egypt, Costa Rica, and China, have increased concern over the competitiveness of the Philippines, with almost 40 percent of respondents indicating increased competition as a top risk.
“While the outlook is positive, the industry is realistic about potential threats. Respondents appear not to take the outlook for granted,” added Gillian Joyce G. Virata, BPAP executive director for information and research.
