RP’s BPO sector shrugs off global crisis

MANILA, Philippines – Will the Philippines go into recession? This is a question that economists from both government and the private sector continue to debate on.

Some say that the lack of investments in the country is a big problem because if no new businesses open, there will be no one to hire new graduates and those who have been laid off?

Trade and Industry Secretary Peter B. Favila said they are looking at a flat growth in investments this year compared to the previous year.

But one industry has remained strong in spite of the global slowdown, the business process outsourcing (BPO) industry. In fact, a recent survey noted that the BPO industry in the Philippines was not very much affected by the global financial crisis.

The survey, conducted by the Business Process Association of the Philippines (BPAP), said 83 percent of the surveyed firms claimed that the global financial crunch had minimal impact on them.

About 60 percent of the executives in firms affected by the crisis indicated that their firms have responded by introducing new services, suggesting that new revenue opportunities are providing a silver lining.

Among respondents who said their firms were affected by the crisis, most said that impact was “moderate” or “minor.” Only five percent of respondents said the impact of the Global Financial Crisis was “very significant” and 16 percent said it was significant.

 “The results of the survey suggest that despite some challenges associated with the Global Financial Crisis innovative firms are identifying new opportunities as a result of the crisis. This is enabling them to continue growing their businesses,” BPAP executive director for information and research Gillian Joyce Virata said.

Virata said that although demand for BPO services remains strong, labor supply remains an area of concern for many firms with 45 percent of the respondents saying that their firms hire only six or fewer applicants out of every 100. On the other hand, more than half of the respondents indicated they hire seven or more applicants out of every 100.

A positive indicator for the industry is that attrition is either the “same,” “decreasing,” or “decreasing significantly” in the view of 79 percent of respondents. Fifty-three percent of respondents said attrition in their companies is 10 percent or lower.

However, a significant number of respondents, 29 percent, said attrition in their firms runs between 11 and 20 percent while 17 percent said attrition is above 21 percent.

Likewise, more employees will be hired by the industry in spite of the slowdown in the global economy.

The survey showed that 49 percent of the companies said they will be increasing their work force by 11 percent to 200 percent while 51 percent said they will expand the number of employees by at least 10 percent.

On the other hand a mere six percent said they will be downsizing the size of their workforce this year.

BPAP CEO Oscar Sañez explained that the results suggest that whatever impact the global financial crisis is having on the industry, it doesn’t seem to be dramatically slowing expansion.

“It’s encouraging that although the industry has been growing rapidly for several years, almost 40 percent of the respondents indicated that their firms will still grow between 16 percent and 200 percent this year,” he said.

Recent developments in the industry support the results of the survey. StarTek, a mid-size value-added BPO announced that it is ramping up its Makati facility to full capacity to meet expanding demand for complex services.

Convergys opened three new call centers in Cebu, Santa Rosa , and Quezon City in April which will provide almost 3,000 new jobs and increase the company’s headcount to 16,000 in the Philippines .

Miguel Garcia, CEO of industry supplier DTSI and a member of the BPAP board, forecasts that the Philippine BPO industry will grow overall by about 20 percent this year.

The survey did provide some signs of concern. Substantially more respondents or 36 percent indicated that their firms are decreasing capital investments rather than increasing capital spending.

The impact of the crisis is being felt primarily in demand according to 66 percent of respondents, but the large number of respondents whose firms have introduced new services suggests that an interesting shift in the kind of services desired by clients is taking place.

The suggestion that a shift in the kinds of services provided by the industry is supported by the large number of respondents that say their firms are providing high or very high value-added services, according to Frank Holz, CEO of Outsource2Philippines (O2P).

“The fact that 69 percent of respondents said their firms are providing high and very high value-added services is actually staggering,” Holz said. This means that the industry is providing much more complex services overall than it did in the early years of its development.”

The survey was conducted online by BPA/P and O2P. It was in the field from March 31 to April 29. Invitations were sent to 571 BPO executives and 160 completed the survey, providing a 28 percent response rate. –Ma. Elisa P. Osorio, Philippine Star