RP, other first-wave BPO sites losing market share

THE market share of the Philippines and other first-wave country-hosts of business process offshoring fell because of new attractive locations, according to the United Nations Conference on Trade Development (UNCTAD).

In a report titled, “Information Economy Report 2009,” the UN body said the combined market share of the Philippines, Canada, China, India and Ireland had shrunk to 80 percent from 95 percent in 2004.

The UNCTAD blamed the cut in market share to the new major destinations such as Malaysia, Singapore, Czech Republic, Hungary, Poland and Romania.

“A closer examination of the data suggests a trend towards geographical diversification, at least in the case of ICT-enabled services. While the top five countries – Canada, China, India, Ireland, and the Philippines – still account for four fifths of exports related to offshoring, many new destinations are emerging and account for a growing share,” the report said.

More countries in Africa, Asia, Europe, and Latin America and the Caribbean are perceived as attractive candidates for the production of various business services.

This trend is particularly visible in the case of voice-based services, where companies look to develop global
supply capabilities covering many language areas and time zones, the report added.

“Latecomer offshoring destinations in Africa, Asia, and Latin America and the Caribbean should continue to improve their locational advantages and identify niches in which they can compete most effectively,” Supachai Panitchpakdi, UNCTAD secretary general, said.

The report also said that the long-term growth prospects for the offshoring of IT- and ICT-enabled services are promising for early starters such as India as well as for many other emerging nations.
As the global offshoring business is poised to grow, there should be room for more countries to develop sizeable export-oriented services industries, the report added.

The UNCTAD said the global market for the offshoring of IT- and ICT-enabled services was estimated at around $90 billion in 2008, of which IT services accounted for 60 percent.

Between 1998 and 2007, the value of exports of ICT goods rose from $813 billion to $1.73 trillion, representing 13 percent of all merchandise trade. During the same period, the share of developing countries in such trade jumped from 38 percent to 57 percent.

“This increase was almost entirely attributable to developing Asia,” UNCTAD said.

Convergys to hire more by yearend

Clark Handy, Convergys Corp. senior vice president for human resources, however said the company still sees continued growth for its Philippine operations.

“Demand [for outsourcing services in the country] is growing. Clients are demanding that we do business in the Philippines,” he told reporters on the sidelines of the inauguration of Convergys’ 75,000-square-meter facility in Glorietta 5, which is the company’s largest worldwide.

This site, which started operations in April, has over 2,000 seats and a maximum capacity of 3,500 employees.

About 90 percent of Convergys’ accounts in the country are composed of voice services, mostly for clients in the US. Non-voice, back office clients— who outsource accounts receivables, financial analysis, human resource (HR) management and market research—are “slowly growing,” Marife Zamora, Convergys country manager, said.

She said clients from other markets such as Australia and the UK are also coming in. Zamora said Convergys would hire an additional 2,000 workers before the year ends.

She said Convergys already has about 18,000 employees in its 12 Philippine sites, over 4,000 of whom were hired in January this year. In October alone, the company hired about 1,700 people, she said.

The executive said the company will add one floor each to its facilities in San Lazaro, Manila, and UP TechnoHub next year.

The company likewise will open new sites nationwide starting January or February but Zamora did not disclose the details.

This year, Convergys opened five centers in the country, namely Cebu Asiatown i3, Glorietta 5, Nuvali Evozone, San Lazaro, Manila, and UP TechnoHub.

This brings its total number of facilities to seven in Metro Manila, three in Cebu, one in Bacolod, and one in Santa Rosa, Laguna. –Darwin G. Amojelar Senior Reporter And Ben Arnold O. De Vera Reporter, Manila Times