Caution trims outsourcing sales

MANILA, Philippines – The Business process outsourcing sector (BPO) saw sales slow down last year — due to the caution that prevailed among businesses in the first half — but still managed to meet its full-year target.

Last year’s revenues of $7.2 billion — a 19% increase — came in at the lower end of the industry-set target of $7.2-7.4 billion. The 2008 uptick, in comparison, was 24%.

The Business Processing Association of the Philippines (BPA/P) last year downgraded its 2009 revenue growth projection to 20-22% from 35%, citing the global downturn. But it maintained that double-digit growth remained possible due to businesses opting to outsource non-core operations to save on cost.

First-half caution was to blame for the slower growth, BPA/P executive director for information and research Gillian Joyce G. Virata yesterday said in a presentation during the 10th e-Services Global Sourcing Conference & Exhibition.

The annual two-day event is being held at the SMX Convention Center in Pasay City.

“Recovery began in the second half of 2009 from the slowdown that started in the last part of 2008 and continued into the first half of 2009,” Ms. Virata said.

“Companies began aggressively hiring [in the second half] in anticipation of a full-blown recovery.”

The BPO segments that saw sales grow last year, said Ms. Virata, were:

* call centers, up 22% to $5 billion;
* knowledge process outsourcing, 35% to $1.1 billion;
* transcription, 3% to $186 million; and
* game development, which grew 50% to $4.5 million.

Segments which saw fortunes dip or stagnate, meanwhile, were:

* information technology (IT) services, down 5.5% to $560 million;
* IT design, which stayed flat at $228 million; and
* animation, also flat at $120 million.

“Information technology outsourcing faced hard times because in times of crisis, information technology is the first to be cut,” Ms. Virata said.

“But it is also the first to be placed back.”
The call center segment accounted for bulk of industry jobs at 280,000 in 2009.

The entire industry generated 70,000 more jobs last year, against a forecast of 100,000 the industry made in February last year.

The BPA/P, said Ms. Virata, expects revenues to grow by a fourth this year to around $9 billion as the industry rides the wave of a general economic recovery.

The head of the Commission on Information and Communication Technology (CICT), meanwhile, told reporters yesterday that the industry should prepare for an expected pickup in business.

“What we need to do is to maintain our supply of talent and focus on infrastructure. We expect the BPO industry to grow more as our markets emerge from the recession,” CICT chief Ray Anthony Roxas Chua III said on the sidelines of the industry conference.

“We also expect voice [-based] outsourcing to continue to grow, but also see faster growth in non-voice outsourcing, which is gaining ground.”

He cited the urgency of building competitiveness as more countries enter the global outsourcing market. The country is estimated by Everest Research Institute to have a 15% market share.

Economic planners classify BPO under “business services,” which contribute about 2.1% to gross domestic product. –BusinessWorld