BPO industry to meet 26-percent growth target

Published by rudy Date posted on June 3, 2010

THE business-process outsourcing (BPO) industry is expected to meet its 26-percent growth target this year despite concerns generated by a proposed US bill seeking to tax heavily US companies that engage in outsourcing, the Commission on Information and Communications Technology (CICT) said on Wednesday.

CICT Chairman Ray Anthony Roxas-Chua said in a Palace briefing that last year, the BPO sector grew by 17 percent, earned $7.2 billion and employed 440,000 people.

“This year, with the global economy coming back, we’re expecting a growth of 26 percent. So it’s really robust growth for the industry. We’re really building a name for ourselves as a preferred offshore destination,” Roxas-Chua said.

He said the global demand for outsourced services continues to grow and that the “addressable market” remained “very large.”

“There are lots of services that can be outsourced or have yet to be outsourced,  so the market is there,” Roxas-Chua said.

He said the challenge for the Philippines was to develop talent, encourage new investors in the sector, and remain competitive.

“Other countries have seen how successful we have been. In a span of 10 years, we became the No. 2  player in the world, after India, so other countries are trying to get into this sector as well. Of course, we have some big hitters coming in like China, which is going to be very competitive in certain aspects like IT outsourcing. So these are the things that we have to keep an eye out for,” he said.

Asked to comment on the proposed US measure to impose high taxes on companies that outsource some services to keep jobs in the US, Roxas-Chua said he believed this would not prosper since it is protectionist in nature and is contrary to the US advocacy of eliminating trade barriers.

“What we’re talking about there is providing services across borders. The global trend is really the lowering of barriers. Initiatives like this are really more from a political standpoint. We don’t think that they are sustainable. That said, we constantly monitor situations like that, and it would be up to our bilateral relationship with the US to avert any adverse effects of such a move,” he said.
Roxas-Chua said the bill, which became a campaign issue during the last US presidential elections, was unlikely to prosper since it not only runs counter to trends in globalization but will also hit US companies hard.

“A lot of [US] companies were probably able to avoid going bankrupt because they were able to cut down on their cost by outsourcing some of these services. For us, we see it as a win- win situation, they get to offshore their noncore work and able to increase their profitability. I’m sure a lot of companies in the US will oppose such a move,” he said.

Roxas-Chua said the Philippine BPO industry remained “heavily dependent” on the US, which accounts for 70 percent to -80 percent of its market, which, he noted,  was “decreasing a little as we increase our presence in other markets like the UK, Australia, even in Japan.”  –Mia M. Gonzalez / Reporter, Businessmirror

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