Prospects better for BPO firms

EXPECTATIONS for the outsourcing industry have been scaled down but are better compared to the more uncertain view recently offered for merchandise exports.

Officials of the Export Development Council (EDC) and the Business Processing Association of the Philippines (BPAP) have pegged industry growth for 2011 at 18% and 20%, respectively, down from last year’s 26% surge to $8.9 billion.

This compares to merchandise exporters describing their 10% growth goal a “fighting target” given concerns over a recovery in Japan, the unresolved debt crisis in the euro zone and continued unrest in the oil-producing Arab world.

Last year, outbound merchandise shipments rebounded by over a third to $50 billion.

“Since the growth in IT-BPO (information technology-business process outsourcing) has been robust at over 30% in recent years, it was felt that it would be more realistic to have a slightly lower target because the base itself is expanding rapidly and it would be difficult to project the same or higher rate,” EDC Executive Director Senen M. Perlada said in a text message yesterday.

The outsourcing sector is more optimistic, with BPAP Executive Director Gillian G. Virata saying the forecast is for revenues to grow by a fifth to $11 billion. The Contact Center Association of the Philippines (CCAP) is also similarly upbeat.

“A target of around 15-20% for the BPO industry is a conservative growth rate,” Jojo J. Uligan, CCAP corporate secretary and executive director, said on Saturday.

“The base is expanding, which is why it’s more difficult to achieve larger growth rates now, but the voice-based customer service industry is far from its saturation point,” Mr. Uligan added.

“Majority of our accounts are still from the US, but there are other English-speaking countries out there we can tap such as the United Kingdom, Australia, and New Zealand,” he continued.

“We’re also encouraging companies to expand outside Metro Manila [to areas] such as Cebu, Baguio, Batangas, Laguna, Cavite, Davao, Dumaguete, Cagayan de Oro, and Iloilo to increase their risk management abilities and lower their vulnerability to things like natural disasters.”

The call center industry ended 2010 with 344,000 jobs and $6.1 billion worth of revenue, a 21% rise from 2009, BPAP data show.

“[O]ur industry is close to 370,00-380,000 employees, but we are aiming for more than 420,000 jobs generated by the end of the year,” Mr. Uligan said.

“Most of all, we are moving to higher value adding for voice-operated customer services for the next several years, since our workforce now is more technically capable and more knowledgeable compared to three to five years ago,” he noted.

The BPAP has drafted a six-year medium-term development plan to generate $25 billion in revenue and 1.3 million jobs.

The EDC, for its part, has set out decreasing BPO growth goals of 16% and 14%, respectively, for 2012 and 2013. — Eliza J. Diaz, Businessworld