RP being pitched as outsourcing hub amid US-led slowdown
THE LOCAL business process outsourcing (BPO) industry is expected to weather a US-led global economic storm, since much of the services outsourced to the Philippines are operational tasks that companies cannot do without.
Foreign companies have yet to cancel projects or cut budgets for outsourced services, Business Processing Association of the Philippines (BPAP) Chief Executive Officer Oscar R. Sañez told a briefing on Friday.
“Whatever the effects [of the economic slowdown], it will only be for the short term,” he said.
Still, he said they could only say for sure that the economic slowdown BPO clients
The effects of the slowdown, if any, would most likely be seen by the start of next year as clients decide whether they will renew their contracts with BPO firms here, Mr. Sañez said.
Still, the group is not ruling out cutting growth targets for the sector as potential clients become more hesitant to enter into long-term investments such as outsourcing of services.
“We are already assuming that this is a global problem,” Mr. Sañez said, adding that growth would most likely be in the double digits.
He said companies here do tasks that are vital to client companies’ day-to-day operations.
A slowdown could be felt more in countries like India, the world’s largest BPO destination, where outsourced jobs are more concentrated on research and development. Mr. Sañez said these jobs are the ones that are cut first before companies consider down-sizing of operations.
Under the group’s road map, the local business process outsourcing sector is expected to grow into a $13-billion industry by 2010, from around $7 billion by yearend. With an annual growth rate of 30%, the industry is also projected to employ a million workers from 500,000 this year.
Meanwhile, BPAP Executive Director for External Relations Cathy S. Ileto said companies abroad need to realize that outsourcing is not just a means to cut costs.
BPO firms can become profit centers and start making money for clients, she pointed out. “In light of the recent financial crisis…we’d like to offer [outsourcing to the Philippines] as a solution.” The usual services include customer service, trouble shooting and other back-office tasks. But companies can actually make money by outsourcing sales services. “We’re moving up the value chain,” Ms. Ileto said.
But Mr. Sañez said the industry has other challenges to overcome if it is to hit its targets.
He noted that while the Philippines is still the biggest outsourcing destination in Southeast Asia, countries like Indonesia, Malaysia, Singapore and Vietnam are catching up.
He said unlike the Philippines, the emerging BPO industries in these countries are heavily backed by government subsidies.
“We can’t expect much from the government [financially], but they help in other ways,” he said.
The government helps companies mainly through income tax incentives, and by facilitating meetings with companies and potential clients abroad.
The government also helps market the industry abroad, but much of work and funding still comes from the private sector, he said. “We’d like to [get] more [state support],” Ms. Ileto said. She noted that given the global economic slowdown led by the US, where up to 80% of the local industry’s clients are based, the group has had to intensify efforts to market the Philippines abroad. “The Philippines is a challenging product [to sell].”
Mr. Sañez said the industry constantly grapples with negative perception abroad due to local bad news that ranges from the war in Mindanao to rogue soldiers storming hotels demanding to overthrow the government.
“Some clients are most concerned about the risks [particularly] peace and order,” he said.
But the industry is trying to market the Filipino’s good work ethics. Local BPO firms have launched a marketing campaign dubbed Experience Excellence, Experience the Philippines, which seeks to attract more companies to outsource here not just for the quality of service, but also for everything else the Philippines has to offer.
The sector is trying to lure prospective clients to come here and check out the Philippines, using Boracay and Palawan, and shopping centers in Metro Manila as selling points. — Paolo Luis G. Montecillo
Source: bworldonline.com
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