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Growth Expected for Booming BPOs

Customer Care Feature Article


January 16, 2006

Growth Expected for Booming BPOs

TMCnet News


(Philippine Daily Inquirer Via Thomson Dialog NewsEdge) Despite the challenges of finding more quality skills to man the booming industry, now known as business process outsourcing (BPO), and the threat from other countries like India, the local outsourcing industry still expects to grow this year

In a joint forecast by the Business Process Association of the Philippines (BPAP), Board of Investments (BOI) and the Commission on Information and Communications Technology, the Philippine outsourcing industry is expected to generate 103,000 new jobs in 2006, or a 44 percent increase from 2005.

The same forecast showed that about 81,000 new jobs were created in 2005, which is a 53 percent growth from 2004 figures. Based on these growth rates, there is a foreseen slowdown in the generation of newer jobs year-on-year.

The forecast also noted that the outsourcing industry is expected to generate $3.7 billion in revenues this year, or a 52 percent growth over 2005.

"The prospects are still bright for the Philippine outsourcing industry," according to Celeste Ilagan, executive director of the International promotions of the BOI.

She noted that information technology-related projects registered with the BOI have increased in 2005, and are projected to increase by over 50 percent in 2006. "But we will need to develop more niches in this booming outsourcing industry," she adds.

Dan Reyes, president of the BPAP, says that he is bullish about the prospects in 2006, but admits that the industry is faced with the challenge of finding quality skills to man expanding operations in the Philippines.

Meanwhile, the call center or customer care industry will account for majority of the new jobs in 2006, according to Rafy David, president of the Contact Center Association of the Philippines.

He says that the organization, which represents businesses doing outsourced call center work for foreign clients, projects 70 percent growth in 2006 in terms of revenues. "We also want to stress that for every one call center job created, two support service jobs are created," David adds, noting the boom of the real-estate, convenient store and restaurant business in areas where call centers are.

Josephine Gonzales, senior corporate liaison officer of SPI Technologies, says that other than call centers, the outsourced back-office industry is also expected to generate more jobs in the country.

These are also the same expectations from the Philippine animation and software development industry in 2006.

Marilyn Montano, president of the Animation Council of the Philippines, says the Philippine animation industry hopes to sustain a 20 percent growth in total revenues over the next five years. The Philippine animation industry is currently a $40 million business, while the global animation outsourcing industry is valued at $72 billion, she adds.

The BPAP-BOI-CICT projections indicate that the animation industry will generate 7,000 new jobs in 2006. In 2005, about 4,500 jobs were generated from outsourced animation work to the Philippines.

The Philippine software development is currently focused on a program, dubbed Fly-High 2010, which hopes to generate more jobs for this sector, according to Mon Villar, executive director of the Philippine Software Industry Association.

The software development industry, which deals with projects for export, is projected to generate 20,000 jobs in 2006. Meanwhile, the software development industry dealing with the domestic market is projected to employ 31,000 people this year.

A Canada-based market research firm predicted that the outsourcing will lose its luster in 2006, as organizations decide to take back certain IT operations that have been outsourced to third-party providers.

"As a number of multi-year deals are up for renewal globally, outsourcing will lose its luster as organizations take back certain IT functions, selectively outsource, or set up their own remote operations," XMG stated in its 2006 prediction report found at www.xmg-global.com.

It added that with heightened awareness of the capabilities of Asia Pacific countries and the increasing internal tolerance for risks in operating offshore, several organizations that have previously outsourced multi-year contracts with an offshore component will set up its own remote operations offshore to support its internal business process and IT requirements.

The Philippine outsourcing industry, in partnership with the Department of Trade Industry, is scheduled to hold this e-Services Philippines conference and exhibition at Edsa Shangri-La Manila on Feb. 16 to 17, 2006.

Organized by the Center for International Trade Expositions and Missions, the e-Services Philippines will invite international and local speakers to discuss the prospects of the outsourcing industry in 2006.

The conference and exhibition will also feature global industry experts on emerging issues affecting the industry. Avinash Vashistha, founder and managing director of outsourcing consultancy neoIT and author of Offshore Nation, is among those invited to speak at the conference.

Nigel Roxburgh, founding director of UK's National Outsourcing Association, has also been invited to discuss prospects in the UK market.

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