Philippine BPO companies must climb up the value chain, says analyst

To maintain its standing as a burgeoning economic force in Asia, the Philippine outsourcing industry must aim for a higher spot in the industry value chain, an economist said.

The business process outsourcing (BPO) industry is one of the main pillars of the Philippine economy. Forecasts by the IT and Business Process Association of the Philippines (IBPAP) state that it could generate about $25 billion in revenues by 2016. Along with this explosive growth, BPO companies can also offer up to 1.3 million jobs in the same period.

However, economist Andrew Masigan said in an interview that outsourcing companies in the country must start shifting from call center services to higher-value services. According to him, this will help make the Philippines the leading nation in the global outsourcing industry.

“The growth in our BPO industry isn’t bad. It contributes a lot to the economy but if you will look closely, a BPO employee employed in a contact center gets paid a minimum of only $15 a day,” Masigan said.

Knowledge process outsourcing in the Philippines

Masigan remarked that Philippine BPO companies should delve into sectors that could generate bigger revenues. Examples of this are business processes categorized within the knowledge process outsourcing (KPO) sector. KPO tasks are based on analytic and research skills, design and creative skills, and expertise in business. As such, they may be considered the core processes of an organization. Examples of this are software engineering, business and market research, and business transformation services.

However, current rough estimates indicate that one one-third of all outsourcing companies in the Philippines offer KPO services, whereas call center operations make up the larger two-thirds of the industry. In relation to this, IBPAP expects the non-voice sector to catch up with the voice sector as the former grows at a 20% rate.

The potential of emerging BPO cities

The Philippine outsourcing industry can also benefit significantly from several flourishing BPO sites. Together with the IBPAP, the DOST periodically updates its list of Next Wave Cities, with Davao, Baguio, Iloilo, and Dumaguete as frontrunners. The gradual spread of the call center industry outside Metro Manila and Cebu City provides investors renewed opportunities while boosting employment and revenues.

The Philippines’ roadmap for the outsourcing industry is already set. The only remaining task is for BPO companies to embark on the momentum that drives the entire sector forward. What the BPO industry needs right now are focused management, widening of knowledge-based services, and a capacity-targeted training to enhance professionals’ competencies in both voice and non-voice services.