by: Karen Cayamanda
After seeing a decrease in the number of job applicants in local outsourcing companies, the business process outsourcing (BPO) industry of Dumaguete City, Negros Oriental urged new graduates to apply in local firms instead of finding work in major locations such as Metro Manila or Cebu.
The BPO industry of the province has launched a campaign to cite the advantages of working locally. Suzanne Lu-Bascara of Spi Global based in Bacong town said while wages are higher in Manila or Cebu, it is still better to work in the province, considering that a BPO employee working in Manila would have to spend a big part of his/her salary on rent, food, and transportation.
It is estimated that the province needs more than 2000 full-time BPO employees this year. Dana Fortunato of BPO firm Student Universe said they need to get workers locally instead of looking for manpower outside the province. She added that the industry as well as local government units and schools must work together to meet the manpower needs of the province this year.
SPi Global president and CEO Malik Parekh predicts that the Philippine business process outsourcing (BPO) industry will grow by 30 percent this year. Figures also reveal that the industry shows a faster growth rate compared to others around the world.
More than 500,000 workers are currently employed in the country’s BPO industry. Parekh predicts that the workforce will stand at 1.3 million employees by 2016. This can be attributed to the emergence of new markets in the Asia-Pacific region and Western Europe.
BPO companies in the Philippines reported that more than half (58 percent) of their revenues come from non-voice services, and 42 percent come from voice-based work.
The industry is continuously growing, but Parekh said Filipinos should work on further improving their skills to meet client requirements, especially those in the non-voice sector.
Parekh also predicted that global BPO revenues will reach US$124 billion by 2016.
by: Ronald Escanlar
A decade of data on the outsourcing industry shows that companies are moving towards smaller contracts and multi-sourcing deals, according to research released today by sourcing data and advisory firm TPI.
According to the 4Q10 Global TPI Index, the number of large companies relying on multiple outsourcing service providers increased from 30 percent in 2000 to 53 percent last year. Data shows that almost half of these companies relied on more than three service providers, and not a single one returned to single-sourcing.
“As they have grown disillusioned with single-source arrangements, global organizations are increasingly opting to employ multi-sourcing strategies,” said John Keppel, Partner and President-Information Services & Chief Marketing Officer, TPI. “By using multiple providers, they can customize their sourcing solutions and leverage the skills of the best in each market. We expect the preference of companies to multi-source will continue to grow as it allows them to tap the best talent possible for their needs.”
The index, which is on its 33rd quarterly release, covers commercial outsourcing deals that are worth more than $25 million. For 2010, data shows that total contract value (TCV) worldwide amounted to $79 billion – a decrease of 11 percent from the previous year.
Information technology outsourcing (ITO) continued to drive the outsourcing market, despite a decline of 4 percent from last year. Business process outsourcing (BPO) fell by 31 percent, while human resources outsourcing fared better, recording its best TCV in three years.
“Looking forward to the first quarter of 2011, as we consider mixed signals from financial analysts, service providers and industry pipelines, we do not anticipate a significant uptick in the market,” Keppel said.
Manpower problems will slow down the aggressive growth of the Philippine business process outsourcing (BPO) industry if high attrition rates continue, warns Maulik Parekh, president and CEO of SPi Global Solutions, a Philippines-based BPO firm.
Parekh explained that BPO companies could avert the labor shortage and reduce attrition by offering value-added services over cost savings to client-companies, improving working conditions for employees, and encouraging innovation through entrepreneurship. Around 84,800 employees resign from their BPO jobs yearly, the CEO pointed out.
If the BPO industry did not immediately address the attrition issue, Parekh said that “the industry will be short of 400,000 workers by 2016.”
Business Processing Association of the Philippines chairman Alfredo Ayala had earlier announced that the BPO industry would earn $25 billion by 2016, even with “zero investment” from the government. Parekh explained, however, that with the current exit rate of workers standing at 16 percent, the industry could only bring $18 billion, which he said was “not acceptable”.
Luxoft, a leading offshore software development company, urged businesses to plan accordingly to avoid the common mistakes when it comes to transferring IT processes and delegating responsibilities.
According to Luxoft’s president and CEO Dmitry Loschinin, these pitfalls include failure to match requirements with what the provider can actually deliver, and choosing a company which does not have the capability for high-performance outsourcing. Also, he said that many firms underestimate how important having an effective communication is in an outsourcing relationship. "Without clear roles, responsibilities, and collaboration in place, the client and outsourcer teams may adopt divergent strategies that can dilute the value of the outsourcing engagement," he claimed.
Loschinin said companies must conduct regular transparency checks to ensure that both parties follow the workflow process and avoid problems later on.
The economy of the Philippines will continue to grow steadily for 2011 and 2012, says the World Bank (WB) in its latest Global Economic Prospects 2011 report.
The report, which the WB publishes twice annually, estimates that the country’s 6.8 percent growth in 2010 will stabilize to 5 percent in 2011 then 5.4 percent in 2012.
During the launch of the GEP 2011, Eric Le Borgne, World Bank Senior Economist for the Philippines, commented that, "GDP growth has been stronger than expected, reflective of rapid recovery and election-related spending amidst a strong external position which has led to a sovereign credit rating upgrade in November by Standard and Poor's."
The senior economist explains that the continued economic growth of the Philippines relies on the assumption that the strong investor confidence will be supported by the government in much-needed reforms and in improving the overall investment climate.
Although the country faces risks from the economic downturn of developed countries, Le Borgne says the outlook for the country’s top performing sectors remains positive. The electronics and semiconductor sector will remain strong, while the services sector, led by the business process outsourcing (BPO) industry, will continue to grow, explains Le Borgne.
by: Ronald Escanlar
The Bangko Sentral ng Pilipinas (Central Bank of the Philippines) reports that multinational companies with Philippine operations have reinvested USD 259 million into the country during the first 10 months of 2010 - five times more than during the same period in 2009.
The central bank says the reinvestments propped up the rate of foreign direct investments (FDI) to USD 1.07 billion for that period. However, the institution reports that the FDI rate actually declined from 2009, when it totaled USD 1.68 billion.
In their report, the central bank says, “Notwithstanding the favorable growth prospects in the domestic economy, investor sentiment remained cautious amid concerns on the sustainability of recovery of advanced economies, particularly of the United States where the outlook continued to be fragile given the high government fiscal deficit and tepid employment conditions.”
Within the same period, subsidiaries and affiliates of multinational companies increased their loans from overseas headquarters for short- and medium-term local economic operations.
The central bank calls these activities as “intercompany loan availments from affiliates abroad.”