The business process outsourcing (BPO) industry in the Philippines is likely to grow and post $25 billion in revenues in 2016, according to Maulik Parekh, CEO of BPO firm Spi. This forecast is almost three times higher than the industry’s revenues of $9 billion every year.
The Philippines is currently battling it out with countries such as Vietnam and Malaysia. Parekh said higher value services will be needed to beat the competition. He added that from 43 percent last year, non-voice services will grow by 58 percent.
Meanwhile, the Commission on Information and Communications Technology (CICT) is optimistic about the country’s BPO industry, even though there is a proposed US bill that will impose taxes on calls received from offshore call centers. In fact, CICT predicts the industry will grow by 26 percent.
CICT Chairman Ray Anthony Roxas-Chua said more than 440,000 Filipinos have entered the BPO workforce since 2010, and demand and job opportunities are expected to increase in the near future.
The professional clash between pure BPO companies and integrated IT-BPO players is coming to a head, as rumors swirl in the large Indian outsourcing industry of mergers and acquisitions among pure play BPO firms.
The Hindu Business Line interviewed outsourcing experts to share their views about these M&A rumors. “I think it is more about speculation and investment horizon of PEs and less to do with performance of a sector or even integrated versus pure play BPO debate,” comments Sid Pai, managing director of outsourcing consultancy TPI India.
“Theoretically, it is rare for PE (private equity) firms to stay invested in companies for very long, and so naturally, when there is a recovery in valuations they may mull an exit,” Pai explained.
Nikhil Rajpal, partner at Everest Group, shared the same opinion. “I do not think it reflects any preference for an integrated approach at all. From an industry point of view, in companies where PE firms are invested in, there is generally an investment lifecycle. So 5-8 years is, typically, seen as a right maturity time for them to exit or cash out.”
On the other hand, Keshav R. Murugesh, group CEO of WNS, argued that buyers in the market for IT and BPO services were different clients. “We have gone for a vertical approach where we have people with deep domain knowledge, speaking to clients. As opposed to that there are integrated players, predominantly IT players for whom BPO is just a fraction of the business,” he argued.
In a recent Dell-Gartner media briefing that tackled top data center technologies for this year, it is predicted that most companies will focus on data center efficiency and automation. Enterprises will also improve their IT architecture and data center spending will bounce back.
According to Craig Slattery, director for enterprise platforms and solutions marketing for the Asia-Pacific and Japan of Dell Global B.V. (Singapore), organizations will be gearing towards data center efficiency. “To talk about the virtual era, virtualization is really the inflection point to drive new levels of efficiency. Efficiency in an organization is highly flexible, has low capital expenditure and has been optimized the IT manager. That is how you drive data center efficiency,” he said.
Meanwhile, global IT research firm Gartner said about 40 percent of companies with more than 1000 employees in Asia-Pacific will move towards investing in the cloud.
In 2009, Software-as-a-Service (SaaS) increased by nine percent of the total enterprise applications software spending. It is projected to grow by 14 percent in 2014.
by: Karen Cayamanda
There are good business opportunities for business process outsourcing (BPO) firms in India from the knowledge process outsourcing (KPO) industry, according to global IT research firm Gartner.
"KPO service offerings is a good opportunity for Indian BPO providers to provide high value services and thereby enabling them to develop higher margin work," said Arup Roy, Gartner’s Principal Research Analyst. IT firms in India such as Infosys, TCS, Wipro, and Cognizant provide different KPO services. Based on a recent Gartner research paper, KPO services would involve “a combination of better processing methodology and an intellectually skilled workforce based predominantly in an offshore location”.
The multi-billion dollar KPO industry covers services on legal processes, marketing, as well as banking. In the future, it is estimated that the industry will be worth more than US$15 billion.
In a legislative move to further support the growing BPO industry in the country, the Philippine Congress has approved on its second reading the proposed Data Privacy Act of 2011.
The bill, “An Act Protecting Individual Personal Data in Information and Communications Systems in the Government and the Private Sector, Providing Penalties in Violation Thereof”, will cover the governance and management of private individual data collected by the government and private companies such as banking institutions and credit card facilities. The bill states that personal data should only be collected for legitimate reasons, and these must be determined first before any collection is undertaken. The government and the private sector will have to erase the collected personal data after processing.
The bill mandates that data controllers and processors must employ measures in safeguarding personal data against accidental or illegal misuse, destruction, disclosure, alteration, or even illegal processing. Also, the bill makes it illegal to share personal data with third parties. Companies that fail to safeguard personal data will be fined by as much as PHP5 million (USD 115,000), the bill states.
“The approval of the Data Privacy Act on second reading sends the right signals not only to existing foreign locators in the business process outsourcing industry but also to the many global players which are just deciding whether to invest in our country and participate in the IT-BPO space,” commented Martin Crisostomo, executive director for external affairs of the Business Processing Association of the Philippines (BPAP).
The bill was filed by Representative Roman Romulo in July of last year. A counterpart bill in the Philippine Senate was filed during the same time.
by: Karen Cayamanda
Realty firm Ayala Land and the University of the Philippines (UP) signed a contract of lease to build a “University Town”, a hub that combines BPO offices and academic support facilities. Ayala will invest about P3 billion in the development of the 7.4-hectare property, also known as the UPIS campus, located along Katipunan Avenue, Quezon City.
According to Ayala Land, the University Town Project will consist of “mixed-use retail and office components, with firm emphasis on academic support facilities. This will be the first of its kind in the country to reflect a strong collaboration between the academe and the industry."
The 25-year contract can be renewed for another 25 years through a mutual agreement. Ayala added that construction of the project will start this year.
Exports reached a three-year high last year, relying on an increasing global demand for electronic products, apparel, coconut oil, woodcraft, furniture, and metal components.
The country’s export receipts increased by 33.7 percent, for a total value of $51.39 billion, the National Statistics Office reported recently. This increase exceeds the government-set target of 15 percent for exports.
According to Sergio Ortiz-Luis, president of the Philippine Exporters Confederation, Inc. (Philexport), the value of exports would be higher if the revenues generated from the business process outsourcing (BPO) and services sectors were added.
A strengthening global economy pumped up demand for Philippine exports, with electronic exports increasing by 40.11 percent from 2009, bringing in a total value of $31.07 billion. Most products were shipped to Japan, the United States, and Singapore. Of the three countries, Japan was the Philippines’ top importer for 2010, buying Filipino-made products worth $7.8 billion.