Philippines Should Expand Beyond BPO
The Asian Development Bank (ADB) said depending too much on the services sector, specifically business process outsourcing (BPO), in the Philippines will not drive growth, contrary to what the government was saying in its inclusive growth plan.
It is apparent that the country is still troubled with the high unemployment rates, even if the BPO sector began to grow incessantly from 2001, said ADB senior country economist Norio Usui. He added that there are two important prerequisites to simplify the country’s growth. These are services and manufacturing.
In Usui’s recent presentation at the Federation of Philippine Industries (FPI)-organized First Philippine Manufacturers and Producers Summit, he said that the Philippine economy will not grow without manufacturing. This, together with modern services, will drive economic growth.
He later on added that even if the BPO sector has grown into a $10-billion industry, contributed 4.8 percent average economic growth, and employed half a million people from 2000 to 2009, there is low activity in the manufacturing sector. Also, investments are believed to have weakened because the country focused too much on services. Moreover, Usui said that while the BPO industry greatly helps the economy, it only provides job opportunities to those who have proper education.
According to Josef T. Yap, President of the Philippine Institute for Development Studies (PIDS), the contribution of the country’s manufacturing sector to the GDP dwindled to 21.4 percent in 2009 from 22.2 percent in 2000 and 25.7 percent in 1980.
Manufacturing sectors in other countries in Southeast Asia reinforced economic growth. In fact, Indonesia’s manufacturing GDP increased 26.4 percent in 2009 from 13.5 percent in 1980. Thailand’s sector grew from 21.5 percent to 34.1 percent. Malaysia also posted an increase - from 21.6 percent to 25.1 percent.
Globe Telecom Supports PH BPO
Globe Telecom’s corporate division, Globe Business, issued a statement that they are fully supporting the growth and development of the IT-BPO industry.
In her “Sustaining a 24/7 Innovative Culture” presentation to the delegates from various countries, Grace Jarin-Castillo, Globe Business’ Enterprise Segments Head, recapped the firm’s plans of providing not only technological options for the entire industry but strong partnerships for business solutions as well.
Jarin-Castillo said that Globe is fairly known for having employees who are assertive and innovative for the sake of improving a customer’s experience. Globe believes that one of their strongest assets is its people. As a matter of fact, the firm provides their team members with ample tools and training to encourage them to provide better customer service. She added that “The Globe Way” usually helps the employees to be kept on track with the firm’s values and commitment of putting customers’ needs first.
Meanwhile, the Philippines was recently dubbed as the “rock of the BPO industry” by BPO leaders worldwide. It is projected to post $11 billion in revenues this year and $25 billion by 2016, in accordance to the IT-BPO Road Map 2011-2016.
More BPO Cities in the Philippines Open Up
Robinsons Land Corporation (RLC) announced that their mall-based business process outsourcing (BPO) offices in New Wave Cities in Luzon and Mindanao are now ready for occupancy.
New office spaces in malls in Paco, Davao City and Tarlac City, an additional 21,000 sqm, are now available for BPOs for leasing, said Arlene Magtibay, RLC’s Business Unit General Manager of Commercial Centers Division. She added that if the BPO market demands additional office space, they can proceed with the construction in Tacloban and Dumaguete, which can be customized based on the requirements of potential tenants.
According to Henry Yap, Business Unit General Manager for Office Buildings Division, more RLC BPO buildings are in the construction phase in the Ortigas Business District, adding a total of 80,000sqm to its portfolio. This makes RLC one of the leading lessors in the Philippines.
Having offices within Robinsons Malls not only provides tenants shopping and dining convenience - it also boasts proper accreditation from the Philippine Economic Zone Authority or PEZA, armed with 24/7 support facilities and 100 percent power backup.
Industry reports state that there is a rising demand for BPO office space, and vacancy rates in Metro Manila stay low even though rents are increasing.
BPO sector huge factor in PH economic growth
President Benigno Aquino III’s Philippine Development Plan strategy (PDP 2011-2016) highlights the business process outsourcing (BPO) sector as a huge factor in the country’s economic growth. Cayetano Paderanga, Director-General Secretary of the National Economic Development Authority (NEDA), said that some industries were overlooked in previous economic growth reports.
President Aquino’s strategy for the country includes “Social Contract with the Filipino People”, focusing on “Good Governance and Anti-Corruption” to “Achieve Inclusive Growth, Create Employment Opportunities, and Reduce Poverty.”
Paderanga said during the PDP’s visit in Davao City, the BPO industry can help the country achieve the growth goal. In an industry that is rapidly growing, it is no longer right to say that BPO is only about call center work. He added that the sector has actually diversified when it comes to service offerings such as backroom operations and graphics.
Also, BPO hubs have emerged in other locations aside from Metro Manila. These include cities like Cebu, Davao, Cagayan de Oro, and even Pangasinan. Panderanga also said that provided that a location has good educational institutions, BPOs will definitely develop in the area.
A lot of companies nowadays are looking to outsource IT operations by means of the cloud platform. However, the main concerns of the business companies that are adopting the new technology are still to reduce costs and gain access to more flexible contracts. IT groups, on the other hand, are having issues with the security and service levels.
Important factors for IT outsourcing
For businesses that are planning to avail of cloud services, IT expert Michael Robert from BusinessComputingWorld.co.uk shared five important factors to take into consideration:
Business owners should look into the requirements of their IT infrastructure and operation. They should also check if their processes are compatible with the cloud. Since businesses have sensitive information and are ruled by strict regulations, it may be best to keep the processes in-house.
Robert said businesses should look into additional costs for future development and unpredictable scenarios. Also, businesses need to consider the different benefits of the process and not to focus only on cost reduction because IT outsourcing serves other purposes like support for the current IT structure.
His fourth rule focused on the preparedness of the current/in-house networks and bandwidth capacity. He said these things should be well thought of to avoid problems. Lastly, Robert said that businesses should research about the service provider and know the vital areas where they excel or fail.
The Business Processing Association of the Philippines (BPAP) and Commission on Higher Education (CHEd) recently sealed a five-year partnership by signing a Memorandum of Cooperation at Eastwood City Cyberpark, Quezon City. Both groups pitched their proposal that could help future graduates land a job in the IT and business process outsourcing (IT-BPO) industry. The proposal aims to revise college curricula, develop a training program for teachers, and provide a tool to evaluate the skills of graduates.
Improvement in HR processes to help achieve IT-BPO goals
Due to the issues in the quality of the country’s talent pool, it is stressed that improvement in human resource processes will definitely help achieve IT-BPO’s medium-term goals. The 2016 Road Map aims to create 4.5 million jobs and generate $25 billion in revenue. BPAP Chairman Alfredo I. Ayala is confident that working with CHEd will greatly help BPAP efforts in addressing talent issues of the BPO industry.
Meanwhile, CHEd Chairperson Patricia B. Licuanan pledged full support to the industry, saying that it will help create jobs and eventually alleviate poverty. She added that this partnership can provide more opportunities for graduates so they will no longer have to leave the country to get better jobs abroad.
According to BPAP External Affairs Executive Director Martin Antonio S. Crisostomo, the proposal also states that students, whatever course they are taking, can include “BPO 101” in their core curriculum. They are likewise allowed to take service management as their minor course and can be trained for the BPO culture, finding solutions, and other analytical skills.
High Cost Indian IT-Enabled
According to Ramesh Bhandari, MD of Pegasys Information Technologies Pvt. Ltd, India is believed to be losing traction on IT-enabled Services (ITeS) due to expensive rates. Tight competitors such as Brazil, the Philippines, and Sri Lanka are gaining from India’s loss and are offering more affordable services.
In the Business Orientation Program of IMT Hyderabad where a group of 120 students and faculty members participated, Bhandari discussed ITeS & Cloud Computing, stating that India’s IT outsourcing industry posted a 6.1% growth during 2010 and is predicted to grow by 19% in 2011. In India, ITeS contributes to the country’s economic growth and is responsible for nearly 5.66% of the country’s GDP and provides jobs to 2.3 million people. Bhandari also noted that cloud computing has drastically changed the industry by making way for new opportunities for businesses involved with IT/ITeS and traditional services.
Cloud computing basically means delivering hosted services over the internet without making use of additional hardware and software. It is also affordable and can be easily set up.
Services exports such as ITeS-BPO account for 85% of the country’s revenues. In fact, during 2009-2010, the total ITeS revenue amounted to $14.7 billion, a huge increase from 2004’s $2 billion.