Outsourcing News for March 2012 | MicroSourcing
Eastwood Cyberpark Philippines cited as Top IT-BPO Location
Eastwood City Cyberpark, the Philippines’ first registered information technology (IT) park, was recently cited as the leader in three key categories by the Philippine Economic Zone Authority (PEZA): export revenues, salaries and wages, and number of direct employees.
Out of US$5.85 billion worth of exports, Eastwood City’s outsourcing and offshoring locators contributed US$486.29 million in export revenues for 2011, a 37.27 percent increase from US$354.19 million recorded in 2010.
Salaries and wages of employees amounted to P10.42 billion, a 31.4 percent increase from 2010’s P7.93 billion. Eastwood City Cyberpark’s PEZA-registered locators also employed the most number of direct workers, providing 31,044 jobs last year. This is a 60-percent increase since 2010. Meanwhile, real estate giant and developer of Eastwood City Cyberpark Megaworld said if non-PEZA locators were included, nearly 40,000 jobs would be reported by the IT park.
Jericho Go, Megaworld’s FVP for Business Development said Eastwood City Cyberpark has made an impact to the lives of numerous Filipinos by providing job opportunities. He is confident about the future of the IT park which is predicted to contribute US$500 million in revenues this year.
The Philippines is Third Largest Supplier of IT Talent
Industry Development of the Information and Communications Technology Office of the Department of Science and Technology (DOST-ICTO) Deputy Executive Director Alejandro Melchor III announced during a meeting with the Philippine Software Industry Association (PSIA) that the country’s information technology outsourcing (ITO) industry can grow two-fold and get a bigger share in the global ITO market by 2016.
He then compared the ITO sector to BPO, saying that it bares similar benefits to the economy. He also noted that ITO has a rapid growth rate propelled by emerging trends that are considered as game changers. Some of which are the developments in technology and evolution of knowledge economy.
Melchor said the Philippines is the third largest supply of IT talent in the Asia Pacific Region (lagging behind India and China). The country has a talent pool equipped with diverse IT skills and is one of the most economical IT outsourcing destinations in the world.
On the other hand, DOST Secretary Mario Montejo said the ITO industry robustly grew last year at 37 percent and contributed about $1 billion in revenues, employing 50,000 workers.
DOST-ICTO Undersecretary Louis Casambre believes in the country’s potential to become a premier ITO destination as they are developing programs like ICT Public Private Partnerships (iPPP) with the help of PSIA. Nora Terrado, PSIA’s President said it is possible for the Philippines to become a leader in the ITO segment because it is already equipped with skilled and talented Filipino IT workers.
Next Wave cities, or areas with ideal business environments for outsourcing operations, are now being considered by business process outsourcing (BPO) companies. Most (85-90%) BPO firms in the Philippines operate in Metro Manila, and relocation will help reduce congestion and provide more employment opportunities to talent pools in other cities and provinces.
Next-wave BPO cities in the Philippines
The 10 “Next-Wave BPO cities” report stated that Davao City, Sta. Rosa City in Laguna, Bacolod, Iloilo, Cavite, Lipa in Batangas, Cagayan de Oro, Malolos in Bulacan, Baguio City, and Dumaguete, Negros Oriental have talent supply, infrastructure, and telecom setup that BPO companies need.
The Department of Science and Technology (DoST) and the Business Processing Association of the Philippines (BPAP) released a study indicating that Davao City, Sta. Rosa City in Laguna, and Bacolod City are the three leading BPO destinations out of the 34 locations in the country. Last year, the outsourcing industry posted more than $9 billion in revenues with more than half a million in the workforce.
The BPO sector anticipates an increase in revenues and employment opportunities in 2016 if the plan to relocate or expand to urban areas outside Metro Manila pushes through. Also, BPAP sees cities outside the capital will be employing one third of the predicted 1.3 million BPO candidates by 2016.
More Companies Heading to Cebu to Set up BPO Operations
According to Joel Mari Yu, Managing Director at Cebu Investments and Promotions Center (CIPC), United Health Care, EXL, Health Care Corporation of America (HCCA) Philippines, Inc., Promet, and Talleco are some of the firms that are determined to set up shop in Cebu.
Yu said these firms offer knowledge process outsourcing (KPO) services which are considered to be of higher value than the usual call center operations. Some of the KPO services are business solutions, medical claims analyses, data mining research outsourcing, and many more. Moreover, he noticed that monthly inquiries at CIPC have increased over the last two months.
Yu also noted that qualifications for applying in companies have evolved. Nowadays, candidates in this segment have Masters in Business Administration or are economists, statisticians, and have medical degrees. Yu said new outsourcing clients are looking for more nurses or medical professionals, which is good news for nurses who are having a hard time landing a job.
He estimated that there will be about 4,000 job opportunities in Cebu if each of these BPO firms would hire at least 500 employees.
About 52 BPO firms are currently operating in the province, with a workforce reaching 45,000.
BPAP Pushing for Data Privacy Act Approval
The External Affairs Director of the Business Processing Association of the Philippines (BPAP), Martin Crisostomo, said the Data Privacy Act or Senate Bill 2965 was recently passed but needs to be approved by the President so that the business process outsourcing (BPO) industry can start utilizing it to expand operations and attract investors.
Having a law that strengthens data privacy and security will reassure existing BPO firms that the industry will continue to grow and that clients will start coming in, knowing that there is a law in place that will protect their data. Information and Communications Technology Office (ICTO) Executive Director Louis Casambre said the bill will indeed help in attracting more businesses in the IT-BPO industry.
Senator Edgardo Angara, author of the bill, said once the bill becomes a law, current revenue estimates can grow from $9 billion in 2011 to $25 billion by 2016 and the number of workers employed in the industry will increase in the next few years. He added that a secure data and information environment can help the country transition from traditional services to high-end processes such as engineering, finance, accounting, and healthcare.
A National Privacy Commission is also expected to be created after the passage of the Data Privacy Act. This will be responsible for monitoring personal information controllers and maintaining data security.
Philippine BPO Earnings Could Match OFW Remittances by 2017
In a recent seminar of the Economic Journalists Association of the Philippines (EJAP) sponsored by the San Miguel Corporation (SMC), Jonas Ravelas, Market Strategist at BDO, said if the country’s business process outsourcing (BPO) industry continues to grow at 20 percent, its revenues will be at the same level with OFW remittances by 2017 and will make room for more economic development.
The BPO industry accounts for 5.4 percent of the domestic economy’s growth, seen in last year’s gross domestic product (GDP). The government aims an 8.6 percent GDP contribution by 2016.
Ravelas noted that as the call center sector grows, more jobs will be created even in the local services sector. For instance, establishments that cater to BPO employees will set up shop in call center areas. He added that working for BPO companies is an option that people nowadays are taking since the salary is better than the minimum wage and they would no longer have to leave their families to work abroad.
BPO industry updates
World Bank stated in its Philippines Quarterly Update that new graduates can expect more employment opportunities this year, as infrastructure spending increased and the business process outsourcing (BPO) sector continues to grow even though it is facing talent supply issues. In fact, the BPO industry is expected to provide 100,000 jobs this year.
Majority of the 700,000 Filipinos in the BPO workforce are employed in contact centers. Meanwhile, finance and accounting is seen as a growing segment for Filipino workers.
The BPO industry is stalled by economic problems globally which may affect those who are employed in the electronics sector.
Fewer overseas contracts are also anticipated by World Bank. However, structural reforms are said to be manageable solutions to beef up the volume of skilled candidates, and hopefully resolve advancement issues.
Rogier J. E. van den Brink, Lead Economist at World Bank, said the Philippines has the rudimentary elements against the worsening condition of economies worldwide. Also, the country has the potential to be a prime destination for other services.