by: Sarah Joson
According to the Business Processing Association of the Philippines (BPAP), the IT outsourcing segment posted a 37% increase in revenues last year, reaching $993 million. The entire outsourcing industry, on the other hand, only grew 24% at $11 billion. The BPAP statement shows that for 2012, more IT deals could be awarded due to the growing demand. The IT outsourcing sector also employed 49,908 IT professionals in 2011.
Meanwhile, new processes such as knowledge process outsourcing (KPO) posted a 24% increase in revenues at $2 million. Furthermore, the non-voice segment employed nearly 130,000 candidates last year.
With the Philippines already established as a call center hub, a strong 21% growth rate was seen last year for the industry at $7.4 billion, getting the lion’s share (65%) of the entire BPO sector.
Another growing segment is game development which grew 13%, contributed $8 million, and employed 1,400 workers. For animation, the BPAP statement said a slight drop in contracts was seen last year as competition in back-room animation gets tougher. It posted $128 million in revenues with a workforce of 8,600 in 2011. For the healthcare information management outsourcing, the first survey done by BPAP showed that the segment employed 24,700 and contributed $277 million.
Norio Usui, ADB’s senior country economist and author of the report “Taking the Right Road to Inclusive Growth,” said the volume of jobs created by the BPO segment is not sufficient, as it only accounts for 1 percent of the country’s entire labor force and is favourable only for college graduates. He adds that for a more comprehensive growth in different areas of the country’s economy, the manufacturing sector should be developed more.
The study likewise highlighted that strategies and plans for the industrial sector should be reinforced, and employment opportunities should be provided for undergrads as well.
Moreover, Usui stated that among the countries in Asia, the Philippines is the only one that has a declining industrial base. In fact, the sector’s contributions to the country’s GDP dropped from 39 percent in 1980 to 32 percent in 2009.
Meanwhile, Kunio Senga, ADB’s director-general for Southeast Asia, said that even with the bullish growth posted by the services sector, issues regarding poverty and unemployment still plague the country.
The ADB believes that in order for the country to recover from poverty, more export products should be developed and the business environment should be made more attractive for investors.
by: Sarah Joson
According to a research done by renowned outsourcing consultancy firm TPI, large IT contracts this year are anticipated to come from emerging markets and not on mature ones like the US and Europe.
Managing director and partner at TPI, Sid Pai, said even if India will benefit from the trend, it is unlikely that it will resound to local software providers. Global companies operating in India like IBM or Accenture are also competing for these deals.
Moreover, MindTree CFO Rostow Ravanan predicts contract renewals this year will reach 300. Ravanan also believes that even if small and large players are up in arms in gaining IT deals, Indian players will be able to win at least 80% of the contracts. The game changer he says would be the price points of global versus local players. On the other hand, an analyst predicts that HCL will land most of the IT deals since the firm is willing to change its price points.
The National Economic and Development Authority (NEDA) said the business process outsourcing (BPO) sector of the Philippines can attain an annual growth rate of 15 percent from 2011 to 2016. With this growth forecast, the Business Processing Association of the Philippines (BPAP) said the sector will be able to create more than three million direct and indirect jobs.
According to Ruperto Majuca, Assistant Director General at NEDA, 15 percent is the closest annual growth projection for the BPO sector from 2011 to 2016, although it could also reach 20 percent if public and private partnerships are reinforced, or fall to nine percent if the global market weakens.
During a meeting with President Benigno Aquino III last week, Majuca said the economic crisis in Europe and the US’ delayed recovery from recession will not affect the predicted growth of the global BPO market. He added that those types of economic challenges push foreign companies to outsource work to countries such as the Philippines with relatively lower labor and operational costs.
NEDA said faster establishment of the so-called Next-Wave cities, improving the quality and quantity of talent pool, and further enhancing the business environment to make it more attractive for offshoring are efforts that should be made to maximize the growth potential of the BPO sector.