Outsourcing News for August 2012 | MicroSourcing
At CNBC Asia’s latest article “Who Is Asia’s New Darling of Investors?” published in The New York Times last August 27, it identified the Philippines as the country that is getting the attention of investors. The country posted a GDP growth rate of 5.9 during Q2, making the GDP of this year’s first half 6.1%.
Philippine Service Exports Fuel GDP
The Philippines’s Q2 GDP enabled it to come in third place, closely following China and Indonesia. With the country’s 5.9% GDP, fuelled by the strong growth of services exports, it was able to outdo Malaysia (5.4%), Vietnam (4.4%), Thailand (4.2%), and Singapore (2%).
Prakriti Sofat, Regional Economist at Barclays, said the Philippines is “Asia’s rising star”. It is also expected that the country would get an upgrade in credit ratings in the second half of 2012.
Medha Samant, Investment Director at Fidelity Worldwide, said the Philippines’ reduced fiscal deficit, strong domestic demand, and high volume of remittances from overseas workers help the country attract more investors. Another key growth driver for the country’s economy is the thriving business process outsourcing (BPO) sector. Samant noted that the BPO market poses a lot of opportunities.
Meanwhile, research consultancy firm Everest Group said the Philippines is the global leader for call center operations, overtaking India’s $7 billion in voice-based processes by posting $7.6 billion.
Ruling to Improve Philippine BPO Industry
The rapidly growing business process outsourcing (BPO) sector of the Philippines is set to benefit from the Data Privacy Act or Republic Act 10173 as it aims to protect personal digital data of private and public entities, specifically those that are dealing with offshore businesses.
Benedict Hernandez, Director of the Business Processing Association of the Philippines (BPAP) and President of the Contact Center Association of the Philippines (CCAP), said the local BPO sector must and will abide by the new law’s provisions. It is also predicted to attract more investors as it is set to reinforce protection of private data.
In an interview, Hernandez also highlighted several uses and benefits of the law to the outsourcing industry and other sectors as well. He added that private information should be handled with outmost confidentiality.
Moreover, he said having reinforced data privacy processes will help pave the way for better business practices in companies and more opportunities in attracting potential investors. He reiterated that BPAP will strive to work with the government in implementing and establishing the provisions of the Data Privacy Law.
More Opportunities Expected for the Outsourcing Industry
The recent approval of the Data Privacy Act or Republic Act 10173 by President Benigno Aquino III is seen as a new window of opportunity for the Information Technology and Business Process Outsourcing (IT-BPO) sector.
The law aims to protect and secure private data from both public and private entities. The National Privacy Commission is assigned to monitor and make sure that the country is following international standards in terms of data protection protocols.
Moreover, a data protection guide will be published and reviewed periodically in case an occasion calls for an update, as well as to keep the private and public entities informed.
Senate Science Committee Chairman Edgardo Angara, who proposed the bill, said if the act is signed into law, it will help the country’s IT-BPO industry grow and attain the revenue forecast of $25 billion by 2016 and employment of up to four million Filipinos.
A mobile marketing event for the IT-BPO will be held by the Information and Communications Technology Office of the Department of Science and Technology (DOST-ICTO) in regions outside Metro Manila. These areas are also known as the ‘Next Wave Cities’ (NWCs).
Next Wave Cities for PH IT-BPO
Next Wave Cities are identified as IT-BPO qualified locations outside the National Capital Region and Metro Cebu.
According to DOST, the event aims to increase applications, promote the outsourcing industry to graduates, and clarify some false impressions about the sector. It will last for four months and will be held in different locations.
The dates for the IT-BPO road show are as follows: Palayan City, September 7; Tagbilaran, September 13; Zamboanga, September 28 -29; Malolos, October 4-5; Clark Special Economic Zone, October 10-11; Bacolod, October 15-16; Cavite, October 25-26; and Davao, November 9-10.
The institution added that the road show aims to tap Smarter City/Rural regions to improve the social and economic standing of the regions by means of ICT. Moreover, partnerships that will provide employment opportunities and training programs with the private and public sectors are highly anticipated for the IT-BPO industry.
Alejandro Melchor, DOST-ICTO Deputy Executive Director for Industry Development, said it would be more beneficial to the country if other regions that have high volumes of graduates can benefit from the IT-BPO sector, especially now that major cities are already saturated by outsourcing operations. He said it would result to a more balanced development throughout the country.
Animation Software Market
A new study titled "Global Animation Software Market 2011-2015" was recently added to Research and Market’s roster of reports. It identified the rising demand for animation content in the entertainment industry as one of the major propellers of the global animation software market’s growth. Another phenomenon seen in the segment is the rising outsourcing activity, though piracy remains a concern.
Some of the renowned players in this segment are Adobe Systems Inc., Autodesk Inc., Side Effects Software Inc., and Toon Boom Animation Inc.
An analyst from TechNavio’s engineering team said a lot of organizations in the animation sector are outsourcing animation work offshore to reduce operational costs. It is also a growing trend in the market. Countries in the APAC region such as Japan, the Philippines, Korea, and India are the chosen animation service provider locations of more advanced countries which make the most out of the cost advantages.
The two types of animation content gaining traction are 2D and 3D as these help movies give better graphical display, productivity, and clearer pictures. An increasing demand for animation work is also seen in the gaming space.
The recent disapproval of the anti-outsourcing bill in the US was indeed good news to the Department of Labor and Employment (DOLE) as it could help the country’s business process outsourcing (BPO) industry.
BPO is PH's Main Job Generator
According to DOLE Secretary Rosalinda Baldoz, the BPO industry is still the main job generator. She added that there are now fewer hurdles for the industry to grow as BPOs can further develop operations in the country and provide more jobs to local candidates.
However, she said DOLE had prepared contingency plans should the “United States Call Center Worker and Protection Act”, which discourages US-based companies from sending jobs abroad to countries like the Philippines, be approved.
Nevertheless, the defeat of the bill in the US Senate by way of vote (56-42) last July 19 is highly taken note of and welcomed.
The DOLE added that US-based companies that will eventually bring jobs back home will be rewarded by the US government. Meanwhile, other business groups in the US do not agree with the bill as it could be detrimental to their business operations and overall standing against competitors. It could also take a toll on the earnings of companies that subcontract offshore as penalties will be strictly imposed.
Baldoz quotes the President of the Business Processing Association of the Philippines (BPAP), Benedict Hernandez, saying outsourcing is an effective tool for businesses in the US to stay competitive and profitable.
With an estimated growth rate of about 7.3 percent until 2050, the Philippines will be the 6th country in the Top 10 list of the world’s fastest growing economies. This is according to the Knight Frank and Citi Private Wealth’s 2012 Wealth Report.
PH in Top 10 list of world’s fastest growing economies
Citi Chief Economist Willem Buiter said the Philippines is seen as one of the “global growth generators”. The country is followed by Mongolia with 6.9 percent growth rate, Indonesia with 6.8 percent, Sri Lanka with 6.6 percent, and Egypt with 6.4 percent.
For Q1 2012, the Philippines posted a growth rate of 6.4 percent, meeting the 6-7 percent growth target for this year. By 2016, the government aims to post a growth rate of 8.5 percent.
In the next 40 years, the economic crisis in Europe will affect the developed countries. These are expected to post a slower growth rate. According to the report, developing nations in Asia currently post a 27 percent share in the total economic output. This is predicted to reach 49 percent by 2050. On the other hand, total shares of North America and Europe will drop to 18 percent from 41 percent.