Owing to the combination of its cost-competitive workforce and infrastructure, a large pool of English-speaking, college-educated employees, effective government incentives and a service-focused culture, the Philippines has become one of the top business process outsourcing (BPO) locations within the short space of the past two decades. Of the more than $110 billion annual global industry, outsourcing to the Philippines accounts for almost 10%, or $10 billion annually, and is set to grow even more vigorously over the next couple of years.

While presenting a great opportunity for the Philippines and its educated and skilled workforce, this rapid growth also presents several challenges. At the 2010 International Outsourcing Summit in Manila some of these challenges, concerns, trends and developments were addressed by the approximately 300 participants from the IT BPO and shared services sector.

Human resources challenge 

By the end of 2010 the business process outsourcing sector in the Philippines employed an estimated 530 000 workers. In order to expand the industry at a rate of 30% per annum, as envisaged by the Philippine IT-BPO Road Map 2016, to the level where its annual revenue is $25 billion, the labour pool needs to grow by 130 000 workers annually, and by 2016 the sector will need an addition 180 000 workers annually.

Although 400 000 students graduate from tertiary institutions in the Philippines annually, only an estimated 50 000 to 60 000 consider a career in BPO. The demand for talent will therefore significantly outpace the supply of educated workers, and those jobs may well go to other outsourcing locations, unless the industry in the Philippines can find a way of attracting graduates, also from those with seemingly unrelated majors, who have the knowledge and skills required by the outsourcing sector, with its increasing demand for complex services.

Challenge of branding the Philippines

Another concern addressed by participants at the International Outsourcing Summit was brand visibility of the industry, both internally and externally, and especially of outsourcing capacity beyond call centres. Gaurav Gupta from the Everest Group summed it up as follows:

“The problem is that awareness of the Philippines’ capacity to deliver these services is low. Companies view the Philippines as the world leader in voice BPO. What they don’t realize is that it is also a significant provider of non-voice, complex services.”

In order to capitalize on the demand for more complex services, the Philippines needs to increase awareness internally of its capability to deliver these services.

The issue of the external perception of the Philippine brand is also addressed by the Philippine IT-BPO Road Map 2016 commissioned by the Business Processing Association of the Philippines (BPAP). The BPAP is also actively lobbying the Philippines’ Congress to address the threat of regressive labour legislation which might deter investors, and is arguing that liberalization of the Philippines’ archaic labour laws will work in the best interests of workers and the BPO industry.

The Philippines’ Department of Trade and Industry and the Department of Finance have given assurances that incentives such as income-tax holidays and exemptions for investors will be maintained – awareness of these policies need to be promoted in order to benefit the industry.

Secondly, increased internal visibility of the industry will result in greater number of students being attracted to the BPO sector. The attractiveness of the industry to the domestic populace has a direct effect on the Philippines’ capacity to address the talent pool shortage. Internal branding can have a bearing on the career choices of graduates and encourage them to consider working in business processing outsourcing. In this respect it is critical for the industry to work together with tertiary institutions.