BPO industry: A sector in constant evolution

Reading Time: 5 minutes
GIGI_VIRATA_1
IBPAP Senior Executive Director Gigi Virata

Already the world’s largest call center hub, the Philippines’ Business Process Outsourcing (BPO) industry is earmarked to hit $16 billion by end-2013. Looking over the industry that provides the largest amount of private sector jobs, the Information Technology and Business Process Association of the Philippines (IBPAP) compiles research and assists with large-scale training programmes. Inside Investor asked  what comparative advantages the Philippines can offer as it diversifies into more complicated business services.

Q: Can you tell us about your career background, as well as that of IBPAP?

A: I began my career in the education sector before moving on to corporate communications with Accenture. I then worked as a consultant for Ayala Corporation and the World Bank, being based in Washington, D.C., before taking on a role as a writer and researcher with the Asian Development Bank. IBPAP has 300 direct members and about another 300 members in partner associations, making our total group about 600 companies across 6 associations. IBPAP assists prospective investors seeking opportunities in the BPO industry by providing research to supplement planning for sites so that companies can assess whether a location is a viable option or not. Some of the research, namely the education statistics, comes from governmental sources.

Q: How does IBPAP help promote growth in the industry?

A: We view ourselves as an enabler association that offers services to boost the industry, such as educational and training programmes. The largest issue companies entering the BPO industry face is the hiring rate, as they are looking to expand quickly. We have large teams here helping them to understand and improve employee growth. One such training programme we provide is bridge training, which targets applicants who didn’t pass training the first time, a large reason being because they lack confidence in their English skills. By providing a more relaxed environment and working towards greater confidence in English, bridge training conducted by IBPAP has made 70 per cent of applicants that failed the first time subsequently hirable. IBPAP completed a training project in March 2013 with a $12-million fund led by the Philippine government. We trained 65,000 BPO workers, and 46,000 got hired. We are hoping that the government considers it a success so that we can sustain the programme.

Q: The BPAP was rebranded as IBPAP to include technical services. What was the motivation behind this?

A: We’ve seen in the past few years that when clients look for services they need an integrated approach, including a back office and IT workers. The Philippines is more known for its call centers so we needed to promote our IT professionals, reflecting that integrated approach to services. One major challenge we face is creating awareness. Our challenge with promoting is that we don’t have as much funds for marketing as Malaysia, for example. We’ve had a few consultants once call the Philippines a ‘silent knight’ for non-voice work, which draws a clear picture of our situation. We do trade missions, and an important marketing tool is our web portal. Our president is currently on a mission in Sydney, and we are eyeing North America and the EU. The EU doesn’t know us very well yet, but we have welcomed a few visiting delegations from there. We have conducted a few EU missions so far hoping to promote the fact that the Philippines is diversifying in its offerings.

Q: According to the Department of Trade and Industry, the BPO industry will hit $15 billion in gross annual revenue by end-2013. What is the direct and indirect employment target for this year?

A: The Philippine BPO industry grows an average of 20 per cent per year in terms of employment. About 10 per cent of BPO companies in the Philippines have over 500 employees each, a group that mostly consists of multinational corporations. This group employs half of the total industry, which currently stands at 800,000 people. Indirectly, the industry now employs 2 million people.

Q: Do you still retain that the Philippines will surpass India as the BPO hub of the world by 2015? What evidence can you show that the Philippines is moving towards this goal by creating more lucrative Knowledge Process Outsourcing (KPO) jobs?

A: We are not so focused on measuring ourselves by competing with India. However, the industry’s diversification into KPO is continuing. While 67 per cent of the industry was dedicated to voice work about two years ago, today that figure is 65 per cent. Actually, the BPO industry started in the 1970s with non-voice work, when multinationals opened up auditing offices here. Moreover, HSBC has been here doing such services for over 100 years, while IBM has been here for over 80 years. With the advent of technology, the call center industry began to boom in the mid-1990s. One reason why the demand for non-voice hasn’t been so large is because the Philippines has built a reputation for voice work. Yet while Convergys has become known for building the world’s largest call center in Makati, Accenture also plays just as large a role, dedicating half its workforce in the Philippines to IT and back office jobs. There are about 200,000 employees in the industry working in healthcare and financial service jobs. Deutsche Bank has about 2,000 more employees in financial services; Thomson Reuters does media, research and financial services here. Concerning expansion, SPi Global set up in Dumaguete, and also has a facility in Laguna.

Q: Considering that the BPO industry is projected to hit $25 billion by 2016, what KPO segments do you think will contribute to this growth by becoming comparative advantages?

A: If I had to choose a comparative advantage of the BPO industry it would be healthcare and finance. I pick healthcare because we have a distinct advantage due to the customer-service oriented qualities of the industry, which Filipinos excel in. Additionally, the Philippines is one of the few places in the world where you can do multilingual work. We can take on contracts that require 5 to 10 per cent work in languages other than English. There are a lot of Koreans, for example, currently living in the Philippines and some are working in BPOs. However, the reality is that the BPO industry has grown faster than we can catch up with in terms of finding managers and supervisors; in the end, the industry compensates by quickly elevating a lot of young people. Now there is a whole industry being built out of training these young and highly adaptable professionals to address the lack of maturity and experience.

Q: A study conducted by the church-based Ecumenical Institute for Labour Education and Research found that occupational health risks among BPO workers were “very serious and life-threatening.” Among the health concerns cited in the study are sleeping problems, over-all fatigue, headaches, chest and back pains, voice problems and mental stress. How would you challenge these claims?

A: I’m not familiar with that particular study but often these studies aren’t done very objectively. There are no control groups or research methods you would expect in a thoroughly compiled piece of work.

Q: The Mindanao Development Authority has said that animation BPO is thriving in Davao. What other outlier examples of KPO have you heard of in Cebu, Bacolod or other secondary cities?

A: There are many such examples in Cebu, where the Asia IT Park is located. Iloilo is also an education center and has been feeding Bacolod. With infrastructure being completed in Iloilo and the educational output approaching critical mass it has the potential to grow rapidly. Davao has a very active blogger association and those who have access to the internet are able to do design work as well. We do have Filipino animators that offer their experience, but when China comes in they undercut us by offering services at half the price. However, when one of our big studios was left by a client who moved to China, that client came back shortly after asking the Philippine designers to write out the script because apparently the Chinese animators couldn’t figure out the desired sense of humour.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

Reading Time: 5 minutes

IBPAP Senior Executive Director Gigi Virata

Already the world’s largest call center hub, the Philippines’ Business Process Outsourcing (BPO) industry is earmarked to hit $16 billion by end-2013. Looking over the industry that provides the largest amount of private sector jobs, the Information Technology and Business Process Association of the Philippines (IBPAP) compiles research and assists with large-scale training programmes. Inside Investor asked  what comparative advantages the Philippines can offer as it diversifies into more complicated business services.

Reading Time: 5 minutes

GIGI_VIRATA_1
IBPAP Senior Executive Director Gigi Virata

Already the world’s largest call center hub, the Philippines’ Business Process Outsourcing (BPO) industry is earmarked to hit $16 billion by end-2013. Looking over the industry that provides the largest amount of private sector jobs, the Information Technology and Business Process Association of the Philippines (IBPAP) compiles research and assists with large-scale training programmes. Inside Investor asked  what comparative advantages the Philippines can offer as it diversifies into more complicated business services.

Q: Can you tell us about your career background, as well as that of IBPAP?

A: I began my career in the education sector before moving on to corporate communications with Accenture. I then worked as a consultant for Ayala Corporation and the World Bank, being based in Washington, D.C., before taking on a role as a writer and researcher with the Asian Development Bank. IBPAP has 300 direct members and about another 300 members in partner associations, making our total group about 600 companies across 6 associations. IBPAP assists prospective investors seeking opportunities in the BPO industry by providing research to supplement planning for sites so that companies can assess whether a location is a viable option or not. Some of the research, namely the education statistics, comes from governmental sources.

Q: How does IBPAP help promote growth in the industry?

A: We view ourselves as an enabler association that offers services to boost the industry, such as educational and training programmes. The largest issue companies entering the BPO industry face is the hiring rate, as they are looking to expand quickly. We have large teams here helping them to understand and improve employee growth. One such training programme we provide is bridge training, which targets applicants who didn’t pass training the first time, a large reason being because they lack confidence in their English skills. By providing a more relaxed environment and working towards greater confidence in English, bridge training conducted by IBPAP has made 70 per cent of applicants that failed the first time subsequently hirable. IBPAP completed a training project in March 2013 with a $12-million fund led by the Philippine government. We trained 65,000 BPO workers, and 46,000 got hired. We are hoping that the government considers it a success so that we can sustain the programme.

Q: The BPAP was rebranded as IBPAP to include technical services. What was the motivation behind this?

A: We’ve seen in the past few years that when clients look for services they need an integrated approach, including a back office and IT workers. The Philippines is more known for its call centers so we needed to promote our IT professionals, reflecting that integrated approach to services. One major challenge we face is creating awareness. Our challenge with promoting is that we don’t have as much funds for marketing as Malaysia, for example. We’ve had a few consultants once call the Philippines a ‘silent knight’ for non-voice work, which draws a clear picture of our situation. We do trade missions, and an important marketing tool is our web portal. Our president is currently on a mission in Sydney, and we are eyeing North America and the EU. The EU doesn’t know us very well yet, but we have welcomed a few visiting delegations from there. We have conducted a few EU missions so far hoping to promote the fact that the Philippines is diversifying in its offerings.

Q: According to the Department of Trade and Industry, the BPO industry will hit $15 billion in gross annual revenue by end-2013. What is the direct and indirect employment target for this year?

A: The Philippine BPO industry grows an average of 20 per cent per year in terms of employment. About 10 per cent of BPO companies in the Philippines have over 500 employees each, a group that mostly consists of multinational corporations. This group employs half of the total industry, which currently stands at 800,000 people. Indirectly, the industry now employs 2 million people.

Q: Do you still retain that the Philippines will surpass India as the BPO hub of the world by 2015? What evidence can you show that the Philippines is moving towards this goal by creating more lucrative Knowledge Process Outsourcing (KPO) jobs?

A: We are not so focused on measuring ourselves by competing with India. However, the industry’s diversification into KPO is continuing. While 67 per cent of the industry was dedicated to voice work about two years ago, today that figure is 65 per cent. Actually, the BPO industry started in the 1970s with non-voice work, when multinationals opened up auditing offices here. Moreover, HSBC has been here doing such services for over 100 years, while IBM has been here for over 80 years. With the advent of technology, the call center industry began to boom in the mid-1990s. One reason why the demand for non-voice hasn’t been so large is because the Philippines has built a reputation for voice work. Yet while Convergys has become known for building the world’s largest call center in Makati, Accenture also plays just as large a role, dedicating half its workforce in the Philippines to IT and back office jobs. There are about 200,000 employees in the industry working in healthcare and financial service jobs. Deutsche Bank has about 2,000 more employees in financial services; Thomson Reuters does media, research and financial services here. Concerning expansion, SPi Global set up in Dumaguete, and also has a facility in Laguna.

Q: Considering that the BPO industry is projected to hit $25 billion by 2016, what KPO segments do you think will contribute to this growth by becoming comparative advantages?

A: If I had to choose a comparative advantage of the BPO industry it would be healthcare and finance. I pick healthcare because we have a distinct advantage due to the customer-service oriented qualities of the industry, which Filipinos excel in. Additionally, the Philippines is one of the few places in the world where you can do multilingual work. We can take on contracts that require 5 to 10 per cent work in languages other than English. There are a lot of Koreans, for example, currently living in the Philippines and some are working in BPOs. However, the reality is that the BPO industry has grown faster than we can catch up with in terms of finding managers and supervisors; in the end, the industry compensates by quickly elevating a lot of young people. Now there is a whole industry being built out of training these young and highly adaptable professionals to address the lack of maturity and experience.

Q: A study conducted by the church-based Ecumenical Institute for Labour Education and Research found that occupational health risks among BPO workers were “very serious and life-threatening.” Among the health concerns cited in the study are sleeping problems, over-all fatigue, headaches, chest and back pains, voice problems and mental stress. How would you challenge these claims?

A: I’m not familiar with that particular study but often these studies aren’t done very objectively. There are no control groups or research methods you would expect in a thoroughly compiled piece of work.

Q: The Mindanao Development Authority has said that animation BPO is thriving in Davao. What other outlier examples of KPO have you heard of in Cebu, Bacolod or other secondary cities?

A: There are many such examples in Cebu, where the Asia IT Park is located. Iloilo is also an education center and has been feeding Bacolod. With infrastructure being completed in Iloilo and the educational output approaching critical mass it has the potential to grow rapidly. Davao has a very active blogger association and those who have access to the internet are able to do design work as well. We do have Filipino animators that offer their experience, but when China comes in they undercut us by offering services at half the price. However, when one of our big studios was left by a client who moved to China, that client came back shortly after asking the Philippine designers to write out the script because apparently the Chinese animators couldn’t figure out the desired sense of humour.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid