Philippine BPO industry to hit $25b

call center cubiclesThe Philippines’ business process outsourcing (BPO) industry is on target to hit $25 billion in annual gross revenue by 2016 after growing 20 per cent in 2012, Jose Mari Mercado, president of the Philippine BPO Association, said on May 20.

By this projection, the industry will account for nearly 10 per cent of GDP, directly employ 1.3 million Filipinos and 3.2 million more in indirect employment, Mercado said.

According to figures provided to Inside Investor by the Department of Trade and Industry, the BPO industry has created 730,000 jobs so far and is looking to pass the $13-billion revenue mark in 2013, hitting $15 billion by year-end.

In a press briefing, Mercado admitted that the appreciating value of the peso was negatively affecting the industry but fended off fears by claiming that the current exchange rate of the Philippines peso to the US dollar of above 41:1 was “manageable.” In further defense, Mercado maintainsed that the quality of Filipino call agents, which make up about 88 per cent of the industry, will keep businesses coming.

“They are willing to spend more in this country when they hear a Filipino agent answering the phone,” he said.

The BPO industry is the second largest source of foreign exchange in the Philippines (measured at $84.1 billion in March in total) after remittances, which currently contribute 10 per cent to the country’s GDP.

Mercado said it was “his dream” that the BPO industry begin a “reverse migration” trend, where overseas Filipino workers come back to their home country.

One way to boost the industry beyond its current parameters is by promoting mandatory language education outside of English in Spanish, Japanese and other European and Asian languages.

“In 2020, there would be more Spanish-speaking Americans than English-speaking Americans in North America. Think about the potential market that is out there,” Mercado said.

Simple service to knowledge

Although the Philippine BPO industry is predicted to overtake India as the world’s largest by 2015, it has been chastised for lacking non-complex services and ridding to long on voice work.

The evolutionary step into knowledge-process outsourcing, however, has already been recorded. In the most recent example, IBM is mulling over plans to open a new BPO facility in Bicol in southern Luzon to support the development of local talent and give a jolt to the innovation ecosystem.

Located in Naga City, a major city in Bicol, the proposed facility would deliver “next generation” business process solutions to a broad range of clients in the fields of human resources, finance and accounting, supply chain management, customer relationship management and application services.

Naga City is known in the Philippines for having premier educational institutes and a strong pool of talent, both factors which have drawn IBM.

“By locating our global operations in emerging growth cities such as Naga City, IBM is able to bring world-class career opportunities closer to more Filipinos and enhance the country’s competitiveness in the continuously thriving BPO industry,” IBM’s Global Process Services Delivery Country Manager  Cassandra Soto said.

IBM has been operating in the Philippines for 75 years, one of the longest track records for a company in the industry. 

About author

Justin Calderon

Justin Calderon is a research analyst for Inside Investor based in Manila, Philippines. His work has been featured in The New York Times, Newsweek (Japan), CNN Travel, GlobalPost, Global Times and The Nation (Bangkok). Living in and out of Asia since 2006, Justin spent two years in Shanghai working for a popular B2B magazine. He also hunkered himself down in Taipei for two years to teach English and study traditional Chinese characters. He is a Mandarin and Thai reader and speaker.

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