The BPO Industry and the Development Potentials  

THERE IS one sector that maintains huge leverage for accelerated growth of the country, though still the said sector may also lead to some asymmetric growth, nevertheless, it can assimilate the growing labor force. The BPO is a potential that is not maximized.

The expansion of the services industry is hugely affected by the growth of the information and communications technology (ICT) services, remarkably on the growth of contact centers and the Business Process Outsourcing (BPO). In 2005-2010, the Philippine software industry reported an average growth of 42%, on the same period, of this, the Call Center services grew bit higher at 45%. The Business Process Outsourcing (BPO) therefore has been a significant key driver of the country’s growth.

With more than 50 service providers, Philippines ranked along with China, Brazil, India, and Poland as country destination for software services. It placed third as location for business process outsourcing in terms of annual tertiary graduates in finance and accounting or business and information technology and number one voice services center in the world with USD5.7 billion in revenues in 2012.

In 2010, Philippines was the world’s largest exporter of voice-oriented BPO. That time, we were able to put to the side India which had been the world’s top. Meanwhile the non-voice BPO sector is estimated to give employment to more than 200,000 workers for global sourcing services. Five years after, Philippines became number one in shared services. The industry contributed USD12.1 billion of revenues in 2011. This is a significant leap in revenue-earning for the country.

Philippines, due to its vast human resource, maintains highest potential as an outsourcing destination, even Trump is now the US President. The Philippine IT-BPO industry’s growth was attributable to the fresh investments of large and mid-sized foreign providers and the bigger expansions of mature locators and captives across the country’s many established delivery locations. In addition, factors like affinity to Western culture provide Filipinos the advantage for a more responsive customer relations, greater efficiency and higher quality outputs.

Multinational firms’ decision to outsource services to countries is influenced by the desire to take advantage of the cost differences, human resource and the quality of the market effective governance, the geographic advantage and risk exposure. Our human resource is further made attractive due to favorable demographics, lower salaries, lower real estate costs and the availability of the local talent. Davao City, for that matter, is an emerging best alternative to Metro Manila and Metro Cebu for ICT-BPO investments. This was before President Duterte becomes president; we would expect heavy investments in the industry now. For four years now, Davao City consistently lands in the Tholons top 100 and in the Next Wave City of DOST because of the city’s pool of talent.

Davao City has been producing 12,000 – 15,000 graduates from more than 40 universities and colleges within and in surrounding peripheries. It has four Centers of Development and Centers of Excellence granted by CHED in information and technology education. Approximately 13,000 to 15,000 graduates are joining the formal labor City. The size of the new entrants can be accommodated by the BPOs.

My take is the BPO industry has the potential that must be given adequate attention because of the purposes it serve. First, it can serve either for formal career choice or as “temporary career stop” for young professionals not yet ready for assimilation in their chosen industry. Salaries in the call center of the BPO-Voice sector can reach as high as Php10, 000 but no lower than Php8, 000.  This job is an employment opportunity for college drop-out or those who have earned high school educational as long as they could communicate effectively in English and be able to adapt to various Western culture. Non-Voice employment could absorb new graduates from health care and allied professions. The work requires basic understanding of medical terminology, human anatomy, physiology & disease processes. Medical transcriptionist may earn income between Php11, 000 to Php15, 000.  Employees of the KPO may also earn income between Php9,000 as graphic designer to Php30,000 as  software developer.

Second, the industry is a non-extractive industry. The BPO industry does not destroy the environment; it does not extract natural resources from the ground, does not pollute the air, and does not dirty the waters.

Third, the industry can push for massive improvement in the telecommunications and energy industries. These industries are platform industries which can increase competitiveness and positioning of the Philippine cities as outsourcing destinations. The improvement that will happen in these industries will have seismic impact in the BPO industry; expansion of the BPO means expanding job opportunities to the increasing working population. Currently, Philippines has 44% share of underemployed workers. They can be assimilated formally in the BPO. In addition, The BPO industry maintains vertical integration with the real estate and construction industry. The real estate and construction industry account for more than 100,000 jobs in 2011, and if BPO is to expand, then it means more than hundred thousand working and earning income.

If we now have a new middle class composed of the BPO employees, and majority of income Class D & E households are receiving benefits due to the push of the expanding BPO industry on the construction and real estate, then we are watching an economic dynamo chugging towards high-speed.

*The article is a portion of the cross-cutting issue paper for the Mindanao Jobs Report (MJR) of the World Bank Group- Philippines. Credit to the World Bank Philippines for the permission to publish the work.

 

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