Global crisis forces outsourcing firms to offer new services, survey claims

MANILA, Philippines - Thanks to the global financial crisis, Philippine outsourcing companies have introduced new services, providing additional revenue streams for their businesses. These findings were among those reported by a survey that polled executives of business process outsourcing (BPO) companies in the Philippines. “…[D]espite some challenges associated with the global financial crisis, innovative firms are identifying new opportunities as a result of the crisis," Gillian Joyce Virata, executive director for information and research of the Business Processing Association of the Philippines (BPA/P) said in a statement. “This is enabling them to continue growing their businesses," she added. Although demand for BPO services remains strong, labor supply remains an area of concern for many firms, Virata said. Forty-five percent of respondents indicated that their companies hire only six or fewer applicants out of every 100, said the survey entitled, “State of the BPO Industry: Mid-Year Report." On the hand, more than half of the respondents indicated they hire seven or more applicants out of every 100. A positive indicator for the industry is that attrition is either the “same," “decreasing," or “decreasing significantly," 79 percent of respondents said. Fifty-three percent of respondents said attrition in their companies is 10 percent or lower. However, a significant number of respondents – at 29 percent – said attrition rates in their firms run between 11 to 20 percent. Seventeen percent said attrition is above 21 percent. As a result, high attrition rates have “sustained demand" for companies such as ExcelAsia which provides recruitment and training services for the country’s large BPOs. The company “continues to grow rapidly," Rita Trillo-Ugarte, ExcelAsia president said. Services providers themselves indicate that expansion efforts are continuing resulting in increased demand for workers. StarTek, a mid-size value-added BPO, recently announced that it is ramping up its Makati facility to full capacity to meet expanding demand for complex services. Convergys opened three new call centers in Cebu, Santa Rosa, and Quezon City in April which will provide almost 3,000 new jobs and increase the company’s headcount to 16,000 in the Philippines. Telus and Sitel have also opened new sites in recent months. In a related development, Thomson Reuters recently announced that it has established a team to support global legal content initiatives, its most profitable division, in the Philippines. The company already provides services in five other operations areas, including the Investment & Advisory division, from the Philippines. “The Philippines is providing increasingly complex services for Thomson Reuters customers worldwide," Raoul Teh, senior site office for the company, said recently. Next: Philippine BPOs seen to expand by 20 percent this year Philippine BPOs seen to expand by 20 percent this year Miguel Garcia, CEO of industry supplier DTSI and a member of the BPA/P board, forecasts that the Philippine BPO industry will grow overall by about 20 percent this year. Meanwhile, industry estimates show an addressable global IT-BPO market of $450 billion, according to BPA/P CEO Oscar Sañez. Next year, the penetrated global IT-BPO market is expected to generate $130 billion, suggesting that demand for BPO services will continue to outpace supply for many years. Sañez said the Philippine BPO industry aims to capture 10 percent of that market. The BPA/P-O2P survey was in the field from March 31 to April 29. Invitations were sent to 571 BPO executives and 160 completed the survey, providing a 28 percent response rate. Respondents represented approximately 25 BPO sectors ranging from advertising services to legal knowledge process outsourcing to software development. Thirty-eight percent of respondents said their firms have more than one BPO facility in the Philippines in more than 35 tier-one, tier-two, and tier-three urban areas. The size of respondents’ firms in terms of headcount ranged from less than 500 (40 percent) to 501 to more than 15,000 (60 percent). Twenty-one percent of respondents’ firms employ more than 1,000. The same survey also indicated that 83 percent of companies have felt “at least some impact" of the financial crisis. Among respondents who said their firms were affected by the crisis, most said that impact was “moderate" or “minor." Only five percent of respondents said the impact of the crisis was “very significant" and 16 percent said it was significant. The survey, conducted by the BPA/P and Outsource2Philippines (O2P) with the support of TeamAsia, will be released in a breakfast briefing for senior industry executives on June 16. The BPA/P is the umbrella organization for the offshoring and outsourcing (O&O) industry in the Philippines. Meanwhile, Outsource2Philippines (O2P) provides a cost-effective, timely mechanism for companies to receive professional support in analyzing the suitability of outsourcing selected operations to the Philippines, and in implementing outsourcing programs. - GMANews.TV