BPO industry eyes faster sales growth this year

The business process outsourcing sector (BPO) expects sales to grow by a quarter to $9 billion this year as the industry rides the wave of a general economic recovery. The industry's revenues of $7.2 billion last year — a 19-percent increase — came in at the lower end of its target of $7.2-$7.4 billion due to the caution that prevailed among businesses in the first half, the Business Processing Association of the Philippines (BPA/P) said on Monday. In 2008, sales went up by 24 percent. Meanwhile, the head of the Commission on Information and Communication Technology (CICT), said the industry should prepare for an expected pickup in business this year. "What we need to do is to maintain our supply of talent and focus on infrastructure. We expect the BPO industry to grow more as our markets emerge from the recession," CICT chief Ray Anthony Roxas Chua III told reporters on the sidelines of an industry conference. "We also expect voice[-based] outsourcing to continue to grow, but also see faster growth in nonvoice outsourcing, which is gaining ground," he added, citing the need to build competitiveness as more countries enter the global outsourcing market. The Philippines is estimated to have a 15 percent market share, according to Everest Research Institute. Economic planners classify BPO under "business services," which contribute about 2.1 percent to total economic output. Last year, the BPA/P downgraded its 2009 revenue growth projection to 20-22 percent from 35 percent, citing the global downturn. But it maintained that double-digit growth remained possible due to businesses opting to outsource noncore operations to save on cost. First-half caution was to blame for the slower growth, Gillian Joyce G. Virata, BPA/P executive director for information and research, said in a presentation during an annual outsourcing event in Pasay City. "Recovery began in the second half of 2009 from the slowdown that started in the last part of 2008 and continued into the first half of 2009," Virata said. She said companies started aggressively hiring in the second half in anticipation of a full-blown recovery. The BPO segments that saw sales grow last year, said Virata, were: call centers, up by 22 percent to $5 billion; knowledge process outsourcing, 35 percent to $1.1 billion; transcription, 3 percent to $186 million; and game development, which grew by half to $4.5 million. Segments whose sales dipped or stagnated were: information technology (IT) services, down by 5.5 percent to $560 million; IT design, which was flat at $228 million; and animation, also steady at $120 million. "Information technology outsourcing faced hard times because in times of crisis, information technology is the first to be cut. But it is also the first to be placed back," Virata pointed out. The call center segment accounted for the bulk of industry jobs at 280,000 last year. The entire industry generated 70,000 more jobs last year, against an industry forecast of 100,000 in February last year. — Emilia Narni J. David, BusinessWorld