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 News
State of the BPO industry: Well-managed, innovative firms are growing
O2P-BPA/P survey results reveal plans to increase workforce, introduce new services, and accelerate expansion
(Manila, Philippines, June 16, 2009) – Although 83% of executives responding to a recent survey designed to assess the state of business process outsourcing (BPO) industry said the global economic crisis has had at least some impact on their firms, 49% said their firms will expand headcount this year by at least 11% and up to 200%. Fifty-one percent of respondents will expand headcount conservatively up to 10%, retain their current headcount, or decrease the size of their workforces.
However, only six percent of survey respondents said they will decrease the size of their workforces this year.
According to Business Processing Association of the Philippines CEO Oscar Sañez, the survey results suggest that whatever impact the global financial crisis is having on the industry, it doesn’t seem to be dramatically slowing expansion. “It’s encouraging that although the industry has been growing rapidly for several years, almost 40% of respondents indicated that their firms will still grow between 16% and 200% this year,” he said.
Introducing new services was the most prevalent response to the global financial crisis, with almost 60% of respondents indicating that their firms have expanded their service offerings. Only two percent of respondents indicated that they have reduced the number of services they offer clients. More respondents said they were accelerating expansion (33%) than postponing expansion (26%). Respondents indicating that their firms are increasing recruitment efforts (23%) somewhat outpaced respondents indicating that their firms are moderating recruitment (20%).
Recent developments in the industry support the results of the survey. StarTek, a mid-size value-added BPO 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.
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% this year.
The survey did provide some signs of concern. Substantially more respondents indicated that their firms are decreasing capital investments (36%) than increasing capital spending (9%). The impact of the crisis is being felt primarily in demand according to 66% of respondents, but the large number of respondents whose firms have introduced new services suggests that an interesting shift in the kind of services desired by clients is taking place.
The suggestion that a shift in the kinds of services provided by the industry is supported by the large number of respondents that say their firms are providing high or very high value-added services, according to Frank Holz, CEO of Outsource2Philippines (O2P). “The fact that 69% of respondents said their firms are providing high and very high value-added services is actually staggering,” Holz said. This means that the industry is providing much more complex services overall than it did in the early years of its development.”
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.
Among the sectors represented by respondents, firms providing back office services appeared to be the most affected by the crisis, representing 63% of respondents indicating their firms had been very significantly affected by the crisis and 36% of respondents who said their firms had been significantly affected. However, the impact appears to be primarily positive, with respondents in this sector representing 60% of respondents who said their firms are accelerating expansion. Respondents representing back office services account for 35% of respondents who said their firms are postponing expansion.
Back office services providers (data processing, HR, finance & accounting, document management, claims and transaction processing, editorial, procurement, professional services, research, supply chain management, etc) are some of the largest employers involved in the survey. However, it is the smaller services providers that have been most affected by the global financial crisis, according to Gillian Joyce Virata, BPA/P executive director for information and research.
“This may suggest that while smaller firms were in some ways more susceptible to the crisis, they may also have been the most responsive,” she said.
Some of the small firms represented in the survey provide medical transcription services. Total Transcriptions Services, Inc. President Myla Reyes said separately that as a result of the impact of the global economic crisis on the health care industry, especially in the United States, clients are now more receptive to outsourcing options to make their businesses viable. “As a cost-cutting measure, more clients tend to ‘shop around’ for MT service providers outside the US. This gives us an advantage as one of the destinations of choice in providing this type of service.” Reyes explained.
The survey was conducted online by BPA/P and O2P with the support of TeamAsia. It 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% 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%) to 501 to more than 15,000 (60%). Twenty-one percent of respondents’ firms employ more than 1,000.
About BPA/P
The Business Processing Association of the Philippines (BPA/P)
is the umbrella organization for the fastest-growing industry
in the Philippines: offshoring and outsourcing (O&O). BPAP serves
as the one-stop information and advocacy gateway for the country's
key O&O services sector and has over 200 company members, including
five association members. For more information, visit www.bpap.org.
About O2P
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. For more information,
visit www.outsource2philippines.com.
About TeamAsia
TeamAsia is an award-winning strategic marketing communications
firm that develops place, corporate, and personal brand strategies,
creative concepts, and marketing communications programs for its
clients. It specializes in non-traditional communications channels,
including the Web (e-Mail, blog and Podcast marketing, online
brand advertising and website development, search engine marketing),
contact center services, direct marketing, public relations, events,
and innovative experiential and direct marketing communications
collateral. For more information, visit www.teamasia.com.
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