Survey: BPOs revising expansion plans upward

While diversifying into non-voice and more complex services

(Manila, Philippines, April 28, 2010) – Business process outsourcing industry (BPO) executives are revising expansion plans upward according to the results of an industry survey released today. Most BPOs say they will expand their workforce between 6% and 50% this year. At the same time, the trend toward diversifying into non-voice and more complex services continues to gain momentum.

“There are two things particularly that stand out in this latest survey,” said Business Processing Association of the Philippines (BPAP) CEO Oscar Sañez. “First, we see a return to optimism and better prospects for rapid growth.

“Second, the industry is more than just recovering from slower growth in 2009. It is diversifying and transforming as a result of increased demand for non-voice and more complex services.” However, Sañez also said that important challenges for the industry must be addressed to ensure continued rapid growth and expansion. “People issues are still a top concern,” he said.

“And, in the short term, it is important that next month’s elections take place in a transparent and credible fashion to improve investor perception,” Sañez said.

Thirty-four percent of respondents indicated that the tight labor market is their number one risk concern when it comes to offering BPO services from the Philippines. That is up from 23% in a similar survey conducted in October last year. In that survey, 44% of respondents said the tight labor situation was the top one, two, or three risk factor associated with operating a BPO services provider in the Philippines. In the latest survey, that number jumped to 54%.

The number of respondents addressing the tight labor market by providing education and training also increased dramatically, from 26% to 48% of respondents who indicated education and training as their number one priority.

Thirty-four percent of respondents said hiring skilled professionals for knowledge process outsourcing is their number one priority in terms of development issues, suggesting that lack of skilled professionals could hamper expansion. Forty-three percent of respondents said doing business in the Philippines is as risky as doing business in India, and 37% said it is less risky.

Respondents indicated that North America and Asia are the principal markets for BPO services providers, with 65% of respondents each indicating their clients are primarily located in these regions. The EU is the next largest market (36%).

The online survey was commissioned by the Business Processing Association of the Philippines (BPAP) and Outsource2Philippines (O2P) and conducted by TeamAsia from February 2–March 1. Sent to 687 industry executives, the survey had a response rate of 23%, or 160 individual respondents. Invitations to the survey were sent to BPO executives in a broad range of services sectors, including voice, back-office services, design and engineering, animation, software, legal, and creative services.

May Elections
There was broad agreement that the upcoming national elections can impact investor perception of the Philippines and its BPO sector significantly. Ninety-three percent of respondents said peaceful, credible, and transparent elections would “somewhat significantly,” “significantly,” or “very significantly” affect investor perception. Almost half (49%) responded “very significantly.”

Likewise, 87% said a failure of elections would “somewhat significantly,” “significantly,” or “very significantly” generate a negative effect on investor and client perception of the Philippines. Ninety-three percent said a smooth transition of power would have a “somewhat significant,” “significant,” or “very significant” positive effect on investor and client perception of the Philippines, with 50% indicating “very significant” and 35% indicating “significant.”

About BPA/P
The Business Processing Association of the Philippines (BPAP) is the umbrella organization for the fastest-growing industry in the Philippines: information technology and business process outsourcing (IT-BPO). BPAP serves as the one-stop information and advocacy gateway for the country’s key IT-BPO 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.