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Mounting BPO profits in the Philippines

By:   |   Jul 08, 2018   |   Views: 13   |   Comments: 0

Mounting at 46% per annum since 2004, the US$6.8 billion Philippines' offshore market today provide work for over 450,000 people, more often than not for voice-based services. The Everest study, The Silent Knight: The Philippines' Emerging Non-Voice BPO Capability, which includes assistance from the Business Processing Association of the Philippines (BPAP), projects that the Philippines is now perched to emerge as an important destination for non-voice offshore BPO work for buyers looking beyond India to grow their off shoring trail. It is worth mentioning here that by 2012, the offshore BPO market will have an addressable prospect of $220-280 billion, and as much as 90 percent of this addressable market prospect will be in non-voice BPO services.

Says Nikhil Rajpal, Principal, Everest Group, €œSuccess in voice-based BPO services has positioned the Philippines as the second largest low-cost BPO destination after India, and both countries combined account for 50 percent of the offshore BPO market in revenue terms. In non-voice BPO, most current activity and scale in the Philippines is concentrated on transactional services. Whereas almost all types of non-voice BPO functions are now being delivered from the Philippines, their maturity varies, so while we see relatively high activity and maturity in Finance & Accounting and transcription services, there has been only some activity recently in HRO, with even lesser in Procurement Services. Further, while there has been an increased traction in judgment-intensive knowledge services such as research, analytics and legal services, the scale and maturity remains low.

In conditions of working cost per employee for transactional back-office employment, the Philippines offers about 75% and 70% respective savings over tier-II cities in UK and US, which is to some extent lesser savings as compared to India, but sizably more than other off shoring destinations like Monterrey (Mexico) and Prague (Czech Republic). Again, in terms of graduates per annum, at 480, 000, Philippines lags behind India's 30, 00, 000, but is much ahead of Egypt, Argentina, South Africa and Mexico.

On the other hand, according to Nikhil, managing talent-related constraints will be critical to ensure operational success in the Philippines. He says, €œPhilippines will need to address four key talent-related challenges - scalability of entry-level talent; availability of specialized skills; availability and quality of managers; and migration of skilled talent. Challenges regarding shortage of entry-level talent exist in India as well as the Philippines. According to the NASSCOM-Everest study, €œRoadmap 2012 - Capitalizing on the Expanding BPO Landscape, released last year, while the number of people required to support impending growth of BPO in India are available, unless the current focus on €œready-to-eat talent is altered, the future growth may lead to a shortage of approximately one million entry-level graduates by 2012. However, availability of specialized skills, access to quality management talent, and talent migration are challenges that are much more pronounced in the Philippines as compared to India.

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