The Philippines flexes offshore muscle

The Philippines is continuing its rapid rise to prominence in business process outsourcing (BPO). In the latest Tholons ranking of offshore destinations, metropolitan Manila nudged Mumbai off second place to consolidate its position only behind Bangalore. Cebu City also joined the Philippine capital in the top 10 at number eight.

In its annual overview published earlier in 2013, outsourcing consultancy Tholons said that “The Philippines, Malaysia and Indonesia were amongst the most promising Southeast Asian destinations in 2012. Among the three, the Philippines remains to have the most vibrant IT-BPO industry, led by the emerged outsourcing destinations in the country, Manila.”

The success of the Philippine BPO industry is down to a number of factors, including lower costs and attrition rates, high quality of candidates, widespread English language skills and cultural affinity to Europe and North America. The country also recently improved its ranking in the WEF Global Competitiveness Report, with the report identifying improvements in the labor market and success against corruption as key factors.

Recent BPO investment in the Philippines includes: Teleperformance with a new delivery center, Conversys with its 18th contact center in the country, UnitedHealth opening a back office processing center, a new center for EXL processing healthcare and insurance and Wells Fargo, which is opening a business support center for customer service and back office processing.

voice BPO market leaders

The Philippines already dominates voice BPO. According to the Contact Center Association of the Philippines (CCAP), the country has 600,000 contact center workers, beating the long-time market leader, India.

The country has seen consistent year-on-year growth of 28%, with the CCAP says it is leading in voice, customer care, tech and financial services outsourcing, and making inroads into non-voice BPO. According to the Business Processing Association of the Philippines, the growth in the sector in the last six years was five times that of overall employment growth making the sector extremely attractive for prospective employees.

Healthcare outsourcing is a significant growth area and the market is expected to double over the next three years. Some 45,000  are already employed in the sector, which was worth $460 million at the end of 2012. Services offered include medical transcription, clinical data management, disease management and insurance processing. The requirement for healthcare information management (HIM) is rapidly expanding, partly because of legislation in the US that has added 32 million Americans to healthcare plans.

growing pains

But the rapid growth of the BPO industry is not without its challenges, not least a potential shortage of workers. According to Jose Mari Mercado, president of the IT-Business Process Association of the Philippines, the industry is suffering from growing pains. The main shortages are in middle management roles, Mercado reportedly told AFP.

“What is stopping us from growing faster is that our skills and competences have to develop faster to meet the global demand,” he said. “You can’t just say you will hire a middle manager with five years of experience. There are very few people (like that). Definitely it is part of growing pains.”

Find out more about Orange Business in the Asia-Pacific. And check our high-growth markets infographic for worldwide trends.