IT-BPO Industry in the Philippines Leads to Economic Boom

The Information Technology and Business Process Outsourcing or IT-BPO Industry in the Philippines has brought a 17% increase in the country’s revenue for the year 2013, according to the Business Process Association of the Philippines (BPAP)1.

From $13.2 billion in 2012, the IT-BPO sector has generated $15.5 billion in revenue last year. According to BPAP president and CEO Jose Mari Mercado, more foreign companies are favouring the Philippines as their choice of outsourcing destination. Mercado is anticipating the same rate of growth in revenues in the future.

Although the Philippines dominates the voice segment in the call centre industry, India still holds the spot as the top provider of technical support due to its cheaper labour.

Citing analysis by Everest Group and Outsource2Philippines, former BPAP president and chief executive officer Benedict Hernandez said the combination of an appreciating peso and a depreciating Indian rupee provided India with a meaningful cost advantage.2

“With the 30 percent difference in peso and Indian rupee exchange rate with the US dollar, the cost differential has substantially widened,” Hernandez said. “And that is much more difficult to manage.”

According to BPAP, while cost is an important factor for clients outsourcing work to the Philippines, the Philippine IT-BPO industry has traditionally competed for business on the basis of the quality of service and productivity. Some clients still prefer the Philippines for its exceptional customer service and proficiency in the English language.

This year, Metro Manila has displaced Mumbai as the world’s 2nd preferred outsourcing destination, next to Bangalore. Another Philippine city, Cebu, also managed to place in the Top 10 in Tholons’ latest rankings; it notched the no. 8 spot, next to Indian cities, Hyderabad and Pune. Cebu is now primed as an outsourcing hub as a 28.8-hectare special information-technology (IT) park and economic zone are being built in Lapu-Lapu City.3

In an interview at the Conference on the United Kingdom (UK) Higher Education and Corporate Training in February, Mercado said, “The performance of Filipino knowledge workers industry has been such that the clients have been coming back and just asking for more and more work to be done in the Philippines.”

As the industry thrives, the Philippines is expecting 1.3 million direct employees by 2016, and the country will account for over 10 percent of the global IT-BPM market by achieving these targets, BPAP stated.

To support the budding sector, some state universities and colleges, with the help of Commission on Higher Education (CHED) and IBPAP, are offering courses in BPO this academic year 2014-2015.4 This aims to help fresh graduates prepare themselves in entering the industry as more positions are waiting to be filled.

With its globally competitive workforce, the Philippines remains a major player in the IT-BPO industry as more and more clients choose it over other providers.

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