Chinese firms urged to locate BPO functions in Philippines

The Board of Investments is urging Chinese companies to put up business process outsourcing facilities in the Philippines, so that they can take advantage of the support that highly skilled English-speaking BPO personnel can provide for their businesses.

Coming from a recent investment promotion trip to China, BoI managing head Cristino Panlilio said Chinese companies would benefit from offshoring some company functions to the Philippines, especially those that China still had to improve.

“China is starting to bone up on its service exports, so we’re giving them tips and strategic recommendations on how to make their service export industry more competitive,” he said.

Certain banking and financial functions, for example, could be done out of the Philippines for China’s overseas clients, he related.

“The Chinese market is big, and it needs strong support from English-speaking countries like the Philippines to serve its clients in the West. What they can do is move some business functions here, then just move these back to China when they’ve already built their capabilities,” Panlilio said.

“Like in banking, for example. China’s banking capabilities are still not on par with the world’s best. The Philippines can help in that area. We can also do animation and just about any service. A lot of companies in China need BPO services,” he added.

Should Chinese firms decide to bring their BPO business into the country, he said as much as a third of local BPO operations could be servicing Chinese companies.

In an earlier interview, Business Processing Association of the Philippines executive director for information and research Gillian Joyce Virata said the local BPO industry was keen on entering new markets.

Not wanting to rely almost solely on the United States for its business, she related that the BPO sector was pushing to enter new markets such as the United Kingdom and Asia-Pacific.

“Because of the growth of the Asia-Pacific region, there’s now also a big demand (for BPO services). We’re trying to capitalize on our language capabilities. The biggest demand is for Mandarin, Japanese, Thai, Bahasa, and Korean,” she said.

 

Continue reading

WORLD Bank ranked the Philippines among world's top service exporters

The World Bank has ranked the Philippines among the best performers in the services exports, particularly in the business process outsourcing (BPO) sector, but urged further reforms in the travel and tourism sector if the country intends to sustain growth moving forward.

World Bank senior trade economist Sebastian Saez said in a report that the services sector depends on human capital, the quality of the telecommunications network, and the quality of institutions.

“The experience of exporting outsourced business services in the Philippines shows that by creating an enabling environment where the private sector can deploy its creativity, developing countries can reap the benefits that services exports opportunities are opening,” Saez added.

The Philippine experience shows that services are a viable option for export diversification, he said, adding that trade in goods is no longer the only vehicle to diversify exports for developing countries.

Services exports as a percentage of total exports increased from nine percent in 1999 to 21 percent in 2009 in the Philippines. Its services exports rose 3.6 percent on average per year during the period, higher than that of Asia as a group, which averaged 1.5 percent per year. Unlike many developing countries, the Philippines had been a net exporter of services since 2006.

The Philippines is currently the third largest player in BPO in the world, accounting for 15 percent of the global BPO market, after India (37%) and Canada (27%).

Business Processing Association Philippines (BPAP) chairman Fred Ayala said that the BPO sector currently employs close to 500,000 people and generated about $9 billion worth of exports in 2010.

The industry’s target in terms of annual revenue is $25 billion by 2016 and a direct workforce of 1.3 million.

“There is an urgent need to develop supervisors, middle managers, and more skilled workers to respond to increasing market demand for a broadening array of knowledge-based, complex services,” Ayala said.

The World Bank report also highlights the importance of developing the tourism sector.

Tourism accounts for about nearly seven percent of the country’s gross domestic product (GDP), and directly employs about 3.5 million people. But the report said that tourism could contribute more to help address poverty should reforms outlined in the National Tourism Development Plan (NTDP) are effectively implemented.

The study said major impediments to tourism competitiveness are largely associated with weak ground and air transport infrastructure - roads, railways, ground transport network, and airports. Weak physical infrastructure, it says, lowers accessibility to tourism destinations and discourages private sector investments in accommodation facilities.

Tourism Undersecretary Daniel Corpuz said the government has already started to put in place important reforms that will increase tourism arrivals in the country. The Philippines implemented a liberalized air policy in selected international airports outside Metro Manila to promote greater tourism flows to the country.

“More reforms are underway to transform the Philippines into a ‘must experience destination in Asia,’” Corpuz added.

 

Continue reading

Philippines Tops Global Ranking for BPO with 500,000 English-speaking college graduates per year

The Philippines has taken over the lead as the world's number one country for business process outsourcing and shared services, according to the 2010 IBM Global Locations Trend Annual Report.

Increasingly, multinational companies building an alternate support hub have been establishing their presence in the Philippines owing to the intrinsic strengths of the country's labour market, world-class telecommunications infra-structure and business environment.

With a 92% literacy rate and an abundant supply of nearly 500,000 English-speaking college graduates per year in relevant disciplines, the Philippines' affordable high quality workforce is valued by BPO firms for its strong work ethic, flexibility and productivity. Based on a survey of the McKinsey Global Institute, a relatively high proportion of Filipino finance and accounting professionals as well as life sciences professionals, researchers and analysis is suitable for work in a multinational organization and global work.

The Philippine IT/BPO industry spans across a wide range of competencies that include contact/call centers, business processing outsourcing (BPO), knowledge process outsourcing (KPO), medical, legal and other data transcription, film animation, software development, engineering and construction design as well as game or content development.

Top-notch telecommunications and low-cost real estate in major urban areas also contribute to the Philippines' global reputation as a BPO location.

Fiscal and non-fiscal incentives from the government have supported the growth of the Philippines' BPO industry.  IT BPO enterprises enjoy an Income Tax Holiday (ITH) of 4 to 8 years and a special 5% tax rate on gross income after the lapse of the ITH, in addition to a host of tax and duty exemptions for capital equipment, deductions for labour expense, 12% input VAT exemption on allowable local purchases of goods and services and employment of foreign nationals.

The Philippines' BPO industry was recognized by the National Outsourcing Association in London as the Offshoring Destination of the Year in 2010.  The Philippines first won the title in 2007 and again in 2009.

This year, the Philippines' sunshine industry is expected to yield some $11 billion in revenues or a 20% increase from the estimated revenue of US$9 billion in 2010 with over 500,000 employees.

In its IT-BPO Roadmap for 2011-2016, the Business Processing Association of the Philippines (BPAP) sees the Philippines' share of the global IT BPO market doubling to 10% by 2016 for $25 billion in annual revenues, if current conditions are sustained.

New locators share this optimism such as Tata's Consultancy Services of India, which recently opened its first Southeast Asian BPO center in the Philippines.  The growing list of industry players include Accenture, American Express, Citibank, Convergys, DELL, Hewlett Packard, IBM, JP Morgan Chase Bank, and Siemens, among others.

 

Continue reading