Thursday, 18 June 2009

Survey says Philippine BPO firms growing and well managed

Business Mirror

ALTHOUGH 83 percent of executives responding to a recent survey designed to assess the state of business process outsourcing (BPO) industry said the global economic crisis has had at least some impact on their firms, 49 percent said their firms will expand headcount this year between 11 percent and 200 percent. The remaining 45 percent will expand headcount conservatively of up to 10 percent, retain their current headcount, or decrease the size of their workforces. Only 6 percent of the survey respondents said they will decrease the size of their workforces this year.

Business Processing Association of the Philippines CEO Oscar Sañez said the survey results suggest that whatever impact the global financial crisis is having on the industry, it doesn’t seem to be slowing expansion. “It’s encouraging that although the industry has been growing rapidly for several years now, almost 40 percent of respondents indicated that their firms will still grow between 16 percent and 200 percent this year,” he said.

Introducing new services was the most prevalent response to the global financial crisis, with almost 60 percent of respondents indicating that their firms have expanded their service offerings. Only 2 percent indicated that they have reduced the number of services.

More respondents said they were accelerating expansion (33 percent) than postponing expansion (26 percent). Respondents indicating that their firms are increasing recruitment efforts (23 percent) somewhat outpaced respondents indicating that their firms are moderating recruitment (20 percent).

Recent developments in the industry support the results of the survey. StarTek, a midsize value-added BPO announced that it is ramping up its Makati facility to full capacity to meet expanding demand for complex services. Convergys opened three new call centers in Cebu, Santa Rosa, and Quezon City in April which will provide almost 3,000 new jobs and increase the company’s headcount to 16,000 in the Philippines.

Miguel Garcia, chief executive officer of industry supplier DTSI forecasts that the Philippine BPO industry will grow overall by about 20 percent this year.

However, the survey did provide some signs of concern. Substantially more respondents indicated that their firms are decreasing capital investments (36 percent) than increasing capital spending (9 percent). The impact of the crisis is being felt primarily in demand according to 66 percent of respondents, but the large number of respondents whose firms have introduced new services suggests that an interesting shift in the kind of services desired by clients is taking place.

The suggestion that a shift in the kinds of services provided by the industry is supported by the large number of respondents that say their firms are providing high or very high value-added services, according to Frank Holz, chief executive of Outsource2Philippines (O2P). “The fact that 69 percent of respondents said their firms are providing high and very high value-added services is actually staggering,” Holz said. This means that the industry is providing much more complex services overall than it did in the early years of its development.”

Thomson Reuters recently announced that it has established a team to support global legal content initiatives, its most profitable division, in the Philippines. The company already provides services in five other operations areas, including the investment and advisory division, from the Philippines. “The Philippines is providing increasingly complex services for Thomson Reuters customers worldwide,” Raoul Teh, senior site officer for the company, said.

Among the sectors represented by respondents, firms providing back-office services appeared to be the most affected by the crisis, representing 63% of respondents indicating their firms had been very significantly affected by the crisis and 36% of respondents who said their firms had been significantly affected. However, the impact appears to be primarily positive, with respondents in this sector representing 60% of respondents who said their firms are accelerating expansion. Respondents representing back-office services account for 35% of respondents who said their firms are postponing expansion.

Back-office services providers (data processing, human resources, finance and accounting, document management, claims and transaction processing, editorial, procurement, professional services, research, supply chain management, etc.) are some of the largest employers involved in the survey. However, it is the smaller services providers that have been most affected by the global financial crisis, said Gillian Joyce Virata, BPA/P executive director for information and research.

“This may suggest that while smaller firms were in some ways more susceptible to the crisis, they may also have been the most responsive,” she said.

The survey was conducted online by BPA/P and O2P, with the support of TeamAsia, from March 31 to April 29.

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