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Philippine outsourcing sees unprecedented growth

Written by John Guzman

The Philippines has been relying on Business Process Outsourcing (BPO) sector for over a decade now. The large English-speaking population, on top of low labor costs, draws investors into the country. Aside from quality workforce, the BPO industry runs on the back of an efficient IT infrastructure.

According to 2014 Tholons Top 100 Outsourcing Destinations, Manila ranked second and Cebu ranked eighth while India’s metropolitan cities dominating the top ten. Based on the list, India remains the top outsourcing destination but with consistent improvement in IT readiness, Philippines might overtake soon. There are good reasons why the Philippines has the potential to be the next best destination.

The country currently boasts a total of 197 IT parks and centers spread throughout the country. Construction of new parks and centers has attracted Megaworld, a large developer of these projects, to construct vertical offices throughout Manila and Cebu. According to Bloomberg, Megaworld has plans to pour in USD 5 billion over the next ten years to create townships for the BPO industry. The township concept is in support of the idea that office areas should be located nearby residential areas. The pilot township built in 1997 at Eastwood, which houses BPO firms, residential areas, and shops, also developed by Megaworld, turned out successful and the company is trying to replicate the success in other parts of Manila and central and southern Philippines. Other developers are following suit as the industry revenue is expected to hit USD 25 billion in three years, the report noted. The bullish sentiments of developers to build IT parks and centers reflect the growth of the industry.

According to Philstar, the total revenue posted by the BPO industry, this year alone, is forecast to hit USD 18 billion. The industry is growing on a 16% year-on-year; due to the emergence of new growth areas. Growth areas are back office, finance and accounting services, engineering, and healthcare. The Information Technology-Business Process Association of the Philippines (ITBPAP) is monitoring closely, in particular, the growth of healthcare services, where the industry in the country stands to benefit from tourists in advanced economies who start to age and become more concerned with their health, but still looking for cheaper treatment.

Accenture and Convergys, information management firms, are only two of the many global brands that have invested heavily in the country. The country even now hosts foreign governments’ back office. The United Kingdom set up the BPO in the country two years ago for its foreign offices and is now is harnessing benefits. According to Inquirer, the UK saved at least GBP 2.3 million. UK’s BPO center in the country is the first diplomatic office to do so. It serves 40 countries across the globe.

The Philippines now ranks 78th in Network Readiness Index 2014 of the World Economic Forum, after being stagnant at 86th spot for the past three years, stated a ABS-CBN News report. The ranking assesses an economy’s capacity to fully leverage information and communications technology (ICT) for the growth and well-being of the population. The country ranks 6th among ASEAN countries behind Singapore, Malaysia, Brunei, Indonesia, and Thailand, respectively.

GBP 1.00 = USD 1.69 (XE.com 2014-05-06 06:18 UTC)

–Edited by Mohamed P.Hassan

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