Category Archive: Philippines

1. Philippine BPO Revenues Seen Growing Amid Trump Policies

   February 11, 2017 10:00 am Leave a Comment

   

   There’s no stopping the Philippine business process outsourcing sector from growing steadily amid threats that the United States is about to enter a protectionist regime under US President Donald J. Trump.

   It is estimated that 70 percent of the Philippine BPO sector is comprised of US accounts. And ING Bank Asia chief economist Tim Condon said 33 percent of the Philippines’ foreign direct investment (FDI) inflow came from the US since 2005. FDI reached a high of 61 percent in 2014 to a low of 17 percent in 2006.

   The economist from the Dutch financial giant issued that while the Philippines is “the most exposed country, excluding Japan, to a Trump shock to US outsourcing”, growth in the BPO sector will still grow to mid-single digits in the coming years.

   “We expect the growth of outsourcing exports to settle in the mid-single digits in the medium term,” he said.

   Trump Policies

   Following the inauguration of US President Trump in January, he reportedly would like to impose a “very major” border tax on companies that would move operations offshore.

   President Trump, who met with business leaders in the US for help, wanted to revive the glory days of US manufacturing sector. Condon said ING believes Trump wants the US manufacturing industry during his regime to reach a renaissance, which in effect could boost the strength of the US dollar.

   President Trump also signed a memorandum pulling the US from the Trans-Pacific Partnership (TPP).

   While removing the US from the TPP can affect bigger economies who are part of the deal, the Philippines stands to benefit from this move.

   Capitol Economics, a London-based economic research firm, noted that the Philippines and other Asian countries that will affected by the failure of TPP are the beneficiaries for the success of Regional Comprehensive Economic Partnership (RCEP) instead.

   These countries – the Philippines, Thailand and South Korea – would have seen their growth prospects falter if the TPP triggered the formation of regional supply chains which excluded them, according to the Capitol Economics report titled, “How Big a Blow is the Demise of the TPP to Asia?” published in January 24.

   Inquirer.net shows that RCEP will group ASEAN and six other countries in the region with which it has existing regional FTAs. These include Australia, China, India, Japan, New Zealand and South Korea. There is an ongoing negotiation to form RCEP.

   The head of the Philippine President Rodrigo Duterte’s economic team already expressed interest to seek membership in the planned Asean and China-led free trade agreement (FTA) while abandoning inclusion in the TPP.

   BPO Growth in the Coming Years

   In 2015, the country’s BPO sector’s revenues – including income from information technology an other outsourcing revenues – generated an estimated $22 billion. The figure through September reflected a 10.9-percent growth from the previous year, Condon said.

   However, in the 2022 Roadmap of the IT-Business Processing Association of the Philippines (iBPAP), the country’s outsourcing sector is seen generating $40 billion in revenues. The iBPAP also predicts direct and indirect jobs reaching 7.6 million, 500,00 jobs outside of the National Capital Region, and cover 15 percent of the total global outsourcing market by the end of 2022.

   Other threats include rising office rentals and rising cost of internet and electricity services, according to property consulting firm Colliers Philippines in a separate report.

   According to the research from Colliers, advancement in automation will not be sufficient to replace human resource. Hence, automation and IT-BPM could grow together in bettering their services to companies which outsource.

   ING Bank forecasts the Philippines gross domestic product (GDP) will grow to 6.6 percent at the end of the current year, whereby first quarter growth will likely hit 6.2 percent and second quarter growth at 6.1 percent.

   Condon remarked that the GDP growth will be driven mainly by domestic consumption, overseas Filipino workers (OFW) remittances, and the BPO sector. A major factor to this growth, according to ING, is the accelerated infrastructure projects of the Duterte administration.

   Sources:
   BPO Revenues to Outpace OFW Remittances by 2018 – ING Bank
   PH Outsourcing Revenue Growth Seen Slowing
   PH to Benefit if TPP Falters Says Economic Research Firm

2. Staff Retention in Philippine BPO Industry is Improving – Survey

   February 9, 2017 12:17 pm 1 Comment

   

   Less employees working in the business processes outsourcing (BPO) sector in the Philippines are reportedly quitting their job due to improved conditions.

   It has been reported that from 70 percent attrition rate in the IT-BPM sector, the figure is now down to 50%, the Manila Bulletin reported in August 2016.

   Among companies seeking to outsource in the Philippine BPO sector, high staff turnover rate is a big letdown.

   But this improvement is seen as a continuation of previous surveys on the attrition rate in the outsourcing sector.

   A case in point is the 2015 survey by global professional services firm Towers Watson, which revealed that the 20 percent drop in the attrition rate in the Philippine BPO sector reflected the lowest ever since 2007.

   In 2011, the BPO sector registered 33 percent attrition rate while this reached 24 percent the following year.

   Sourcing Outside NCR

   Many experts claimed that the Philippine BPO industry are adopting strategies to keep their employees.

   According to Towers Watson (Philippines) global services practice head Vangie Daquilanea, companies are learning new strategies in talent acquisition.

   Daquilanea added BPO companies are expanding their local operations outside the National Capital Region (NCR).

   Today, it is not impossible to see BPO companies sourcing high-value talents from the provinces like Cebu, Davao, and Southern Luzon. In effect, this movement has affected the attrition activity in the Metropolitan Manila.

   Higher Salaries, Other Factors

   Another possible reason why outsourcing employees are staying with their companies – apart from training, government support and continuous education – is the increased salaries.

   According to Towers Watson, many BPO companies reward high performing employees while non-performers are given zero to less increases. For these companies, using Performance Matrix emphasize compensation principle of paying for performance.

   Unlike employees from other sectors, employees working in the BPO sector enjoy compensation mix which promises high guaranteed compensation.

   There are other Philippine BPO employees who receive a minimal annual performance bonus, which is equivalent to 1 to 1.5 months’ pay.

   BPO companies also allot budgets for the health and wellness of their employees. The Towers Watson survey revealed how employees in this industry are well-taken cared of by their employers.

   Employees in the outsourcing sector are usually offered as perks stress/risk assessment programs, health screening, counselling, fitness competitions, and smoking cessation programs.

   Another interesting observation has been how young people are exploring new career paths in the same sector.

   Beefing Up BPO Employees of the Future

   Benedict Hernandez, chairman and president of the Contact Center Association of the Philippines (CCAP), stressed the importance of continuous education to help upgrade skills and build capabilities of BPO employees.

   In the past, the business processes outsourcing (BPO) sector is only known for the following services it provide foreign companies: data entry, directory assistance, and call center outsourcing.

   A lot has changed in the country’s outsourcing sector over the years, especially on how services are offered to offshore companies.

   Today, Philippine outsourcing firms can confidently offer middle to higher-value services, including data analytics, infrastructure technology, social media marketing and more.

   Other developments include the expansion of what the voice segment of BPO entails in the late 1990s. Today, voice segment include email, chat, social media, multi-channel and omni-channel support.

   More recently, there has also been a bigger emphasis on giving improved lead generation, customer loyalty and retention, and increasing sales revenues through data analytics, and the likes.

   An IT-BPM Roadmap 2022 by Frost & Sullivan confirmed this development, as it predicted how voice tasks will continue to fall by 28 percent while mid-skilled tasks will see a dramatic surge by 7 percent.

   Companies offering complex services that require high-skilled tasks gets to enjoy the surge in demand for these category.

   Frost & Sullivan predicted a 48 percent rise in demand for high-skilled tasks.

   This roadmap showed that a mere 16.6 percent ($166 billion) of the $1-trillion sourceable work across the globe have been outsourced.

   Out of this outsourcing pie, the Philippine outsourcing providers account for $22 billion. Up this date, the Philippines remains the top global destination for outsourced voice services.

   Under the 2012-2016 roadmap, the country’s IT-BPM sector eyed for $25 billion in revenues and 1.3 million jobs. According to the roadmap, the voice sector accounts for 70 percent of the country’s IT-BPM industry.

   References:

   http://2016.mb.com.ph/2016/08/14/it-bpm-attrition-rate-dramatically-improves/

   Why staff turnover in Philippine BPO industry is falling

3. Non-Voice Business Process Outsourcing: Is this the ‘Hidden Jewel’ for Philippines?

   May 24, 2013 10:53 am 2 Comments

   

   After earning a spot as the most sought after offshore destination in the voice-based outsourcing sector, the Philippines got another reason to rejoice. The country’s non-voice business process outsourcing (BPO) is seen as another gold mine for growth and opportunities.

   In the past years, the Philippine outsourcing space recorded impressive growth figures. Just last year, the whole industry generated revenues totalling to $13-Billion. According to the Business Processing Association of the Philippines (BPAP), it expects the country’s non-voice outsourcing space to add up to the total outsourcing revenues in the forthcoming years.

   An Everest Group report entitled, “Healthcare BPO Is a ‘Hidden Jewel’ For the Philippines’ Global Services Industry,” indicated the tremendous growth posted by the country’s health BPO.

   The healthcare BPO segment increased fourfold over the past two years. From the US$102-Million revenues generated in 2010, revenues of the healthcare BPO sector jumped to US$430-Million by the end-2012, suggesting this non-voice sector is one of the fastest-growing among the country’s IT-BPO industry.

   The report also indicates that the country now holds a large pool of US-licensed nurses. More than 6,000 nurses are being trained every year, which suggests that this figure makes the Philippines far ahead of the domestic demand.

   Non-voice BPO works wonder for the Philippines, mainly due to its huge talent pool. It also boasts of a high level of cultural compatibility with that of the United States. Plus, the Philippine educational system follows the US standards.

   Other than healthcare outsourcing, the Philippines command quite an impressive feat in the other areas of non-voice outsourcing. Tholons, one of the world-leading advisory firms today, sees the recent foray of outsourcing service providers in the country into non-voice areas like software development and IT outsourcing, animation and game development, and healthcare information management (HIM) outsourcing.

   Tholons expects the country to also penetrate other markets outside the US. Local outsourcing firms are offering their services to Australian small and medium-sized enterprises as well. Tholons identified Cebu as an attractive destination for both voice- and non-voice BPO operations. In its ranking, Cebu got 8^th place in Tholons’ top 100 global outsourcing destinations.

4. Nomura: Philippines’ Growth Prospects Vindicated

   April 2, 2013 9:56 am Leave a Comment

   

   A Nomura Holdings Inc. research note indicated recently that the promise for a continued economic growth for the Philippines will remain true, a vindication of earlier local and foreign experts’ upbeat growth  assessments of the state of the country’s economy that is seen to expand at the second-fastest pace in Asia afer China.

   Japan-based Nomura’s visiting experts, comprised of Euben Paracuelles, Robert Subbarraman and Craig Chan, made the declaration in a February 28 research note about the country’s growth that will likely reach 6.4 percent this year as compared to the government’s target of 6 to 7 percent. Last year, the country recorded a 6.6 growth in gross domestic product (GDP).

   “We went to Manila to stress test our bullish outlook on the economy,” a portion of the research note read, adding that “We left Manila vindicated that our optimism is well founded and saw plenty of signs the story will remain positive.”

   On the local currency, the Nomura team’s outlook is hovering at “restrained” eventhough the group sees the Philippine peso to appreciate further. It projected the short-term forecast of P39.20 against the U.S. dollar by the end of this year.

   Meanwhile, the International Monetary Fund (IMF) in January cited the resilience of the country’s domestic consumption, government spending and low interest rates that will propel the fast growth in the country’s economy. Economic growth will push the country into a higher growth economy if the economic drivers will be sustained, according to the IMF officials.

   The IMF’s growth projection for the Philippines is 6 percent this year, up from its earlier 4.8-percent economic growth target.

    

   Source: (http://businessmirror.com.ph/index.php/news/top-news/10062-nomura-says-philippine-growth-story-vindicated)

5. Philippine Call Center Sector Reaches 20% Revenue Growth

   March 27, 2013 9:25 am Leave a Comment

   

   The year 2012 proved to be an upbeat year for the call center industry after the Contact Center Association of the Philippines (CCAP) reported that the sector grew about 20 percent against the growth target of 15 percent.

   Despite the appreciation of the peso, the strong performance was considered a big news to an industry that is highly dependent to currency fluctuations. According to CCAP executive director Jojo Uligan, should the peso currency and dollar exchange will fall below P40, the call center industry will be hurt the most.

   “We exceed our target last year. We’ve projected conservatively a 15-percent growth last year, [but] we did end 2012 [with] about 20 percent,” revealed Uligan, adding that CCAP will maintain its conservative forecast of 15-percent growth for the next three to four years.

   Last year, it was $8.4 billion in revenues and 500,000 jobs that the industry were aiming last year. Uligan expressed his satisfaction to the accomplishment thus far, including the opportunities that are coming from areas that the Philippines don’t presently have a strong presence like in Europe, United Kingdom and some Asian countries. The growth drivers last year include healthcare, gaming, banking and the financial sectors.

   For the overall business process outsourcing (BPO) sector, Uligan announced that the industry exceeded its growth target of $13 billion and jobs of 722,000 last year. Based on 2011 figures, the BPO industry posted more than $11 billion in revenues and employed almost 640,000 workforce.

   Under the medium-term roadmap for the BPO sector, it is projected that the industry will register up to $25 billion in revenues and employ 1.3 million by 2016. Out of this target, the call center industry is expecting to post $14.7 billion and 816,000 of the total jobs to be created by 2016.

   In recent years, many American and Australian companies are outsourcing their call center operations in Asia, particularly in India, China and the Philippines. Recently, Manila was named the call center capital in the world with the continued rise of this industry due to various factors that include low cost of embarking on call center outsourcing, English-speaking agents and the flexibility to adapt to Western country’s timezones.

   Source: (http://www.interaksyon.com/business/56941/call-center-industry-surpasses-2012-revenue-goal-despite-strong-peso)

    

6. PH Can Be Next Animation and Game Services Outsourcing Hub, Says Industry Groups

   March 26, 2013 9:08 am Leave a Comment

   

   Hopes are high that the Philippines can become the next prime destination for animation and gaming-related development services given the vast talent resources and competitive potential of the Filipino animators and game developers to excel.

   This was according to the industry groups, Animation Council of the Philippines Inc. (ACPI) and Game Developers Association of the Philippines (GDAP) who both have expressed faith about the large potential of the country’s animation and game services sector to bring sustained growth to the information technology and business process outsourcing sector.

   Philippine BPOs often cater to companies abroad who wants to outsource their non-core business functions so that they can focus on their non-voice and creative services. But that trend has changed already as the more experienced companies realize the vast potential and promise of outsourcing even their core services to countries like the Philippines.

   ACPI President Grace Dimaraanan said that the Philippines just need to step up in the area of providing proper training to this industry’s future leaders to lead the next generation of talentforces that can carry the country as the next animation and game development hub of the world.

   In less than a decade, the Philippines is regarded the new call center capital of the world, followed by India and China. Becoming an animation and game services development destination in the near future is not impossible, projected the experts.

   Key to marketing the Filipino talent domestically and internationally, according to Alvin Juban, the president of GDAP, rests in establishing partnership links between animation and game developers. Juban added, “We hope to have our game developers and animators penetrate the global market and take a bigger slice.”

   Juban noted further that animation and game developers will gain skills and training they need to be competitive when immersed in a successful and technologically-adept country like Korea, which holds 15 percent of the $1.5-billion global animation and games development market.

   India seizes the 40% of the total market share while the Philippines ranks at third place with 10%. Even more, an international research firm MarketsandMarkets report predicts that the global animation and gaming market will continue to grow from $122.2 billion in 2010 to $242.93 billion by 2016.

   The gaming and animation sector of both the Philippines and Korea are similar in some ways. Both employ the Western-style animation, having had decades of experience in Western production projects and also some pains. The Korean experience which grew at a staggering high level through the creation of original content, could teach the Philippines about carving out a niche in the global animation suppliers market.

   ACPI and GDAP are said to be working closely with the Information Technology and Business Process Assocation of the Philippines (IBPAP) to drive their respective sectors in penetrating and expanding to the global markets. One of the cited keys is the pursuit of public-private partnership initiatives in several locations to drive the growth of the country’s animation and gaming sector.

   To train Filipino animators and game developers, the IBPAP and the Technical Education and Skills Development Authority (TESDA) have forged an agreement with the Korean government. Such training programs got the Korean International Cooperation Agency (KOICA) and the Korean Chamber of Commerce and Industry (KCCI) tunder the International Cooperation Program of the Government of Korea o sponsor the initiative.

   Source: (http://www.malaya.com.ph/index.php/business/business-news/26316-prospects-bright-for-gaming-animation-ventures)

7. More Japanese Investments to Philippines Seen

   March 25, 2013 10:54 am Leave a Comment

   

   Sumitomo Coporation, the Japanese firm that operates and develops industrial parks, raved about the country’s attractive tax incentives, as well as the Philippines’ rich competitive workforce skilled in conversing using the English language as keys of the stronger than ever exporting potential of the nation.

   The Star’s columnist, Boo Chanco noted of the wide attention that this positive news has sparked within the Japanese business community, including Japanese and international press.

   Apart from Asahi Shimbun who reported about the investment of Sumitomo, the Financial Times noted of the firm’s bullishness to invest as a sign that “Japanese companies will continue to steer funds into faster growing, more dynamic economies – even as the recent depreciation of the yen makes investment back home that little bit more attractive.”

   Chanco further noted of the FT report of the wage hikes and worker shortages that drive Japanese firms to consider diversification of production facilities. “And where better than the Philippines, where about 97 percent of Japanese companies with overseas operations are yet to venture?”

   Sumitomo is not only interested to lure the likes of Hondas and Canons, reported by FT. The company is also keen at offering factory facilities for lease, with logistics and procurement support to make setting up shop attractive to small and mid-sized Japanese businesses.

   The FT report even said: “a fair amount of this newer investment by Japan Inc is happening at the expense of China, as companies balk at spiraling labor costs after the flare up over a tiny chains of islands in the East China Sea.”

   The foreign direct investment from Japanese manufacturers to the Philippines, according to Sumitomo, is already showing continued growth since 2011. The FT said that government data showed the country’s FDI since 2011stood at just over $10 billion at the end of 2011.

   This FDI stock is more than five times the level of a decade earlier, said FT, further adding “(such) rate of growth exceeded only by investment in India (13x), China (8x) and Thailand (6x) over that period, within Asia.”

   Compared to its Asian counterparts, the Philippines’ attractiveness to foreign investors as a strategic location for export-oriented industries will continue to improve. The Philippines has in fact raised exports by 7.7% year on year during the first half of fiscal 2012.

   These factors led Sumitomo to launch its expansion projects further in the country, which the Japanese firm dubbed as the First Philippine Industrial Park, a 100-hectare expansion project together with the Lopez-owned First Philippine Holdings Corporation. The FPIP is already established in 1996 in Tanauan City, Batangas province, southern part of the capital Manila.

   As well as sustainable growth of the Industrial Park, Sumitomo indicated the aim of the joint venture is to contribute to the progress and prosperity of local society through job creation, and more.

   Among other big Japanese companies that Chanco mentioned in his column who are already in the country and some keen on investing in the near future. Murata, a chipmaker for semiconductor industry, Brother and Canon, both in the printer sector, Bandai, the big toy maker, Fuji Optical, makers of optical lenses, Furukawa, maker of wiring harness for automobiles are among the big ones.

   Uniqlo, Japan’s biggest retailer, already opened its store in Mall of Asia and is reportedly planning to open 10 more stores in the coming year. Mitsubishi Motors, who already presented their plans for expansions in the country to the President, is also said to be interested to sign, Chanco quoted Manuel M. Lopez, the country’s Ambassador to Japan.

   The press release stated that Sumitomo was responsible in handling the marketing while the Lopez Group was in charge of the operations side. Sumitomo’s role include using its global business networks and experience in the industrial park business to win locators in its FPIP. Compared to the times during the Arroyo regime when even Sumitomo’s clout couldn’t overcome the country’s poor reputation, this administration proved otherwise.

   Sources:

   http://www.philstar.com/business/2013/02/27/913507/were-attracting-japanese-investors

   http://blogs.ft.com/beyond-brics/2013/02/22/philippines-winning-japanese-investment-at-the-expense-of-china/

8. Philippines’ less dependence on foreign funds praised by Moody’s

   March 21, 2013 10:12 am Leave a Comment

   

   The Philippine government’s less reliance on foreign funds to support its operations reflects liquidity in its domestic economy and reduces exposure to foreign exchange risks, according to the latest report from Moody’s Investors Service.

   Among other emerging markets in Asia, the Philippines was praised by Moody’s for their “low dependence on foreign-currenty-denominated external financing.” In its “Emerging Asia 2013 Government Financing Needs: Funding to Remain Mainly Local Currency” report, Moody’s says this “imparts stability to government finances.”

   Factors that led to the declining reliance on foreign funds include the falling budget deficit of the country in the midst of growing economy. Moody’s explains the Philippine government now has the luxury to borrow more from domestic sources as a result of the enormous liquidity parked in the local banking industry.

   The Philippines has very strictly limited the share of foreign borrowings to very low level relative to domestic borrowings since the nation encountered fiscal problem in 2004. Domestic borrowings last year reached 80 percent of the government’s total financing requirements, compared to foreign borrowings that only accounts to about 20 percent.

   Moody’s predicts the total financing requirements of countries in the region will drop as a percentage of gross domestic product in 2013. This projection is based on expectations that the hike in their borrowing requirements will be slower when viewed against the growth in these nations’ respective economies.

   The country’s borrowing requirement is seen declining to 6.6 percent of GDP this year, compared to 7.6 percent last year. The Philippines’ current Moody’s rating is Ba1, just a notch below investment grade.

   Moody’s, among other capital market players, project an investment grade upgrade for the Philippines within the year.  The foreign credit agency is optimistic the country’s image among investors will improve if it will carry out on improving its debt metrics and regulatory reforms.

   “Additionally, sound government policies—most notably in Philippines, Indonesia, and Thailand—have helped bolster investor confidence as well,” Moody’s said.

    

   Source: (http://business.inquirer.net/110137/ph-other-countries-hailed-for-less-dependence-on-foreign-funds)

9. Standard Chartered Predicts Continued Growth for the Philippines This Year

   March 14, 2013 10:46 am Leave a Comment

   

   Standard Chartered Bank, the longest serving foreign bank in the country, predicts that the Philippines will continue to experience economic growth this year, further adding that it is bullish the country will continue to post “above-trend levels over the next two to three years.”

   In its latest report on the Philippines, the financial institution expresses its optimism that the country is well-positioned to record above-trend improvement over the medium term or above the 10-year average of 5.2 percent, driven by the local players.

   Government-issued statements reported that Philippines registered 6.6 percent Gross Domestic Product (GDP) growth last year, higher than that of Thailand’s 6.4 percent. Other Asian nations that the Philippines’ growth rate surpassed include Indonesia’s 6.2 percent, Vietnam’s 5.0 percent and Singapore’s 1.2 percent.

   The Philippines is now reaping the benefits derived from the previous economic policies that have helped put the country back on track, which so far has improved fiscal management, a structural current account surplus and stable administration.

   As well as the rise of 24-hour food and beverage and retail businesses, Standard Chartered underscores in the report the progress being made in the business process outsourcing sector (BPO) industry. According to the bank, the increased adoption of technology, such as electronic non-bank overseas workers’ remittances inflows helped spur growth.

   While Standard Chartered admits the perception about the country’s growth story appear to differ among local and international observers, the Philippines still continue to thrive amidst a lower international credit rankings when compared to other Asian countries.

   The bank also stresses the need for more infrastructure development to spur and remove bottlenecks to growth in the construction and residential property sector of the country.

   Government economic planners sees the growth target this year will be spurred by agriculture, industry and service sectors.