Philippines is rising fast in non-voice BPO, says study

Source:  Deccan Chronicles: 

Date: 30 January 2009

Jan. 29: Philippines is emerging as a credible option for non-voice BPO delivery after establishing itself in the voice space, a new study said.

Out of the $35-37 billion offshore BPO market in 2008, India remained the leading offshore destination with 35 per cent market share while the much smaller country Philippines represented 15 per cent, the research arm of global consultancy firm Everest Group stated.

Philippines is growing at 46 per cent annually since 2004 and its $6.8 billion offshore market now employs over 450,000 people, mostly for voice-based services.

The firm noted that by 2012, the offshore BPO market will have an addressable opportunity of $220-280 billion, and as much as 90 per cent of this opportunity will be in non-voice BPO services, where Philippines is fast emerging as an alternative to India.

The study shows that while the scale of work in the country is currently low, a number of providers are already leveraging Philippines for a vast scope of non-voice functions.

"Success in voice-based BPO services has positioned the Philippines as the second largest low-cost BPO destination after India, and both countries combined account for 50 per cent of the offshore BPO market in revenue terms," principal with Everest Group Nikhil Rajpal said. "In non-voice BPO, most current activity and scale in the Philippines is concentrated on transactional services. Whereas almost all types of non-voice BPO functions are now being delivered from the Philippines, their maturity varies. While we see relatively high activity and maturity in Finance and Accounting and transcription services, there has been only some activity recently in HRO, with even lesser in Procurement Services."

The Filipino government is focusing on development of the non-voice BPO industry, providing incentive programmes to attract investors as well as providing grants for infrastructure development, Everest said.

Jimit Arora, research director with the Everest Research Institute said a number of factors are favoring the growth of non-voice BPO in the Philippines. These include competitive costs, sizable pool of English speaking talent, and a starting base of captives and suppliers.

"There is strong cultural similarity between the Philippines and the United States, making it easier for Filipino agents to relate to U.S. customers," he said.

In terms of operating cost per employee for transactional back-office work, the Philippines offers about 75 per cent and 70 per cent respective savings over tier-II cities in the UK and US - somewhat lesser savings as compared to India but more than other offshoring destinations like Mexico and the Czech Republic. In terms of graduates per annum, at 480, 000, Philippines lags behind India's 30, 00, 000, but is much ahead of Egypt, Argentina, South Africa and Mexico.

Besides, availability of specialised skills, access to quality management talent, and talent migration are challenges that are much more pronounced in the Philippines when compared to India.  End