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The year 2014 will come to an end in a few weeks and we can’t help but look back at how the Philippine business process outsourcing industry has fared throughout the year. Let’s take the time to review its biggest successes in 2014.
A Singaporean government agency called the International Enterprise Singapore (IES) revealed that the Philippines is an ideal investment hub for businesses because of the country’s strong economic growth potential. The BPO industry in the Philippines is one of the top growing segments in the country, which attributed to the increase in the demand for office and commercial infrastructure. The IES also stated that the country’s talented workforce is also another big contributing factor.
A statement released by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) stated that India is losing 70% of its call center outsourcing business services to the Philippines and Eastern Europe. This could lead them to lose up to $30 billion in foreign exchange revenue if the trend continues. The Philippines’ quality manpower, lower operating costs, and high-quality services are the top three reasons seen to have contributed to this.
Cushman & Wakefield published a research paper entitled “Should MNCs Stop Paying Rent Overseas?” It forecasted that the Philippines may soon join China and India in the ranks of viable hosts for MNCs overseas operations. Presently, China and India remain at the top for overseas operations. However, there is expected to be a shift towards other markets because of the increase in rental rates in these countries’ central business districts.
Despite a controversial video released by BPO company, Aegis Malaysia, promoting Malaysia as a better outsourcing destination that the Philippines, a survey conducted by A.T. Kearney revealed that the latter has actually improved its ranking against 50 other countries. The 2014 A.T. Kearney Global Services Location Index stated that the Philippines ranked seventh among 51 countries, which is two spots above its 2011 ranking, where it ranked 9th out of 50. It further indicated that despite falling in the financial attractiveness factor, the country improved significantly in people’s skills and availability.
The Global Competitiveness Report by the World Economic Forum (WEF) ranks the economies of 144 countries. It stated that the Philippines’ Global Competitive Index jumped 33 places this year and is now in 52nd place. The country’s ranking has had a steady upward climb since 2010 but this year’s improvement is the highest in the region since that year.
The BPO Philippines industry has helped provide better-paying jobs since it started in the early 1990s and it looks like it will continue to do so in the coming years. It has been credited for providing jobs to one million Filipinos is targeting to provide jobs to 1.3 Million Filipinos by 2016.
During the International IT-BPM Summit held in Manila, Vikrant Khanna of Tholons stated that the country’s information technology-business process management industry will soon become the Philippines’ biggest earner. Its revenues are projected to hit $48 Billion by 2020, which will account for 19% of the $250-Billion global outsourcing industry.
All these achievements by the Philippine BPO industry this year goes to show that the country is indeed growing by leaps and bounds and that it is truly a prime location for outsourcing. It is exciting to see how much of the industry predictions will be realized in the coming years.
Experts and business forecasters agree: the BPO Philippines industry is off to a bright start. Here are three articles we’ve compiled for the week that shows us an even rosier outlook for the BPO industry. One article gives us a report on how the BPO industry will impact the local real estate market and how it is viewed as a viable contender in the Asia Pacific as an investment and development prospect. Another shows us the latest Tholons report that includes Metro Clark among its list of BPO hubs in the country. And lastly, Credit Suisse tells us why it foresees a strong 2015 for the BPO Philippines industry.
A report by the Urban Land Institute and PriceWaterhouseCoopers predicts that the real estate sector will continue to grow alongside the growth of the BPO industry in the Philippines. Also, the Emerging Trends in Real Estate Asia Pacific reports Manila to rank higher as an attractive investment and development prospect, higher than its neighbors Bangkok, Singapore, and Taipei.
The 2015 Tholons International Top 100 Outsourcing Destinations report reveals that the Philippines now has 8 cities in its list, with the inclusion of Metro Clark recently. Metro Manila is still going strong at second place, with Metro Cebu on no. 8.
The bank stated that the continued strength of the BPO companies in the Philippines are leading the country’s consumption-led economy as it relies less on remittances and more on revenues brought about by compensation being spent by young professionals. This is leading to “structural changes” in the investment front of.
According to the January 2013 report of international business advisor and research firm Everest Group, the healthcare BPO is a “hidden jewel” of the Philippines, having grown fourfold over the past two years. The Philippines healthcare BPO’s revenues increased from $102 million in 2010 to $460 million by the end of 2012, making it one of the fastest-growing sectors in the IT-BPM industry of the country. And it’s not slowing down anytime soon — the report also cited that by the end of 2016, the Healthcare Information Management (HIM) sector targets to achieve $1 billion in revenues and employment opportunities to 100,000 Filipinos.
The 4th Healthcare Information Management Outsourcing Services Congress (HIMOSC) last November 12, titled “Intensity 10: Propelling Healthcare Information Management to Exponential Growth”, provided a venue for key industry players, providers and the larger business community to address issues and trends in healthcare outsourcing towards exponential industry growth. One of which is the impact of healthcare reforms on the healthcare industry, that was discussed in the session “Harnessing Opportunities in Healthcare Policies.”
Healthcare regulations and laws such as ObamaCare, Medicare Modernization Act, Health Insurance Portability and Accountability Act (HIPAA), and the recently-signed Philippine Universal Healthcare law, are opening up great opportunities for the continued growth of HIM industry in the Philippines. But how will the industry deal with the challenges that arise from it?
According to Jeffrey De Jesus, Infinit-O’s VP for HIM and Client Solutions Group and a panelist for the healthcare policies discussion, the projected 100,000 employment opportunities and $1 billion revenue by 2016 are doable, “as long as we have the proper information, formation, transformation, and education. The Philippines has to become an ideal place for HIM. We have to help people understand that there’s a job opportunity here.”
De Jesus was joined by the Department of Health (DOH) Undersecretary Hon. Teodoro Herbosa and HCCA Health Connections Vice President for PH Operations Michael Burbach in the panel. The discussion included queries about several regulations and laws related to the global healthcare industry, specifically ObamaCare. De Jesus states, “It opens a new horizon of opportunities. There are US companies that are looking for services that don’t yet exist.”
For proper information, the industry must have all the details to provide the best possible solution. DOH’s Undersecretary Herbosa says, “Understand what the government is doing for healthcare so you can offer the right solution”.
For proper transformation, De Jesus cites a challenge of, “making the Philippines as the ideal place for HIM”. In an article citing Dr. Josefina Lauchengco, president of the Healthcare Information Management Outsourcing Association of the Philippines, she said that “The Philippines’ competitive advantage in the growing Healthcare BPO sector is built on the availability of talent pool, strong cultural affinity with the United States, and medical know-how that leads to good customer interaction skills and efficient delivery of niche services.”
De Jesus also adds that there’s a need to “help healthcare/medical people to understand that there’s a job opportunity here in the Philippines.” Since 2001, the Philippines has produced over 1,000,000 nursing graduates, yet a lot of them are forced to take a different path because of the lack of job openings in their chosen degree. There is a need to raise awareness among unemployed Filipino in the healthcare industry that there are alternative career opportunities provided by the HIM sector.
No matter how cliché the statement, “Health is wealth” can be, it is definitely something that each individual should take into account. Need not worry though, because we can provide your medical institution all the assistance you’ll need through our exceptional patient services such as billing, coding, and even back-office responsibilities.
In the 2014 list of Tholon’s Top 100 Outsourcing Destinations, India and the Philippines ranked first and second place, respectively. The competition between these two countries is getting tougher as India strives to maintain leadership amidst the aggressive strategies of the Philippines’ continuously growing BPO industry.
For companies looking to outsource their business functions, it is important to note the similarities and differences between the BPO industries of these two countries. To find out which one is the better outsourcing destination, let us compare the two according to the following factors:
One of the reasons why companies prefer the Philippines over India is due to its treasure trove of highly-educated manpower. In fact, according to the United Nations Development Programme, the Filipino workforce has an impressive literacy rate of 93.4%, whereas the Indians only achieved a rate of 61%.
Providing good customer service to consumers worldwide requires customer service representatives to have excellent communication skills specifically in English. Poor English speaking skills result in difficult conversations, frustrated customers and loss of business for the company. In this case, the Philippines fare better than India because the latter’s British English accent can be thick and difficult to understand. With English as their second language, Filipinos speak in a neutral accent preferred by most Western countries.
Filipinos are naturally hospitable, service-oriented and responsive, which are all traits necessary to have in any customer service environment. Compared to India, the Philippines has had closer ties with the Western world for a longer period of time, particularly with Americans. This is already deeply entrenched in their way of life, which is evident in the clothes they wear, the food they eat and even the movies and TV shows they watch. Because of this, Filipinos are able to relate and communicate better with Westerners.
India and the Philippines both offer a variety of offshore services to clients. According to an article on the Oxford Business Group though, pure voice services account for 62% of total BPO revenues in the Philippines in 2013. Initiatives are currently being made to expand service offerings in order to maintain their competitive edge. India is said to be more successful in sales and upselling services. This is said to be the reason for Aegis’ decision to transfer 600 call center positions from the Philippines to India.
However, it all boils down to the quality of service. A press release issued by the Assocham stated that India has been losing 70% of its call center business to the Philippines and Europe. This can be attributed to their problems with staff turnover of 31% among other reasons.
The Philippines’ BPO sector continues to thrive each year, growing at an average annual rate of 20%. Employment has currently reached 1 million milestones and is expected to increase some more in the years to come. Estimates from the IT and Business Process Association of the Philippines (IBPAP) reveal that the industry generated US$15 billion in total revenues in 2013 and is expecting it to reach US $18 billion in 2014 and US$25 billion by 2016.
On the other hand, NASSCOM reported that India generated US$17.8 billion in 2013, which is a 10.2% increase from 2012 figures, despite losing a significant amount of their business to the Philippines.
Based on these facts and figures, we can see the reasons why India remains at the top of the list of BPO destinations. However, the Philippines is clearly gaining ground and has the potential to reach the top spot in the future.
The N+1 Theory suggests that there is always one more of everything. Most of the time, this is true. But there are also cases where in the +1 in the theory could provide better results. Simply take the case of finance and accounting, where the old methodologies employed by companies such as manually inputting the numbers and figures for each of the employees’ corporate finances could be definitely exceeded by its +1, which is to engage in finance and accounting outsourcing. By doing so, your company will be saved from the troubles of committing mistakes in calculating employee salaries and deductibles.
Finance and accounting outsourcing covers all areas within that specific department, including general accounting and bookkeeping and accounts payable services and accounts receivable services. It is suggested in an infographic published in Focus that both billing and accounting aspects are two of the processes that were initially outsourced to offshore solutions providers. When these administrative tasks are done manually, it definitely paints a mental picture of a tedious work process. To lessen the drawbacks of employing old and manual methodologies for the finance and accounting aspect of the business, it is highly suggested for your company to seek the assistance of an expert – a finance and accounting outsourcing solutions provider.
With the number of outsourcing companies that provide finance and accounting services today, potential clients will no longer have a hard time looking for the outsourcing provider that is fit for their businesses. There are existing outsourcing companies that offer boutique services that will be tailor-fit for your company’s processes.
Once you have identified the accounting process that you want to delegate to an offshore team, it is best if you can also identify which business outsourcing model is most suited for your business’ needs.
All business models mentioned above are quite prevalent in the outsourcing industry, however, it seems that preference for both Project-based Outsourcing and Managed Services are increasing.
Before outsourcing business model, it is best to identify which among these business models are suited for your company’s needs and operational duties because once you have figured out that your current business model is not working, it is quite challenging to transition from one model to another.
Infinit-O is a outsourcing solutions provider that caters to both small and medium-sized enterprises (SMEs). Among the services being offered by Infinit-O are general accounting, accounts receivables and accounts payables.
Infinit-O assists their clients in identifying which outsourcing model is best for their business. This has helped their clients in the United States, EMEA and APAC fully maximize their outsourcing partnership.
The U.S. recession has squeezed onshore outsourcing firms’ revenues. Most are experiencing dwindling client pools, lack of access to credit to finance operations, and fierce competition from offshore outsourcing providers. This makes them attractive targets for organizations seeking to increase their presence in the business process outsourcing (BPO) arena.
This is exactly the opportunity Philippine-based company Ayala Corporation has been waiting for. Recently, the company acquired bankrupt US-based On-site Sourcing, Inc. for $9 million. In an interview with BusinessWorld, Ayala Corporation chief financial officer Rufino Luis Manotok said “The company will focus on investing in the BPO industry. While its growth rate might slow down, the industry will still grow”.
Ayala’s move to buy the bankrupt Virginia-based firm seems to be a wise decision. KPMG, an audit, tax and advisory firm has just released its list of “locations to watch for next outsourcing boom”. Two cities from the Philippines made it to the list, Davao and Iloilo.
In fact, according to KPMG the 31 cities cited in their report will challenge current well-known outsourcing locations in India and China. Emerging outsourcing destinations in the Asia-Pacific region are attractive offshore destinations for their lower costs, young and educated talent pool, and government incentives.
It’s now up to the local BPO industry to capitalize on their strengths and seize possible acquisitions that could further strengthen their foothold in the offshore market and expand market share.
On another note, India’s global IT-BPO trade body NASSCOM reacted cautiously on US President Barack Obama’s remarks against outsourcing saying US companies had benefited from outsourcing since 50% of their business is overseas.
NASSCOM president Som Mittal bashed on comments blaming outsourcing for the increase in US unemployment rate, citing the latest US state department data on employment which proves job losses in construction, retail and manufacturing were higher than in services, especially in IT. “Compared to other sectors, job losses in the US tech sector were 2.2 per cent as against the overall unemployment rate of 7.2 per cent. The US administration will not do anything that would harm its industry or economy, which is driven by the technology leadership its companies enjoy,” says Mittal.
With a recent acquisition and two new contracts signed and another two possibly in the works, TCS (NSE: TCS.NS) UK subsidiary, Diligenta, is expecting a positive run for the months ahead.
Indian company, Tata Consultancy Services, Ltd. (NSE: TCS.NS) recently acquired Unisys Insurance Services (UISL), from US-based worldwide IT company, Unisys Corporation (NYSE: UIS). UISL served as the UK business process outsourcing services arm for the UK life and pensions industry. The transaction was finalized on the 1st of September.
On the same day, Diligenta announced that it has won two major life and pension contracts; the first is with the Phoenix Group, which is an extension to an original agreement with the company, and will extend the contract until 2018. The second is a new contract signed with Old Mutual International. Both contracts are expected to generate 250 million pounds in revenue in the UK, bringing the number of policies Diligenta administers to 5 million from 3.6 million currently.
This is not bad considering that Diligenta was set up four years ago in 2006. The contract wins boosts the company’s position, positioning it as one of the leading providers within the UK’s life and pensions BPO market, where TCS (NSE: TCS.NS) is the second largest insurance business process outsourcing provider in the UK, second to Capita.
Not only that, but on the 3rd of September, news broke out that at least two more prospective clients have approached the company for potential outsourcing contracts both of which are estimated to be worth more than 100 million pounds each.
“The cycle time for deals to materialize in case of Diligenta is six months to a year, especially for similar deals. So, in the next 12-18 months, we will have something to share. But winning these deals validates our strategy,” said Phiroz Vandrevala, Diligenta chairman and TCS (NSE: TCS.NS) executive director.
With the current contract wins, Diligenta now has three clients since its acquisition: Phoenix Group, Old Mutual International, and the controversial NEST-PADA deal. The latter is a contract won by TCS (NSE: TCS.NS) on the 2nd of March this year for 600 million pounds.
Based on the recent developments, TCS (NSE: TCS.NS) officials are now forecasting that Diligenta will be able to break even for FY2011. Diligenta will also be looking to get more deals from the UK government related to pensions and insurance.
According to Mr. Vandrevala, “the U.K. government very clearly understands and realizes that for the economy to grow; inward investment is a question of their survival. I do not believe they will do anything to upset their applecart in any form or manner.” The statement is referring to the previous fuss that the UK government had generated following the UK elections which had placed the NEST-PADA deal in jeopardy.
Ultimately, it seems that 2010 may be the year TCS (NSE: TCS.NS) can do no wrong.
Author: Audrey B.
2014 is a great year for the Philippine Outsourcing industry. Tholons, a US-based strategic advisory firm for global outsourcing and investments, ranked Manila as the second-best outsourcing destination in the world, with Bangalore still in the top spot for another year. Manila, the only non-Indian city in the Top 5, dislodged Mumbai which was last year’s top 2.
Aside from Manila, Tholons’ Top 100 Outsourcing Destinations for 2014 included 6 other major cities in the Philippines, namely Cebu at 8th place, Davao at 69th, Laguna at 82nd, Bacolod at 93rd, Baguio at 99th, and Iloilo, in spite of being hit by Typhoon Yolanda, remains in the list at 95th place.
Overall, 7 Philippine destinations made it to the Top 100 ranking, while India remains the dominant country with 13 cities in the top 100, 6 of which are in the top 10.
It’s interesting to note that Manila has steadily increased in rank from top 4 in 2012, top 3 in 2013, and now, top 2 this 2014. Will this consistent growth persist until 2015, making Manila as the top outsourcing destination the world? We’ll see.
Reports show that revenues of the BPO sector last year have approximately increased by 15% to $13.34 billion, employing over a million Filipinos, plus a projected number of 100,000 more employments this year.
This news significantly answers the questions we raised last week, “Is your call center job secured?” Many have raised concerns about the security of their call center jobs when a certain call center in Cebu abruptly stopped its operations at the start of the year. Over a thousand Filipino employees lost their jobs without prior notice, benefits, or not even a hint that the company is shutting down.
An “isolated case” as we called it, this unfortunate incident in Cebu does not change the fact that the industry of BPO companies in the Philippines is still in an uphill climb this year. Ironically, Cebu City still remains to be the Top 8 outsourcing destination in the world in spite of this Cebu-based call center closing down.
This recognition means several significant things. For the Philippines, this means more jobs and increased national revenues. For enterprises around the world, this means greater reasons to outsource to the Philippines. For BPO companies such as ours, this means we have a lot of work to do—to continuously enhance our outsourcing services and to prove that our country is truly a world-class outsourcing service provider.
Companies must embrace the holidays and understand that the period between Thanksgiving and New Year, the in-house staff may be physically present but their minds are traveling elsewhere. The holidays are the busiest months in any company’s calendar, but productivity could be decreased while consumer demands increase. This puts your business on the edge as you try to balance respecting your staff’s personal time with their families and keeping the company afloat.
One good business decision is to outsource several tasks throughout the year, and not just during the holiday season. This way, even when your staff goes on paid time off or may at least work remotely, your company still keeps working efficiently with a team of specialists that take on specific tasks.
Let’s take the example of a transportation management company that crosses over North America throughout the year. One of their goals is to improve the efficiency of tracking and monitoring shipments across the continent in various offline and online channels. However, due to a high price job market, it was difficult for them to find the right in-house team. They considered outsourcing as a way to help them find the right specialists, and they partnered with Infinit-O.
Infinit-O built a team of highly trained data analysts that track transactions and monitor customer shipments through chat, email and web tracking. They also make sure that freight invoices from different carriers are organized in a database for accounting purposes. Due to their efficient tracking and monitoring strategies, there able to help the transportation company to track each shipment with minimal errors to no errors (98-100% accuracy rate). This has led the company to focus on their core business, even during the busy holiday season, while their Infinit-O team works to keep the company moving along their path to growth and success.
It can be challenging to run your business during Thanksgiving, Christmas, and New Year, but with outsourcing, you’ll be able to achieve the following results all year round and especially during the holidays:
The benefits of outsourcing go beyond just answering the short-term holiday rush. A globally trusted solutions partner can help you sift through any season all year long, giving you endless opportunities to grow and meet the demands of your consumers.
Infinit-O is a trusted solutions partner that can help you build and operate a dedicated team of well-trained specialists specifically designed for your unique needs, with cost savings of up to 70%. We can help you meet your goals, whether they be growth, better productivity or simply bottom-line cost savings. With access to excellent healthcare talent who use cutting-edge technology, we provide some of the best strategic solutions for your business. We are ISO-certified, and GDPR-compliant, so your company and data are safe with us.