Changes in the Philippine BPO Industry: An Outsourcing History

Ethel Kay Merioles

For years, the Philippines has been experiencing a steady economic climb as the country’s talented population attracts more and more businesses around the world. While a lot can be said about the country’s current status in the BPO arena, only a handful has been recorded regarding the BPO industry’s humble beginnings in the annals of Philippine history.

Let’s walk down memory lane, then, as we unearth a few pieces of information about the Philippine BPO industry’s early years.

Though it was only in 1989 that outsourcing was formally considered as a business strategy, it was in 1992 that BPO was established in the Philippines. Accenture partner Frank Holz was the one responsible for the first IT resource center in Metro Manila.

In 1997, Sykes Asia Inc. was established in the Philippines, and the company started out with only 16 employees. Although the company was founded in the 90s, Sykes Asia had already been employing Filipino talents for international accounts since 1977. Eventually Sykes Asia became known as the Philippines’ first multinational BPO company.

In 1999, two alumni from the call center consultancy Mckinsey & Company founded eTelecare. Since entering the market in November of that year, Jim Franke and Derek Holley’s company has been providing services to the financial services, consumer electronics, travel, media and telecommunications industries.

US-Based outsourcing center People Support restructured its business and shifted its sights on the Philippines in 2001. The company became a known BPO player with several outsourcing facilities and around 8,400 personnel located in the Philippines.

Another major BPO player, Convergys Corporation is one of the global leaders of customer care, billing and HR services. Since first establishing its presence in 2003, the company has been responsible for thousands of Filipino employees working in the industry.

By 2005, the Philippines had 3 per cent of the global BPO market. Back then India was ahead with 8 per cent, mainly because the US and British markets haven’t been largely tapped yet.

In 2006, ePLDT Ventus helped the Philippine market by becoming at the forefront of the local BPO landscape. In this year, the Philippine domestic economy grew by 5.4 per cent, thanks in part to BPO, the country’s dominant driver in the service sector. 

Finally, in 2010, the Philippines became the world’s BPO capital of the world. The Southeast Asian nation achieved this position in the outsourced back-office operations industry due to the sheer number of people the sector had employed.

Over the next few months, numbers steadily climbed and eventually in 2011, the country had a staggering 400,000 employees working at call centers and accrued $11 billion in revenue. A year later, the revenue generated climbed up to $13 billion.

The steady increase in revenue prompted the Business Processing Association of the Philippines (BPAP) to predict that the IT-BPO industry would reach $16 billion in 2013 and fill 926,000 full-time jobs.

With the positive news encouraging more and more companies to invest in Metro Manila and Metro Cebu, sources now indicate that the Philippine BPO industry will be producing $25 billion in revenues and employing 1.3 million Filipinos by 2016.

To this day, the Philippines remains promising. The increasing government support and consistent production of graduates with competent communication skills further motivate companies to seek BPO services from the Southeast Asian gem despite geopolitical uncertainties.