Industry Research : Outsourcing Industry Urged to Unite
The outsourcing industry should not be worried about possible protectionist legislation in the United States and other countries, speakers at a forum yesterday said, as they urge industry players to collaborate and focus on growth opportunities.
Dennis L. Wright, president and chief executive of logistics firm Peregrine Development International, said protectionism might be "a concern" but is "not a threat," as companies which outsource their operations or services would always find ways to maintain their profitability.
"Is protection concern? Modestly, as far as I am concern. Is it a threat? No," Mr. Wright said at the Fourth International Outsourcing Summit held in Makati City yesterday.
He was speaking during a panel discussion titled: "Threats and Challenges: Should protectionism be a genuine concern for the global service delivery business?"
"Take a company who is outsourcing. If you are a board member, you have a responsibility to your shareholders for return on value, you have a responsibility to maintain profitability and to keep jobs," he said, pointing out that outsourcing helps a company lower its cost.
In the same session, Huw Watkins, managing consultant of PA Consulting Group in London, said such pieces of legislation are part of the industry. "Even legislation is part of the package, which includes service quality aspects, access to innovation fit to the strategy of the firm, as well as all innovations," Mr. Watkins said.
"Whole package of things can be taken into consideration, but just to focus on legislation as the big thing, I think, is not the right," he added, noting that legislation, which is affected by political and economic pressures, are normal in any country.
A bill in the United States granting tax perks to companies, which "insource" their jobs amid growing unemployment rate in the US failed to advance in the Senate last July, earlier reports showed.
If the proposed measure will be approved, jobs that have been outsourced outside the US including the Philippines might get lost in favor of the Americans.
Som Mittal, president of NASSCOM, the outsourcing industry group of India, echoed the remarks of the two speakers.
"These [pieces of] legislation will keep coming in, right? There have been some, like increasing visa fees, and so on and so forth, but I personally do not think any legislation that will come, which will be detrimental or directly stopping opportunities for the industry," he said.
Other speakers said the local outsourcing industry should focus on boosting its value chain through collaboration and focusing on growth opportunities. "The world will change and we have to be ready for that, outsourcing will be impasse, global sourcing will be the models" Nora K. Terrado, president of Philippine Software Industry Association, said in a separate session titled "Strategizing for High-Growth: Moving up the Value Chain." "It will [revolve] around building partnership and web of partnership and web of technologies so we have to be brace for that," she added.
For his part, Vikas Bhalla, executive vice-president and head of outsourcing for EXL Services, said the country should focus on certain areas where it could excel.
"We should focus on the Philippine financial services domain and the health care domain. The demand of positioning should be very good right now," Mr. Bhalla said.
Joselito U. Uligan, executive director of the Contact Center Association of the Philippines said, the government should also help to contribute to the growth of the sector. "The government plays a major role in terms of how will this industry will grow, through legislation and making different parts of the Philippines ready for the sector," Mr. Uligan said, noting some assistance from the government including training of talents.
Alfredo I. Ayala, chairman of the Business Processing Association of the Philippines (BPA/P), said the group is on track to meet its revenue targets by 2016.
"The Philippines is making a good progress towards achieving the goals of road map 2016," Mr. Ayala said.
BPA/P expects to generate $13.4 billion in industry-wide revenues for this year, 19% higher than last year, and 772,000 full-stime employees this year.
For next year, revenues are expected to increase to $16 billion with 926,000 employees.
By 2016, the industry is projected to grow to $25 billion in revenues, with its workforce reaching 1.3 million employees.
Posted by Veronica Silva Cusi, news correspondent
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Published: Monday, September 17, 2012