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Industry Research : Philippines Outsourcing Industry Anticipates Strong Growth
With revived interest in the Philippines as investment destination and a steady supply of English-proficient entrants into its labor market, the country's outsourcing industry is expected to strengthen in coming years, with adequate government support, according to industry players.
"It's the largest growing in the services sector and it has pretty good prospects in the coming years," Socio-Economic Planning Secretary Arsenio Balisacan said of the industry that contributed 5.5 percent to gross domestic product in 2012 with $13.2 billion in revenue and employed 770,000 people.
Gigi Virata, senior executive director of the Information Technology and Business Process Association of the Philippines, said in an interview that the outsourcing industry targets $25 billion in revenue with 1.3 million direct employees by 2016.
She said the industry is expanding both in terms of coverage, to include banking and healthcare, for example, and in terms of location, with more and more centers being set up outside of Manila. "We think we still have room to grow. We just have to improve the quality of our (college) graduates and applicants, and tell the people that you can have a real, professional career in outsourcing. And we also have to educate politicians on the requirements of this globally competitive industry, that they need some flexibility," she said.
Outsourcing began in the Philippines in the 1980s with animation jobs for Japanese television shows contracted to Filipino artists, as well as some software services.
Eric Tansingco, 47, who used to work for Toei Animation Philippines, a subsidiary of Japan's Toei Animation Co., when it opened in 1986, said the Philippines has become a major hub for outsourcing firstly because of ease of communication, since so many Filipinos speak English.
"Secondly, our talents here are abundant and very much competitive in terms of quality, compared to other countries. And we can beat deadlines," said Tansingco, who now runs his own studio that still caters to some Japanese anime shows.
But animation forms only a small portion of outsourcing businesses in the country since China continues to dominate that market, owing to its government's generous subsidies, Virata said.
Instead, call centers comprise about two-thirds of the industry in the Philippines, with corporate services, software development, healthcare and engineering services and others making up the remaining areas of outsourcing operations.
Virata said about 70 percent of call center companies here are U.S.-based, and some 10 percent are from Britain. The rest include Australian and New Zealand companies and some that cater to different languages such as Spanish, French, German, Chinese and Japanese, Around 75 percent of the companies are currently operating in Metro Manila, while the rest are spread in other parts of the Philippines such as the islands of Cebu and Mindanao.
Virata said the industry offers reasonably good pay for employees, with fresh graduates receiving at least 15,000 pesos (nearly $350) a month in starting salary.
Cyd Angelie Gualvez, 35, a project manager for a weight-loss consultancy account of Offsourcing Philippines who lives in the southern city of Davao, said she works at night to be able to cater to customers in the United States, where the time zones is very different from the Philippines.
Despite that downside to her job, she said, it has advantages such as being able to work from anywhere where Internet connection is stable and having the daytime to herself.
"As long as I'm present for my three kids in their school activities during the day, I think I'll stay on," she said.
While the pay may not be so high, Charles Rodriguez, 29, a physically handicapped artist at Tansingco's studio, said the joy and fulfillment he gets in sketching anime scenes for Japanese television shows "One Piece" are reward enough for him.
The Philippines leads in the call center industry worldwide, having surpassed its closest rival India in 2010.
Outsourcing started to boom here in the late 1990s when major U.S. call center companies were looking at alternatives to India and the Philippine government began aggressively marketing the country to companies.
Virata said despite economic woes in the United States and elsewhere in the world in recent years, the industry has grown steadily and the Philippines has managed to remain cost-competitive.
She said the creation in 2004 of the outsourcing association, which currently has more than 300 companies as members, also ensured the industry remained strong by collectively addressing its concerns and finding ways to grow further. "What I'm continuing to hear from companies is that the customer satisfaction ratings of our agents in the Philippines are always among the highest in the world. This has been consistent for more than a decade now, and that's why they just keep expanding," she said.
Despite the colorful picture, Virata admits the industry faces some challenges, such as sufficiency of "talent supply" in terms of both the numbers and quality of employees. "We produce 500,000 college graduates every year, and many of them are English proficient. But the employment rate of all applicants is still between 5 and 10 percent. That's a low rate," Virata said.
Aside from the training provided by the companies, Virata's association works with government to prepare future graduates for outsourcing jobs.
She said it also keeps appealing to the government to ensure the peso remains stable against the U.S. dollar, otherwise expansion will be difficult and outsourcing firms may transfer to cheaper locations like India.
Her association also wants the government to simplify business procedures and to refrain from introducing new policies that entail costs, such as declarations of more holidays or special nonworking days in a country that already has among the most in the region, entailing extra pay for workers who work on those days.
Posted by Veronica Silva Cusi, news correspondent
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More Editorial From Information Technology and Business Process Association of the Philippines
Published: Monday, September 2, 2013