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Industry Research : The Shocking Shift in Global Outsourcing
June 30, 2011 -- Chatter Box Call Center (OTC-BB: CXLL),simlar to companies such as Sykes Enterprises (Nasdaq: SYKE) and InfoSys Technologies Limited (Nasdaq: INFY) is taking advantage of the dramatic change in the BPO landscape.
Chatter Box Call Center (CXLL.OB) plans to use its investment resources to quickly expand operations and revenues through strategic acquisitions and build an outsourcing company.
BPO: The inevitable growth industry
The need to cut costs and produce profits in a competitive global economy cuts across almost all industries and has helped propel its rapid growth.
According to industry expert, Everest Research, the global offshore services market grew at a 15% compound annual growth rate from 2006 to 2009 and will more than double by 2016. McKinsey & Co. puts the worth of the global BPO market at $122 – $154 billion. The pressure to cut costs while growing profits will continue into the foreseeable future. That’s why we call BPO the inevitable growth industry.
Stick to what you are good at and outsource the rest
Now more and more businesses are realizing that they can cut costs and improve overall performance by sticking to their core processes and outsourcing noncore back office operations, such as call centers, data processing, HR administration, financial reporting, etc.
Even industries that had been resistant to outsourcing, such as legal services, are now outsourcing much of their business processing work.
"The economic benefits of legal services outsourcing are undeniable," says PriceWaterhouse Coopers managing director, Dr. Charles Aird. " It provides the highest profit margins for service providers as well as the highest cost savings for companies. The emergence of available outsourced legal services and the impact of the economic conditions have changed the perception of the legal industry, once regarded as too sensitive to be outsourced."
The Philippines will be a major beneficiary of the upswing in BPO
As companies turn more heavily to outsourcing during the recovery, one of the biggest beneficiaries will be the Philippines, which has become an outsourcing powerhouse.
The BPO industry in the Philippines has grown an impressive 46% annually since 2006, from $3.2 billion to $9 billion and is expected to see continued growth in the coming years, according to the Business Processing Association of the Philippines (BPAP). BPAP estimates that the industry will earn revenues of about US $11.6 billion in 2011, employing around 700,000 people.
The Philippines is currently among the most cost-competitive destinations for BPO related services.
Direct operating cost per full time employee for English voice work is about $15,000 per year in the Philippines compared to $70,000 in the U.S.
"US-based companies that chose to outsource their services to the Philippines spent 80 percent less on operations compared to firms that had not," according to the World Bank.
The Philippines government is committed to growing the BPO industry, officially declaring it a priority industry. Government and industry have instituted strong incentives and initiatives to support the BPO growth in the country, including.
- 8%-10% tax reduction incentives
- Funding for industry- development initiatives
- Guidance and facilitation for investors
- Industry and market development initiatives
A concerted effort by industry, government, and public-private partnerships is expected to grow the BPO industry in the Philippines to $25 billion by 2016.
Chatter Box seizing the opportunity
While the Philippines has become the leader in BPO, particularly call centers, the industry is highly fragmented in the country. Consolidation would bring operational efficiencies as well as the necessary scale to offer high-ticket services to large companies.
Chatter Box is a Contact Call Center based in Manila, Philippines with operations in Hong Kong and Tokyo. The company plans to use its experience and superior access to capital markets to buy suitable companies and build a BPO conglomerate.
Chatter Box founders have twenty-five years of experience providing flexible contact call center solutions to a wide variety of clientele and market sectors around the globe. The company offers primarily inbound /outbound services such as telesales, order execution; prompt customer service including live web chat and immediate email response. The following customer care solutions have enabled Chatter Box to increase sales, enhance customer loyalty and reduce cost basis for their clients.
The firm as a whole has evolved into a multi-channel contact call center to meet the growing demands and expectations of companies around the world. Its reputation for reducing costs and increasing sales for clients has resulted in a loyal customer base and fueled its growth.
While the company has been built on the foundation of call center services, especially for investor communications, management is poised to use its resources and capital to begin acquiring complementary BPO companies and services throughout the Philippines.
Chatter Box’s acquisition and consolidation strategy comes at a propitious time. The Philippines has ascended to the top of the BPO space. As businesses continue to use more outsourcing to pursue cautious growth during the global recovery, the Philippines BPO industry will be a chief beneficiary. Chatter Box has the tools, resources, expertise and strategy to ride this trend and build a BPO conglomerate.
Posted by Veronica Silva Cusi, news correspondent
Today's Tip of the Day - Understand Your Business
Published: Friday, June 3, 2011