WHY THE PHILIPPINES
By: Gigi Virata, BPA/P
March 2010

Within a short span of time, the Philippines has established itself as one of the top countries in the global information technology and business process outsourcing (IT-BPO) industry. From less than USD100 million in total revenues in 2001, the Philippines increased IT-BPO revenues to USD7.2 billion in 2009. This high rate of growth has persisted even as the industry has grown beyond its initially low base. Between 2004 and 2008, the industry grew 39 percent a year with direct employment of 442,169 full-time employees at the end of 2009.

As a result of this growth, the Philippines is now the Southeast Asia market leader and, along with India, one of the top countries providing IT-BPO services globally. It is for this achievement that the Philippines was named the best outsourcing destination in 2007 and 2009 by the National Outsourcing Association of the United Kingdom.

The Philippine IT-BPO industry has grown rapidly because it has the ingredients critical to O&O service providers and customers noted as follows:

• Large-scale people resources, with close to half-a-million English-speaking students graduating from college yearly;
• Quality, with a well-deserved reputation for excellence in communication skills, interpersonal warmth, customer-service orientation, problem-solving abilities, and cultural affinity with Western markets and customs;
• Operational cost advantage, with costs competitive with any supplier country in the world, including India;
• Infrastructure, with world-class telecommunication networks and BPO workplace facilities; and
• Financial incentives, with highly competitive investment packages for information technology (IT) and IT-enabled services investors, whether third-party services providers or regional captive shared-services centers.

Many of the largest multinational participants in the IT-BPO market have already made big investments in the Philippines and are planning to expand their presence further. These include third-party service providers such as Accenture, Convergys, ePLDT Ventus, Stream, Sykes Asia, Sitel, SPi, , and Telus; and shared services centers of JP Morgan Chase, HSBC, Deutsch Knowledge Services, among many others.

In addition to providing best-in-class customer-care services, companies are also strengthening their presence in the Philippines by outsourcing a full line of services to support business, operational, and creative functions. These services include: IT; business research and analysis; finance and accounting; supply and logistics; human resource; design processes in architecture, interiors, and engineering; animation, graphics, publishing, and game development; medical and legal transcription; and legal research and analysis.

Global companies are realizing more and more that their operations in the Philippines add value to their core businesses in several industry verticals such as banking and insurance, telecommunications, the public sector, utilities, health care, high-tech industries, oil and gas, consumer products, publishing, education, and entertainment.

From the Philippines, companies have found that they are able to service customers or their own operations anywhere in the world. Currently, services from the Philippines reach customers, employees, and management in countries such as the United States, India, China, Japan, Australia, Hong Kong, Singapore, Taiwan, Thailand, Vietnam, Korea, UAE, Saudi Arabia, United Kingdom, France, Spain, and Germany.

The industry has benefited from targeted efforts to develop it by industry players. The IT-BPO players in the Philippines, through the Business Processing Association of the Philippines (BPAP), have invested in a study by McKinsey and Company and BPAP that maps the steps to take to make sure that the environment for expanding the industry in the coming years is continuously enriched. BPAP does this by promoting a pervasive professionalism to foster greater “coopetition” over ruthless competition and working closely with all parties that have a stake in the industry’s success including the government, academe, and support industries.

Industry stakeholders, including the Philippine government, have put in place and will continue to strengthen programs to support the industry. These programs ensure the following:

• Supply of talent for the industry aptly meets the demand in terms of both size and quality;
• Regulatory environment remains attractive to investors and facilitates rather than impedes
  business operations;
• High-standard infrastructure is installed in several parts of the country and is ready when needed; and
• Services provided from the Philippines continue to add value to investors in terms of quality and cost.