Chinese firms urged to locate BPO functions in Philippines

The Board of Investments is urging Chinese companies to put up business process outsourcing facilities in the Philippines, so that they can take advantage of the support that highly skilled English-speaking BPO personnel can provide for their businesses.

Coming from a recent investment promotion trip to China, BoI managing head Cristino Panlilio said Chinese companies would benefit from offshoring some company functions to the Philippines, especially those that China still had to improve.

“China is starting to bone up on its service exports, so we’re giving them tips and strategic recommendations on how to make their service export industry more competitive,” he said.

Certain banking and financial functions, for example, could be done out of the Philippines for China’s overseas clients, he related.

“The Chinese market is big, and it needs strong support from English-speaking countries like the Philippines to serve its clients in the West. What they can do is move some business functions here, then just move these back to China when they’ve already built their capabilities,” Panlilio said.

“Like in banking, for example. China’s banking capabilities are still not on par with the world’s best. The Philippines can help in that area. We can also do animation and just about any service. A lot of companies in China need BPO services,” he added.

Should Chinese firms decide to bring their BPO business into the country, he said as much as a third of local BPO operations could be servicing Chinese companies.

In an earlier interview, Business Processing Association of the Philippines executive director for information and research Gillian Joyce Virata said the local BPO industry was keen on entering new markets.

Not wanting to rely almost solely on the United States for its business, she related that the BPO sector was pushing to enter new markets such as the United Kingdom and Asia-Pacific.

“Because of the growth of the Asia-Pacific region, there’s now also a big demand (for BPO services). We’re trying to capitalize on our language capabilities. The biggest demand is for Mandarin, Japanese, Thai, Bahasa, and Korean,” she said.

 

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IT-BPO industry exports could reach $ 55 Billion Dollar in 2020 - World bank

World Bank says if the government of the Philippines can fully develop the information-technology and business-process outsourcing (IT-BPO) sector services industry, it has the potential to earn export revenues of $30 billion to $55 billion by 2020.

This is according to a study made by World Bank consultant Raja Mitra, who estimates that medium-term export revenues from the sector could reach far more than the $9 billion it controlled in 2010.

Mitra made three assumptions that resulted in a low-end medium-term export revenue estimate of around $30 billion, the medium-end estimate at $45 billion and the high-end estimate at $55 billion.

“While not a panacea...expanding the scale and scope of exports of IT-BPO services as well as domestic industry development and use of ICT [information and communication technology] will offer new avenues that can help the economy to be more productive and accelerate efforts to achieve inclusive growth within the country and to interface and catch up with the rest of the world,” Mitra said in a slide presentation.

With revenues of this size, Mitra expects the IT-BPO services industry to contribute as much as 11 percent of the country’s gross domestic product (GDP) by 2020. In 2010 the industry contributed around 5 percent of GDP.

Mitra also projects that Filipinos employed directly and indirectly by the industry will reach 6.8 million by 2020. Those who will be directly employed by the industry could increase to 1.8 million by 2020 from 500,000 in 2010, while those who are indirectly employed could rise to 5 million by 2020 from 1.75 million in 2010.

However, these are merely projections and, in truth, Mitra said, the Philippines’ full potential in the industry has not been met. For one, the country lags behind in providing IT-related services and the use of high technology in all its IT-BPO services.

Mitra said these two factors would significantly help in growing the industry and allowing the Philippines to also shift to high-value back-office services, which are necessary to earn in more revenues.

“[It is] important to simultaneously develop the IT, telecom, education and other knowledge economy sectors and to enhance the potential synergies between BPO and other ICT sectors both in terms of external and domestic markets. Such a development offers significant promise it can contribute toward achieving sustainable and inclusive economic growth,” Mitra said.

Mitra said the Philippines already has a larger BPO industry than India and has already overtaken it in call-center operations. Metro Manila now has more people employed in the BPO export industry than any other city in the world.

Data collected by Mitra showed that the sector’s export revenues-ratio-to-GDP was less than 1 percent in the early 2000s and steadily grew to 4.8 percent in 2009. Its share of total exports, on the other hand, increased to 16 percent in 2008 from less than a percent in 2000.

Mitra also said the industry has already come a long way in boosting employment in the country. For one, direct employment in the sector as a share of the total labor force employment has risen to more than 1 percent from less than 0.1 percent in the early 2000s

 

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