Editor's Blog

The Philippines: a voice that wants to be heard
Friday, August 22, 2008

As I explored in a recent blog, the Philippines has an enviable track record in the offshore call centre industry, where the workforce’s English skills have long given it a competitive advantage.

However, the Philippines has ambitions beyond its niche in voice services, with a planned expansion into other lucrative BPO areas – legal services would be a logical option if they are not already on the list.

The aim is achieving annual BPO revenues of $12-13 billion by 2010, consolidating the Philippines as the world’s third most popular BPO destination.

This comes as the Philippine Software Industry Association (PSIA) predicts that the US – where PSIA has been conducting coast-to-coast roadshows – will outsource as many as 60,000 jobs to the country over the next two years.

The challenge, then is clear: contact centre seats are not highly skilled roles, and analysts predict that the Philippines will need to find 420,000 additional workers to become the BPO destination it aspires to be.

Indeed, Ovum analyst David Mitchell says that more specialist skills will be difficult to produce without significant government support and investment in education.

That support could come from the proposed Department on Information and Communication Technology (DICT) in the Philippines, and if the focus is shifted to premium skills charged at premium rates.

One area where the Philippines has been hothousing skills beyond voice services (and within its burgeoning number of technology parks) is the emerging field of software as a service (SaaS). This has been typified to date by US customer service and CRM SaaS companies such as RightNow, NetSuite and Salesforce.com. The Philippines, then, has identified a significant market opportunity over the next decade.

Even so, the challenge remains a difficult one, with even the most optimistic estimates saying that 70% of BPO revenues will still come from the call and contact centre industry.

That means significant problems stored up for the future and a growing tension within the local economy. As India has discovered, being a centre of excellence means wage inflation, and so while 30% of the Philippines’ BPO revenues may come from highly skilled, premium rate services, the majority will still be tied up in a service industry where low cost is one of the main advantages.

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