BPO sector in Philippines not just about call centers

The business process outsourcing (BPO) sector has grown from an obscure industry into one of the country’s leading sources of employment and biggest dollar revenue earners in less than 10 years.

Today, the BPO industry means 600,000 new jobs and counting. Based on this number, promoting the Philippines as a highly urbanized country with an ample supply of English-speaking college graduates has worked well.

But for BPO industry executive Rembert de Villa, a change in game plan for government and private sector stakeholders will be needed to sustain the industry’s growth over the next 10 years.

“When companies around the world figure out the value chain of services, the Philippines will have an advantage. We have a lot of professionals in finance, healthcare and legal services and our culture is aligned to the United States,” says Rembert de Villa, head of Transformation Services at New York-based BPO firm EXL.

Advancements in information and communications technology (ICT) now allow multinational companies to have work, done by people overseas.

At first, this helped the country take advantage of the trend of outsourcing call-center services to places like the Philippines, bringing home close to $10 billion in annual revenues. This is seen growing to as much as $25 billion by 2016, or about 10 percent of the global pie.

But banking on the availability of people to answer phones all day and hoping this ensures the industry’s long-term growth prospects would be a waste, considering the many other talents that Filipinos have.

“We are just at the tip of the iceberg,” De Villa says, adding that pretty soon, the only job that can’t be outsourced is the CEOs.

“What we want is to have people that have PhD’s, master’s degrees, law degrees and other professionals working in BPOs,” De Villa says in a recent interview.

De Villa’s company EXL currently has about 1,000 employees in the Philippines, but none of them are customer service agents. In about three years, de Villa says he expects the company to have about 5,000 employees.

“We intentionally did not put up call center operations. We knew we would be growing slower, but it would be a steady kind of growth,” he says.

“We do more complex things in the Philippines for our clients abroad,” De Villa says, noting that the company wants to be a part of the “next generation” of BPO firms that are likely to dominate the local industry landscape in years to come.

He says the company currently focuses on healthcare-related services in the Philippines, with bulk of its workforce made up of nurses.

What is clear today, De Villa adds, is that even in sensitive industries like banking and finance, bulk of the work need not be done in-house.

“What we found out is that when a company underwrites a policy for risk assessment, about 75 to 80 percent of the work is data preparation and analysis,” he explains. “That can be done anywhere in the world and we can do it here in the Philippines.”

“What’s happening is that about 10 years ago, businessmen started drawing the line between core services and noncore services, which can be outsourced,” De Villa says. “That line is moving and now, even core services can be outsourced.”

De Villa says aside from India, the Philippines is the only other country in the world that can offer such services at a high quality and at affordable prices.

Admittedly, however, De Villa says the government needs to accelerate improvements in the country’s educational system.

De Villa says India, the country’s main rival in the BPO sector, has a significant advantage in terms of producing highly educated graduates.

“Our advantage is that we have a large population that speaks English, but India has a more expansive educational system,” De Villa adds.

He explains more local BPO firms need to be established, instead of the country just being another location for global giants that are mostly based in India.

Not only would these companies be more focused on growing the local industry, but local BPOs would also be able to offer innovative new services that no other company in the world does.

“What we are now is a supplier of labor. We are not developers of solutions yet, but that’s where the value is,” says De Villa.

De Villa points out it is time for the industry to attract new businesses from overseas not just by offering low prices, but by telling foreign companies that the country can deliver better quality than anywhere else in the world.

Another reason to switch from being a mainly call-center destination to higher-value services is the threat of automation.

De Villa says with advancements in the field of voice recognition and automation, the need of customer service representatives to man phones 24 hours a day may disappear.

“To focus on just call centers, it’s risky and it’s not sustainable,” he states.