Local BPO industry is ‘crisis-proof’

The local business process outsourcing (BPO) sector’s growth is not expected to decelerate despite the slow but steady recovery of developed markets like the United States and Europe.

Although BPO companies help companies in developed markets cut on costs amid the prolonged economic crises, the outsourcing of non-core services also help firms become more competitive when times are good, a top economic manager said.

“The BPO sector is both pro-cyclical and anti-cyclical,” Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo said, noting that BPOs have the tendency to grow regardless of economic conditions.

“If companies are doing well, they need to outsource to remain competitive. But when their economies are doing bad, they have to resort to outsourcing because they need to cut on costs,” Guinigundo said in a recent interview.

Over the past decade, the BPO industry, dominated by call centers that provide customer support for US-based companies, has grown to be one of brightest spots of the Philippine economy. In 2010, the country became the leading supplier of voice-based BPO services in the world after overtaking India.

Guinigundo described the BPO industry as a “conflict-proof” sector that would continue to contribute significantly to the Philippine economy, which grew by 7.6 percent in the first half of the year.

The BPO sector is expected to bring in $16 billion in gross revenues to the country this year, up from $13 billion the year before. The industry is second only to remittances from overseas Filipino workers (OFWs) as the main source of dollar income for the country.

Remittances sent home by some 10 million Filipinos abroad are expected to grow by 5 percent by the end of 2013 from year-ago levels. Both remittances and BPO revenues, Guinigundo said, were main drivers of domestic consumption, which made up 70 percent of gross domestic product (GDP).

By 2016, the IT and Business Process Association of the Philippines (IBPAP) goal is to increase country’s revenues from BPOs to $25 billion by 2016. The industry is also expected to employ 1.3 million Filipinos in three years’ time. The BPO sector has been branded as the country’s “sunshine industry.” Also referred to as the outsourcing and offshoring industry, it accounted for about 800,000 jobs as of December last year, with the number of employees expected to continue growing.