Gov’t urged to help local science and technology sector, not call centers

PDI FILE PHOTO

MANILA, Philippines—The government should not pin too much hope on the buiness process outsourcing industry, and recent statements by President Barack Obama to bring outsourcing jobs back to the United States highlight the risk of doing so, acording to the Ibon Foundation.

The foundation, an independent think-tank providing research and information on socio-economic issues, said the BPO sector faced adverse trends, and the money that the government was intending to spend to promote it could be better used to support Filipino industry and science and technology.

The Philippines is a popular location for call centers and other outsourced services, and has edged out India as the world’s leading BPO center.

In a statement, the Ibon Foundation said the Philippine government has set aside P575 million in subsidies for private foreign BPO investors, with the money going to training, curriculum and teacher development, career marketing and scholarships.

But there were better ways to spend the money, it said.

“These funds are more productively spent supporting Filipino industry, science and technology than for a sector that is such a small part of the economy and by its nature will never give much value-added,” it said.

“The BPO sector is barely integrated into the local economy outside of its relatively few jobs and so does not stimulate or encourage domestic production,” it added.

According to Ibon Foundation, Obama’s statement to bring outsourced jobs back to the US underscores the dangers of relying on BPO and foreign economies for jobs for Filipinos.

“Even if it is still unclear if President Obama’s proposed ‘insourcing’ legislation will pass, the vulnerability of the sector and the government’s misplaced attention to this is increasingly apparent,” it said.

The Business Processing Association of the Philippines (BPAP) was not alarmed, however, and noted that outsourcing has allowed US companies to survive and grow amid the global financial crisis.

Ibon Foundation said that while Obama’s “insourcing” plan, which has been dismissed as an election ploy,  may not come to pass, the BPO industry is nevertheless facing setbacks.

“But the initiative is just another example of adverse trends facing the sector and more of this are likely to emerge as the crisis in the US and the rest of the world worsens in the coming years,” it said.

The BPO sector has been growing, but the foundation said this has slowed slightly. It said the 21.9 percent growth in BPAP-related jobs in 2011 was slightly slower than the 24.1 percent growth in 2010. The 22.5 percent growth in revenues was also slower than the 25.3 percent growth in 2010.

It also noted that government and industry estimates for the BPO industry are 1.3 million jobs and $25 billion in revenues in 2016. But the group was not optimistic. It said an earlier plan to get 1 million jobs and $12 billion in revenues in 2010 fell short of the target. Only 525,000 jobs and $8.9 billion in revenues materialized, it added.

The foundation said the slowing global and US economy appeared to have affected the BPO industry, despite reports that the Philippines had overtaken India as the world’s leading BPO Center.

“Developments in the US economy are particularly relevant because the latest Bangko Sentral ng Pilipinas data notes that the US accounts for 72% of foreign investment and 80% of BPO service exports,” it said.

It noted that the trend of deployment of Filipino nurses to the US dropped between 2008 to 2010, and Obama had campaigned for prioritizing American nurses over migrants.

The US congress has also approved a bill that would reduce the number of visas allowed for temporary registered nurses.