BPO industry earnings goal maybe ‘ambitious,’ says exec

The business process outsourcing (BPO) industry can expect several more years of healthy growth levels, creating thousands of jobs and bringing in billions of dollars in additional income for the country.

However, it is still not certain whether the industry will be able to hit its target earnings of $26 billion by 2016 from $11 billion last year, an executive of one of the country’s largest BPO firms said.

“The current (industry) guidance is extremely ambitious. To double the industry’s size in five years, it will require a huge talent pool that the country currently lacks,” Aegis Philippines president Rajiv Ahuja.

The $26-billion target was set by the Business Processing Association of the Philippines (BPAP). The outsourcing industry is seen as one of the few bright spots in the Philippine economy. Starting from nothing at the beginning of the decade, the BPO industry now employs more than 600,000 workers.

He said BPAP’s targets might have been crafted with the mindset that growth rates in previous years could be replicated easily.

“We are coming from a bigger base now, so growing 25 percent a year will be harder,” he said.

Ahuja said he was optimistic of the industry’s growth prospects, noting that the healthy investment environment created by the Aquino administration could only mean good news for BPOs.

“With the government’s support, and if there are no additional roadblocks put up, the only way to go for the industry is up. The only question is at what rate,” he said.

Key to achieving the industry’s goals, he said, would be structural reforms in the country’s education system, with the aim of churning out graduates with skills—particularly in communication—that BPO companies needed.

“Even if you do engineering work in a BPO, you will still need to communicate with your client abroad at some point and that’s where the Philippines excels,” he said.

He said even as the industry tries to go up the value chain to move away from voice-based call center services to more complex analytical and engineering work, communication skills would still be vital to the country’s success.

Ahuja cited the example of India, which had experienced talent supply problems mainly because of sub-standard communication skills.

“When the industry was young in India, the battle cry was to train more engineers. Then everybody found out that clients could not understand these engineers,” Ahuja said.

“After a few years, the battle cry changed. Now everyone wants to hire people who can communicate, and they are given basic tech support skills,” he added.

He said the lack of talent in the Philippines has led to wage inflation that could deteriorate the country’s competitive advantage in terms of cost.

Aegis is part of Indian industrial giant the Essar Group, which generates $20 billion in revenue yearly.

Aegis, formerly People Support, has more than 14,000 employees mainly working as call center workers in the Philippines.