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How sustainable is the outsourcing industry in the Philippines?

Macel Legaspi | Feb. 28, 2013
The Philippine outsourcing market achieved new milestones in 2012. However, its continued fast-paced growth has also given rise to much speculation about its sustainability.

The Philippine outsourcing market achieved new milestones in 2012. However, its continued fast-paced growth has also given rise to much speculation about its sustainability.

Generating more than $13 billion in revenues in 2012, the Information Technology-Business Process Outsourcing (IT-BPO) industry in the country is touted as "one of the biggest of the Big Winners" in the second Arangkada Philippines Forum. Notwithstanding the speculations, the executives of the Joint Foreign Chambers of Commerce in the Philippines (JFC) think that the industry has to fuel up to achieve sustainability and propel it to the next level of growth.

"Education is one of the key enablers for sustained growth," said Rhicke Jennings, President of the American Chamber of Commerce. There is a great deal of talent, but "both private and public sectors must stay very focused on realizing its education goals."

With increased demand, outsourcing companies must spend significant efforts in recruitment and talent retention to sustain growth.

In addition, Jennings emphasized that it is also especially important to "create an environment that stimulates innovation."

Michael Raueber, President of the European Chamber of Commerce, echoed his sentiments on education: "Stakeholders need to keep tabs in ensuring competitiveness of education in all levels. The more competitive we are, the faster we will grow."

Today, Manila ranks 3rd outsourcing destination in the world. Cebu is not far ahead, at 8th place. While voice services dominate in terms of revenue and employee headcount, the IT outsourcing and creative industries have yet to realize their potentials.

According to Roger Dimmel, First Vice President of the Canadian Chamber of Commerce, FOREX and increased competition in all parts of the world continue to bring in pressure to the offshore outsourcing industry. "What the industry should do is move up the value chain -- leap behind call center services to software engineering."

The Philippines has clear advantages: a large workforce of educated, English-speaking talent with a strong customer-service orientation and cultural affinity to North America; highly reliable low-cost international telecommunications; diverse and inexpensive site locations; and strong government support. These drivers for success must be strengthened, while new reforms are also needed to realize the high growth potential.

 

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