Offshoring, Outsourcing IT-BPO Industry in the Philippines
The IT-BPO Boom in the Philippines: 2017-2018
Information Technology-Business Process Outsourcing (IT-BPO) is the fastest growing industry in the Philippines today. It boasts a steady growth in revenue with an average of 9% yearly and covers about 10-15% market share of the global outsourcing market. A prime outsourcing destination in Southeast Asia, direct employment for Filipinos in this sector was at 1.3 million in 2017. The BPO sector is projected to increase employment to 1.5 – 1.7 million new jobs in 2018 and onwards.
The outsourcing or IT-BPO global industry has grown at an average annual expansion rate of 20%. IBPAP stated that the IT-BPO and Global In-house Center (GIC) industries are the Philippines’ most important job generators. Their contributions to the gross domestic product (GDP) is approximately 17% in 2016, and are now the Philippines’ second largest net foreign exchange earner, after remittances from an estimated 10 million overseas workers.
The IT-BPO boom in the Philippines is currently led by demand for offshore call or contact centers. In 2016, the Philippines generated revenues of $25 billion, which is up 62% over the $21.5 billion it gained in 2015, and a huge increase from the start of the decade when the outsourcing industry in Manila employed just 2,400 people and the industry had revenues of merely $24 million.
In February of 2015, the Philippines has become the call center capital of the world, and now employs over 1 million employees in the local call center industry, according to Don Lee of Los Angeles Times. It was also able to generate $23 billion in revenues in 2017 amidst the political setbacks and investment risk issues it experienced following US President Donald Trump’s anti-outsourcing stance and plans of bringing jobs back to the USA. Leading consulting firm, Kittelson & Carpo Consulting has been seeing an increase in newly registered IT-BPOs in the Philippines in the early quarter of 2018. The firm is registering as many as 3 per week
The Philippines’ offshoring/outsourcing industry is composed of shared service offices, global in-house centers, captives and third-party outsourcing providers. Large multinational companies outsource functions of their operations to the Philippines; international 3rd party providers offer services from the Philippines to foreign multinationals and independent Philippine companies provide services to international clients. Through these options, many offshore outsourcing services performed in the Philippines can be offered to companies of all sizes and needs. The two main areas of expertise are Contact Centers and Business Process Outsourcing (IT-BPO). The Philippines formerly ranked second in outsourcing worldwide, just after India. However, recent developments in the global outsourcing industry have propelled the Philippines to the top spot in voice BPO and ranking 2nd in non-voice complex services.
The Philippines ranks top 3 in location for talent according to analysts, both on graduate-level pool and among professionals in IT-BPO sectors such as accounting, engineering, healthcare and finance and other non-voice, complex services and is among the top 3 IT-BPO and GIC locations in the world, after India and China in terms of number of graduates. The Philippines records approximately 500,000 tertiary graduates annually.