BPO: A Spine in the Philippine Economy

By: Allistair H. Tamayo

ARALING PANLIPUNAN

One of the most dynamic and fastest growing sectors in the Philippines is information
technology- business process outsourcing (IT-BPO) industry. The Department of Trade and
Industry (DTI) defines business process outsourcing (BPO) as the “delegation of service-type
business processes to a third-party service provider.” The industry, according to the department, is
generally divided into the following sectors: contact centers, back office services, data
transcription, animation, software development, engineering development, and game
development. The IT-BPO industry plays a major role in the country’s growth and development
In 2013, an astounding $ 13B or 1 000 % increase from $1.3B in 2004 was generated by the
Philippine export industry due to the Business Process Outsourcing powerhouse of the country.

The industry has exhibited exemplary growth throughout the past years. The sector has
then become vital to the country’s economy that it has often been referred to as a “major
economic pillar” and an “economic lifeline.” Oxford Business Group (OBG) described the BPO
sector as an “economic powerhouse” and “one of the largest white-collar employers in the
country.”

The Philippine BPO industry was noted born in 1992 employing nearly a million workers
thus creating a ripple effect. In 2005, it was recorded to account an average of 2.4% increase in
Philippine GDP, and in the succeeding year, it drew another milestone as the domestic economy
grew by 5.4%. These are all due to the growing and emerging BPO industry.

“According to industry analysts, revenue from the country’s BPO industry grew 10-fold
from $1.55 billion in 2004 to $15.5 billion in 2013, reaching an estimated $18 billion in 2014,”
the report from OBG stated.

In 2016, the IT-BPM revenue for 2016 came in at $22.9 billion. By 2020, US source
expects BPO revenue to reach $55 billion. OBG added in the report that the Bangko Sentral ng
Pilipinas stated that the industry will soon overtake the value of remittances from overseas
Filipino workers, which currently account for an estimated 10% of annual GDP. It is known that
remittances from overseas workers, along with the BPO industry, are the country’s top two
earners of foreign exchange.

“The industry will soon surpass foreign remittances as the single largest contributor to
GDP, driven by growth in the emerging segments of health care, analytics, and financial services
outsourcing,” OBG stated.
 Fast forward to today, the Philippine BPO industry has just reached another milestone as
the industry has now officially grown as the country’s second largest source of dollar income with
overseas Filipino worker (OFW) remittances still at the top spot according to the Information
Technology and Business Process Association of the Philippines. Battling unemployment rates
with 1.2 million direct jobs generated, should this contribution continue, we can see the IT-BPO
industry overtake overseas Filipino worker (OFW) remittances from the top spot by 2017.

Because of these, foreign investors moved in to the Philippines. They had realized that
Philippines offer a lower area and tax requirements in starting such business. This paved way for
more employment opportunities to Filipinos thus leaving a mark on the decrease of unemployment
rate. More Filipinos working means also more taxes to be collected which really can give a big
help in the growth of Philippine budget and economy.

On the employment aspect, OBG indicated that the BPO industry has also experienced a
similar rise in its record for job creation. The sector was reported to have generated an increase
in job opportunities from 101,000 employees in 2004 to 900,000 in 2013. OBG also reported that
IBPAP had indicated an estimate of 1.1 million people employed in the industry at the end of
2015, with new jobs primarily generated in knowledge-intensive business services including
computer and IT services, as well as in research and development.

By 2016, the sector is reported to have employed approximately 1.15 million Filipinos as
driven by the expansion of global in-house call centers. On the other hand, it was forecasted that
the sector’s employment reached to 1.3 million in 2017.

Meanwhile, IBPAP drafted a new Philippine IT-BPM Roadmap 2016-2022, which

targets the following: 1.8 million direct jobs; 7.6 million direct and indirect IT-BPM
employment; 500,000 jobs outside of NCR; $40 billion in revenue; 15% global IT-BPM market
share.

The said road map aims to strengthen domain expertise and capabilities in the emerging
sectors and ensure that the Filipino talent is future-ready amid rapid innovations in the areas of
digital transformation, artificial intelligence, big data and analytics, as well as evolving delivery
models.

In the year 2010, Philippines was recognized as the BPO capital of the world topping
against other countries such as India, one of the leading countries in terms of the said industry.
This can be credited to the impression that Filipino BPO employees have good communication
skills and can easily capture and persuade the interest of costumers from all over the world. These
attributions to Filipino workers- medical transcriptions down to selling , Filipino workers are doing
a great job. Filipinos will always do their best in order to help their companies prosper at all cost.
The value of work and purpose-driven of Filipino BPO workers are vital elements that make
Philippine BPO industry a boom.

However, there are still challenges on the road ahead like closing in on job-mismatches.
Right now, authorities are closing that gap by strengthening bonds between the academe and the
industry. By knowing what the industry needs, academic institutions can integrate the needed skills
relevant to contact center job opportunities. With the rise of knowledge process outsourcing (KPO)
in the Philippines, more clients are enticed to outsource their departments to the Philippines such
as marketing and advertising, finance and accounting, and other fields under creatives. With this
comes the need of the academe to further improve the competencies of their students and ensure
that they are producing graduates with skill sets required by the outsourcing industry. Enhancing
the capability of institutions to develop curricula and education programs that are significant to the
requirements of the outsourcing industry would do a lot in creating a pool of skilled manpower to
support one of the country’s booming industries.