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BPO industry lowers revenue goal, delays target to 2011

By Karen Flores
June 16, 2009 5:26 PM
MANILA - The Business Processing Association of the Philippines (BPAP) on Tuesday has decided to postpone its revenue target by one year in the face of the global economic slowdown.

BPAP earlier projected that the country's business process outsourcing (BPO) sector will earn $13 billion in revenues by next year, capturing 10 percent of the global IT-BPO market.

The economic slump, however, has caused the industry group to push back its revenue target by one year, which it also lowered by $1 billion.

"As the global economy turns around, hopefully by later this year or next year, we hope to reach the $12-billion target we have set in 2011," BPAP President Oscar Sanez said in a BPAP breakfast briefing. For next year, the group has projected a 26-percent growth in revenues to $9.4 billion.

Revenues of the country's BPO industry grew 26 percent last year to $6 billion, which Sanez said is "still quite commendable" given the collapse of major companies worldwide at the onset of the crisis last year.

For 2009, BPAP is expecting a 23-percent rise in revenues to $7.5 billion.

"We believe that based on inputs we have from members, we can deliver another 23 percent this year, about $7.5 billion," Sanez said, adding that BPAP's member companies have been performing very well for the first five months of the year.

Positive impact

Citing its latest survey, BPAP said the global economic crisis has not dramatically slowed down the expansion of BPO firms in the country.

"It's encouraging that although the industry has been growing rapidly for several years, almost 40 percent of respondents indicated that their firms will still grow between 16 and 200 percent this year," Sanez said, referring to the online survey of BPO executives conducted by BPAP, Outsource2Philippines, and TeamAsia.

About 83 percent of surveyed executives said the global slowdown has had at least some impact on their firms, with almost 60 percent of respondents saying that they have expanded their service offerings in response to the crisis.

Only 2 percent of respondents indicated that they have reduced the number of services they offer their clients, while 6 percent said they will decrease the size of their workforces this year.

One third (33 percent) of respondents said they were accelerating expansion plans this year, while 23 percent said they are increasing recruitment efforts.

Despite this, however, BPAP said the survey provided some areas of concern, with more respondents saying their companies have decreased capital investments (36 percent) compared to increased capital spending (9 percent).

The survey was conducted from March 31 to April 29, with invitations sent to 571 BPO executives. Of the said number, about 160 executives across 25 BPO sectors completed the survey, providing a 28-percent response rate.

RP BPO industry growing

The economic crisis has forced most companies to cut down on production costs such as manpower and rentals to survive, making them move some of their businesses offshore.

This has greatly benefitted the Philippines as the BPO industry served as a sponge for the surplus of graduates that other sectors could no longer absorb.

A number of BPO firms have flocked to the country this year to expand their operations amid the economic crunch. Leading outsourcing firm Convergys, for instance, is on a roll with its expansion plans this year, opening three new contact center facilities in Cebu, Quezon City, and Laguna last April.

On the other hand, Affiliated Computer Services Inc. announced plans to add 2,000 more seats in the next five months as it continues to strengthen its presence in the Philippines through its offices in Makati, Pasay, and Cebu.

The market is also faced with new entrants this year as HP Outsourcing Philippines Inc. and Thomson Reuters Legal have recently expressed their interest to put up facilities in the country for their respective businesses.

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