Study Shows BPO Good for Philippines

While the establishment of outsourced services throughout the world has helped to drive the development of certain economies, not all are jumping at the chance to go down this road. For one, some industries – the contact center industry in particular – are proving to be more promising while providing better paying jobs for its employees.

According to the National Statistical Coordination Board of the Philippines (NSCB), high-level outsourcing services, particularly software development and animation have experienced slower growth in terms of revenues, revenue share and average monthly compensation per agent than the more established contact center sector.

The NSCB made this statement while referring to the findings of its 2005 Benchmark Survey of IT-Enabled Services that was conducted in April of last year.

Funded by Bangko Sentral ng Philipinas, the survey was undertaken with the technical assistance of the Technical Working Group on Trade in Services formed by NSCB and in consultations with the Business Processing Association of the Philippines.

The group, chaired by the Trade department, counted as members the National Economic and Development Authority, the National Statistics Office and the Commission on Information and Communication Technology.

The survey showed that revenues of the entire industry grew 50.79 percent to $1.9957 billion in 2005 from $1.3235 billion in 2004. By comparison, revenues of contact centers grew faster than the industry average at 67.85 percent to $985.6 million in 2005 from $387.2 million in 2004.

In terms of each sub-sector’s share in total industry revenues of $1.9957 billion in 2005 and $1.3235 billion in 2004, contact centers increased their share to 49.4 percent in 2005 from 29.255 percent in 2004. Animation’s share decreased to 0.85 percent from 0.937 percent, while software development’s share also contracted to 20 percent from 21.065 percent.

The average monthly compensation per employee was also measured for each segment of the industry. Contact centers showed an 11.3 percent increase to P26,498 from P23,812. The software sector was the only one to see a decrease of 4.6 percent as it went from P32,425 to P30,937.

The Philippines has definitely benefited from the BPO sector as it increased the country’s gross domestic product (GDP) growth on average by as much as 0.2 percentage points over the studied time period. In the second quarter of this year, the BPO industry contributed 0.3 percentage points to the 7.5% GDP growth.

The industry also contributed an average of 2.6 percentage points to the growth in private services in the periods covered, and - in particular - contributed 4.1 percentage points to the 8.6% growth in private services in the second quarter of this year.

Even more significantly, BPO contributed 9.3 percentage points to growth in export of services, even as these exports actually contracted by 4.6% in the second quarter of this year. All in all, the country is benefiting from the expansion of BPO and will likely continue to try and attract overseas investors.

 

Susan J. Campbell is a contributing editor for TMC (News - Alert) and has also written for eastbiz.com. To see more of her articles, please visit Susan J. Campbell’s columnist page.