RP outsourcing industry optimistic about 2006 prospects

RP outsourcing industry optimistic about 2006 prospects
Jan 13, 2006
Updated 02:55pm (Mla time)
Erwin Lemuel Oliva eoliva@inq7.net
INQ7.net
http://news.inq7.net/express/html_output/20060113-62824.xml.html

REPRESENTATIVES from different sectors of the Philippine outsourcing industry remain optimistic about its growth prospects in 2006 despite serious challenges. One of them is finding more quality skills to man the booming business process outsourcing (BPO) industry. The other is steep competition from other countries like India.

In a joint forecast by the Business Process Association of the Philippines (BPAP), Board of Investments (BOI), and the Commission on Information and Communications Technology, the Philippine outsourcing industry is expected to generate 103,000 new jobs in 2006, a 44 percent increase from 2005. The same forecast showed about 81,000 new jobs created in 2005, a 53 percent growth from 2004 figures.

Based on these growth rates, a slowdown in the generation of new jobs year-on-year is foreseen. The forecast also noted that the outsourcing industry is expected to generate 3.7 billion dollars in revenues this year, or a 52 percent growth over 2005. "The prospects are still bright for the Philippine outsourcing industry," according to Celeste Ilagan, executive director of the BOI's international promotions.

Information technology-related projects registered with the BOI have increased in 2005, and are projected to increase by over 50 percent in 2006, she noted, adding "but we will need to develop more niches in this booming outsourcing industry." Dan Reyes, president of the BPAP, is also bullish about the prospects in 2006, but admitted that finding enough quality skills to man expanding operations in the Philippines is a challenge.

Meanwhile Rafy David, president of the Contact Center Association of the Philippines, believes the call center or customer care industry will account for majority of new jobs in 2006. The association, which represents companies doing outsourced call center work for foreign clients, projects 70 percent growth in 2006 in terms of revenues.

"We also want to stress that for every one call center job created, two support service jobs are created," David added, noting the boom in real-estate, convenience stores and restaurants in areas where call centers are located. Besides call centers, the outsourced back-office industry is also expected to generate more jobs in the country, observes Josephine Gonzales, senior corporate liaison officer of SPI Technologies.

There are similar expectations of growth in the Philippine animation and software development industry for 2006. Marilyn Montano, president of the Animation Council of the Philippines , said the Philippine animation industry hopes to sustain a 20 percent growth in total revenues over the next five years. This local industry is currently a 40 million dollar business, with the global animation outsourcing industry valued at 72 billion dollars, she added. BPAP-BOI-CICT projects 7,000 new jobs generated in the animation industry in 2006. About 4,500 jobs were generated from outsourced animation work to the Philippines in 2005.

And then there's Philippine software development, currently focused on a program dubbed Fly-High 2010, which hopes to generate more jobs for this sector, says Mon Villar, executive director of the Philippine Software Industry Association. Part of the software development industry that deals with projects for export is projected to generate 20,000 jobs in 2006; the part that deals with the domestic market is projected to employ 31,000 people.

A Canada-based market research firm has however predicted that the outsourcing will lose its luster in 2006, as organizations decide to take back certain IT operations that have been outsourced to third-party providers. "As number of multi-year deals are up for renewal globally, outsourcing will lose its luster as organizations take back certain IT functions, selectively outsource, or setup their own remote operations," XMG said in its 2006 prediction report found at www.xmg-global.com. It added that with "heightened awareness of the capabilities of Asia Pacific countries and the increasing internal tolerance for risks in operating offshore," several organizations that have outsourced multi-year contracts with an offshore provider will eventually decide to setup their own remote operations offshore to support internal business process and IT requirements.

Meanwhile, in partnership with the Department of Trade Industry, the Philippine outsourcing industry is scheduled to hold an "e-Services Philippines" conference and exhibition at EDSA Shangri-La Manila on February 16 to 17, 2006. Organized by the Center for International Trade Expositions and Missions, e-Services Philippines will invite international and local speakers to discuss the prospects of the outsourcing industry for the year. Both conference and exhibition will also feature global industry experts on emerging issues affecting the industry. Avinash Vashistha, founder and managing director of outsourcing consultancy neoIT and author of "Offshore Nation," has been invited as a conference speaker. Nigel Roxburgh, founding director of UK's National Outsourcing Association, has also been invited to discuss prospects in the UK market.

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