By Dennis D. Estopace
Reporter
CITING the investment climate in the country as bullish, the chairman of one of the Philippines ' business process outsourcing (BPO) alliances said venture fund capitalists (VCs) are hunting for smaller firms to buy.
"It's short of a dot-com phase wherein money is flowing into the country and every venture capitalist you bump into are either offering to buy you or start you up," Rainerio Borja, chairman of the Business Processing Association of the Philippines (BPA/P),said Thursday.
Borja told BusinessMirror after speaking during a press briefing, that these VCs are offering three to four times the revenue of a company.
"It's a widespread practice in India though there are experiences in the Philippines ," Borja said on the sidelines of the 2006 e-Services Philippines conference at Mandaluyong City .
Borja, who is also president of PeopleSupport (Phils.) Inc., based his bullish outlook on the industry on his company that he has bought. He didn't say though which firm PeopleSupport recently bought.
Borja added that the attractiveness of the Philippines as location for BPO is also based on the profit-to-earnings (PE) ratio of a low of 15 percent to a high of 36 percent. Borja said PeopleSupport's PE ratio is at 16.5 percent.
PE ratio reflects shareholders' income or the profitability of their investment at a given period of operation.
BPA/P director Ernest L. Cu said this industry-wide benchmark of attracting investors is "reasonable" compared to India , the world's largest BPO location.
"Our value would have doubled if we were in another location, say Bombay ," said Cu, who is also president and chief executive of SPI Technologies Inc.
He added that more than the company and sector's attractiveness, other factors as the capital markets and the general investment climate also play in getting more BPO firms to invest in the country.
The Philippines ranks fourth after India as BPO location, according to business consulting firm McKinsey & Co., and sixth according to A.T. Kearney.
Demand for global outsourcing services, McKinsey said in a study, is expected to reach $180 billion by 2010 with the Philippines aiming to get five percent or $10 billion.
The contact center sector, called the country's "sunshine" industry, is expected to account for 24 percent of this market, Borja was quoted in a statement as saying.
He was also cited as saying that approximately 90 call centers in the country employs around 100,000 workers. Borja said he expects it to increase "by several thousand every month."
BPA/P data cites that last year, the BPO industry generated 81,000 new jobs at a 53-percent growth rate, while players expect 103,000 new jobs to be generated this year.
However, Cu said unless government officials revise antiquated laws, like working days, the country could expect to miss out in generating attractiveness.
http://www.businessmirror.com.ph/2006/0217/17%20econ%20venture.php
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