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Outsource magazine: thought-leadership and outsourcing strategy | August 18, 2017

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The Philippines is punching above its weight – but can it last?

The Philippines is punching above its weight – but can it last?
Martin Conboy

I have just come back from a BPO speaking tour of the Philippines. Every time I go there I am always amazed at how quickly their BPO sector has grown. The rise of BPO in the Philippines has been nothing short of amazing.

Captive and outsourced call centres took the very first calls in 1997, and by the year 2000 they had about 25,000 people earning a living from BPO. That’s when I first heard about their BPO sector: we were doing call centre research and we had to double-check the statistics to confirm the sudden surge in the size of their call centres. Today the Philippines BPO sector employs about 640,000 people and enjoys revenues of $11 billion, about five per cent of the country’s GDP. Add to this the multiplier effect and there is a greater community getting a taste of the riches that BPO is bringing to the country. Now 17,000 and growing of those people service Australia. So important is the BPO-ICT sector to the Philippines that it is now the second biggest contributor to the countries GDP. Incidentally the Philippines is the second-fastest-growing economy in Asia behind China.

The Philippines (population 95m) is unlikely ever to better India (1.2 billion) across the entire range of outsourcing offerings, which also include all kinds of information-technology services. However, never say “never”: the Philippines built its sector on front-office voice work and they are starting to understand that the future is visual.

One of the talks that I gave was at the PSIA (Philippines Software Industry Association) and they are totally wired in to the future of the BPO sector. As the sector shifts gears they are delighted that they are about to have their day in the sun. The PSIA is getting behind a brilliant new concept called Project KLIK – basically a reality TV/ video concept that showcases Filipino culture; it’s going to be very big and a lot of major international brands have lent their weight to it. If you are a Filipino anywhere where in the world and you are reading this and you want to know more then drop a line to executivedirector@psia.org.ph

This is exactly where the BPO industry is headed and the Philippines is going to lead the way with this very clever and innovative way to showcase their visual talents. In fact a little known fact is that a lot of the computer animation work that comes out of Hollywood is actually done in the Philippines.

I spoke at an ICT/BPO event in Cebu (Philippines’ second city) which was attended by over 400 people, so they are starting to come along nicely as the next major BPO destination with Clark/Subic (two hours north of Manila). They might be small in comparison to Manila but they lack none of the enthusiasm and are pulling the business community along with them. So for companies looking for alternatives to Manila you might like to consider Cebu and Clark/Subic.

The main reason for the success of the Philippine call centres is that workers speak English with a relatively neutral (US) accent and are familiar with American idioms – which is exactly what their American customers want. Of these, many have taken to complaining bitterly about Indian accents (which no amount of “voice neutralisation” coaching seems to have overcome). Tough gig trying to tame that heavy Indian accent. However the challenge for the Philippines BPO industry is that it is overly committed to the USA and then over-represented in voice projects: as I like to call it, flying around on one wing. Having empty facilities during the day that are crying out to be utilised is a big issue for the operators in the Philippines.

It became apparent to me during my visit that the missing link to be successful in handling voice-related work – for Australia at least – is ‘Culture Training’ which goes beyond simple voice and accent assimilation. FooBoo is in the process of developing a program that addresses this gap. If you want to know more or have some ideas about what should be involved in such a program, then drop me a line.

What helps is that the Philippines has a very large pool of university-educated workers who are itching to get involved; the enthusiasm is palatable. The government has really got behind the BPO-ICT sector by offering an incentive for companies to train the near hires (people who would have been hired if their English skills were just a bit better).

The other interesting thing that I noticed was the reverse brain drain. There are lots of Filipinos repatriating home and really adding to the intellectual horsepower of the community – after all, who doesn’t want to live close to their home and families.

The big question is whether the Philippine BPO industry, having conquered the contact-centre market, can now move up the value chain. To keep growing rapidly – and profitably – it needs to capture some of the more sophisticated higher-value back-office jobs. Somehow I have a feeling that like good wine they will just get better with age.

(PS: Here’s a link to a video I posted after my trip.)

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