According to Cebu Investment and Promotions Center (CIPC) Managing Director, Joel Mari Yu, 2012 was a good year for BPOs, describing the past year as “much livelier than 2011” mainly due to the fact that most of the new players focused on knowledge process outsourcing, the next step up the outsourcing value chain. Yu expects 2013 to be “as good or even better” for BPOs, pointing out the country’s macro-economic fundamentals that restored investors’ confidence to do business in the Philippines.
Related Article: 2012 Good Year for BPOs
In 2012, The Global Competitiveness Report 2012-2013 released by the World Economic Forum (WEF) ranked the Philippines 65th in global competitiveness, jumping 10 places from its previous ranking. The country performed strongly in the macro-economic environment category which represents economic stability. Furthermore, the Philippines placed 87th among 141 countries in Forbes’ Best Countries for Business list, beating both China and India. Out of the 11 factors considered in the report, the country performed strongest in terms of market performance, jumping 11 notches to 4th place. The country’s growing business process outsourcing industry was identified as one of the major contributors to market performance by both reports.
Related Article: Outsourcing Sector Empowers Philippines’ Global Competitiveness
However, 2012 was also not without its challenges. The BPO industry was threatened by a U.S. anti-outsourcing bill, heavily supported by U.S. President Barack Obama, seeking to bring outsourced jobs back to the U.S. Even though the bill was rejected by the U.S. Senate on July 2012, the re-election of President Barack Obama last November has reawakened fears of what this could mean to Philippines’ outsourcing industry.
Related Article: U.S. Anti-Outsourcing Bill Rejected by Senate
The strengthening peso also proved to be a disadvantage for the BPO industry. The Philippine peso ended at P41.05 to $1 on the last trading in 2012, stronger than P43.92 to $1 in early 2012. According to Business Processing Association of the Philippines (BPAP) president and CEO, Benedict Hernandez, “The cost differential has substantially widened and that is much more difficult to manage.”
However, the BPO industry remains confident of hitting the $13 billion revenue target for 2012 despite rise of the Philippine peso. “As for our forecasts, they still hold true for 2012,” said Hernandez. For 2013, BPAP targets $16 billion in revenues and 926,000 jobs as part of its roadmap target of $25 billion in revenues and 1.3 million jobs by 2016.
Related Article: BPO Sector Targets $13-B Revenue This Year
International Association of Outsourcing Professionals (IAOP) recently released their annual “Outsourcing Trends to Watch” for the year 2013. IAOP predicts increased awareness and more caution in forging outsourcing deals and partnerships.
Debi Hamill, Chief Executive Officer of IAOP, expressed optimism in the continued growth of the outsourcing industry, “While we have seen the global economy and U.S. presidential elections impact global sourcing decisions in 2012, we are optimistic about the continued growth in the industry in the coming year and see strong opportunities in different regions of the world.”
Government regulations will continue to be enforced and companies will need to adapt and find better, more efficient ways to handle compliance, legal and financial risk.
Governance will be more important than ever to predict against risks. Expect to see many more different sourcing arrangements than in the past.
Real Deal Partnerships
Buyers and sellers will move beyond talking about partnering and actually achieve it.
Social Responsibility & Impacts
Corporate social responsibility — including fair wages and labour practices, environmental impact, local community support and sustainability — will move to the forefront of engagements between providers and customers.
Professional Certification and Talent
Having employees with the right credentials, expertise and talents will continue to be important in the coming year.
Security of data as well as availability of systems and networks will remain a major issue for customers and providers.
Trends in technology, including managing data, social media and cloud computing, will drive outsourcing growth in various segments.
Driven by rising costs and service interruptions, providers with large data and telecommunications centres may look to other energy sources, such as solar or wind.
Analytics will be the key revenue driver for rapidly commoditizing BPO businesses.
Outsourcing in U.S. state and local government will continue to accelerate given the continued sluggish economy and dwindling tax base, increasing demand for rural sourcing.
Related Article: IAOP Releases Annual Outsourcing Trends to Watch in 2013