Philippines targets Western Europe ITO/BPO markets

Philippine IT and business processing firms are eyeing Europe’s ITO/BPO market, according to the Center for International Trade Expositions and Missions (CITEM).

“The Philippines will adopt a country-by-country strategy that would fit the service requirements of each region,” said Trade Assistant Secretary and CITEM Executive Director Fe Agoncillo-Reyes. Activities will include business forum on the Philippine ICT advantage, pre-arranged business meetings, and high-level networking reception.

The global outsourcing market is projected to reach US$310 billion in 2008, 22% of which will come from Europe, according to PriceWaterhouseCoopers, one of the largest international professional services firms. The United Kingdom still stands out as Europe’s dominant market, but outsourcing has gained ground in Germany, the Netherlands, Spain, and France.

“The continuing pressure on time to market and cost bases are driving European companies to look at offshore outsourcing as a strategic alternative,” Agoncillo-Reyes said. The financial services sector is the largest consumer of BPO-ITES services in Europe, followed by utilities and telecommunications. Human resources, finance and accounting are also showing notable growth.

Western Europe’s spending on core BPO services will grow from US$20.9 billion from 2005 to US$39.8 billion on 2010, based on a research conducted by research group IDC. The largest was customer care (US$8 billion) and industry-specific BPO (US$7.6 billion). Procurement BPO is seen to be the fastest growing segment, from US$245 million in 2005 to US$716 million by 2010.

Another independent technology and market research company, Forrester Research, estimates that the UK will account for three-quarters of all European offshore outsourcing in five years’ time, with software development as the main service provided.

It was also predicted that large Dutch companies would outsource more projects, while SMEs would follow-suit.

According to Bernd Taselaar of Dutch brand organization ICT-office, on a macro-level, global outsourcing may indeed even improve their market position and give new economic impulses to the ICT sector. “In the Netherlands, we must focus especially on innovative applications and effective use of innovative opportunities,” Tasellar added.

“The EU trade mission is part of our ongoing promotion of the Philippine ICT capabilities to European IT/BPO market,” added Agoncillo-Reyes. The EU trade mission will be held on 13-24 September 2006.

In 2005, the DTI-organized trade mission yielded business leads with Logica CMG, a leading wireless telecom leader with headquarters in the UK that decided to set up an offshore development center and in-house call center in the country; Express Gifts for outsourced call center activities; KLM Royal Dutch Airlines for a shared-facility and contact center operations; Emirates Airlines for BPO and software development services; and HSBC with a prospect to continue its expansion for Philippine-based shared services, among others.

The business mission also aims to strengthen ties with the Philippines’ counterpart organizations such as the London Chamber of Commerce, National Outsourcing Association (NOA), International Association of Outsourcing Professionals (IAOP) in the UK; FENIT, The Agency for International Business and Cooperation (EVD), and CBI in Netherlands.

The Philippines consistently ranks among the top attractive offshore location by various research firms, such as the A.T. Kearney, Gartner, and META.

Philippines is now the outsourcing location of some Dutch companies like Getronics, ING Group, KLM Royal Dutch Airlines, and ABN-AMRO.

British companies like Standard Chartered Bank, Sykes, and Ambergis Solutions have established outsourcing operations in the Philippines.

For information on the Philippine trade mission to Europe, please contact CITEM, IT Services and Electronics Division at (02) 8325044 and 8312201 locals 212, 251, and 278, or email itservices@citem.com.ph.