Philippines pushes for aggressive marketing promotions of ICT and BPO in the US

Philippine business processing companies’ foray into the global market will be given a boost through a trade and investment mission organized by the Department of Trade and Industry through the Center for International Trade Expositions and Missions (CITEM) and the Board of Investments (BOI).

“The mission aims to sustain the government’s aggressive marketing promotions of the Philippine IT and BPO capability on customer relations management, procurement, financial, H&R, data transcription, design and engineering, as well as animation in the United States,” explained Trade Assistant Secretary Fe Agoncillo-Reyes, executive director of CITEM.

The US mission (25 September-4 October) is also in coordination with the Philippine Trade and Investment Center and will focus on Chicago, New York, Miami, and Denver as primary target markets for the Philippines. The Philippine delegation will consist 10 companies providing BPO and IT sourcing services.

Activities during the mission include a business forum on the Philippine IT advantage, pre-arranged business meetings, and a high-level networking reception.

The United States remains the Philippines’ primary source market for outsourced business processes and contact center services. Driven significantly by the prosperity to send business processing work oversease, cut costs, and focus on core competencies to remain globally competitive, the US accounts for about 60 percent of the total BPO spending in the global market.

According to statistics, the global BPO market is projected to reach 173 billion dollars by 2007. In 2004, global BPO market reached 131 billion dollars. Presently, North America remains the dominant market for ITES-BPO services, accounting for nearly 60 percent of the total market.

“The United States presents new commercial opportunities to our BPO firms,” said Agoncillo-Reyes. “Its total core insurance BPO is projected to grow to 3 billion dollars in 2006. Also, US will remain, by far, the largest finance and accounting BPO market, with transaction management functions driving its growth.”

Meanwhile, the United States’ human resources work (e.g. HR consulting services, HR volume processing services) accounted for 24 billion dollars in 2004 and is seen to rise to 42 billion dollars by 2008.

“We would like to help our small enterprises in the BPO space who want to collaborate with international partners through this trade and investment mission. These local enterprises are going to be crucial players in the knowledge-based economy and the US mission can become a strong bridge for partnerships and investments,” added Agoncillo-Reyes. “Also, we hope to invite delegations from the United States to attend e-Services Philippines, the government’s flagship show for our players in the IT and ITES industries.”

BPO in the Philippines is one of its fastest growing industries. The BPO boom was led by the demand for offshore call centers. In fact, there were about 112, 000 workers employed in call centers in 2005, and the industry generated about 1.12 billion revenues during the same period.

In addition, the BPO industry in the Philippines has the largest number of accredited accountants in Asia. Filipino accountants are known for their flexibility in working with multiple standards in accounting.

According to neoIT’s Annual Mapping Offshore Markets Update in 2005, the Philippines is ranked 3rd in the world’s top BPO destinations. It is considered the most serious rival to India when it comes to BPO.

As more US firms focus on core competencies, Agoncillo-Reyes said, opportunities abound for niche back office services. For the Philippines, its cultural and geographic lead is already a key advantage. It is only a matter of developing scalable skills and resources required by target niches through domain expertise and continuous training.

“If we are to leverage on our unique attachment to the US model, there are vast opportunities present for customer contact center, business back office, human resources work, content management and development, arts and engineering, procurement, software and medical transcription,” said Agoncillo-Reyes. “The challenge is to position the Philippines as a preferred sourcing destination of choice for US companies”

Also, it is projected that the US labor shortage will reach its peak in 2010 to 2015, when the retirement of baby boomers will result in as many as 15 million jobs unfilled. In a fight to remain competitive, companies are looking beyond traditional labor markets. Thus, the need to hire a third-party provider like the Philippines to manage their non-core processes remain evident.

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