The Philippines has been considered one of the leaders of outsourcing thanks to the young population and cheap labor. However, in a recent report made by the advisory firm Tholons the position of the Philippines BPO industry as an Outsourcing empire is now under threat with China ranking ahead of the country.
China is funding colleges to offer courses for outsourcing at the same time they are also building new technology parks, for the country is aiming to have $100 billion of outsourcing revenue by 2020.
“The other countries know how big this IT business process outsourcing pie is globally and they want to increase their share. This is not a static world.” Rey Untal, head of the Philippines Association of Outsourcing Companies, said in an interview in Manila last July 28.
“We need to put our act together,’ Mr. Untal added. “It really is a significant wake-up call,” he further said.
Even though Mr. Untal is eager not to let China win he is looking at the bright side of things he added, “It’s good in a way. Sometimes you need to be jolted. Many of the countries that compete with us directly are enhancing all the parameters that make them competitive — talent, infrastructure, incentives.”
Philippines BPO
While China is targeting $100 Billion of outsourcing revenue by 2020, the IT Business Process Association of the Philippines is only aiming for $39 Billion of revenue by 2020.
The Philippines BPO industry is bracing itself from both the competition and the government as well since they plan to reduce some tax incentives. On top of that, there is a rising security risk in the south that hinders the expansion in the provinces.
Michael Enriquez, chief investment officer at Sun Life of Canada Philippines Inc. in Manila said, “Business process outsourcing is very important for dollar supply, especially now that the country might slip into a current-account deficit”.
“The challenges we have are already significant,” Mr. Untal said. “We don’t need additional challenges.”
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