(Published under "The View from Taft" column, BusinessWorld, July 12, 2007)
The global business process outsourcing sector is likely to see only a modest growth of 2 percent in 2007, after a continuous average growth of 14 percent annually during the last five years, according to Technology Partners International, a sourcing advisory firm. TPI said the first quarter of 2007 saw the lowest number of BPO contracts signed in the global context since the first quarter of 2003. The contract value was also the lowest since the third quarter of 2002.
Despite this gloomy backdrop in the BPO global landscape, the global BPO market is projected to reach 173 billion dollars by 2007 – a huge market considering that the Philippines only garnered $3.45 billion dollars in 2006.
According to estimates of the Business Processing Association of the Philippines, the BPO sector’s revenues are expected to grow almost threefold to $12.1 billion by 2010 from the end-2006 level of $3.45 billion. Leading this growth is the call center subsector revenues which will reach $5.29 billion in 2010, a significant 97-percent growth over three years.
How can such growth in the local BPO sector be achieved despite the slowdown in the global market? The answer lies in the transfer of BPO business from maturing markets to emerging ones like the Philippines.
According to research firm Evalueserve COO Ashish Gupta , “as BPO has got commoditized [in India], the very low end work will soon shift to destinations like Bangladesh and the Philippines”.
India’s low-end BPO such as call centers and transcription services are already shifting some of its operations to the Philippines, with the recent setting up or ramping up of operations of companies such as Infosys, HTMT, IBM Daksh, and Genpact.
Despite these, it’s still arguable that the Philippine BPO sector will soon slow down, become commoditized, and reach maturity just like what’s happening now in the global market and in India.
So how can the country sustain the growth in the sector in five to ten years? Key to sustaining the BPO revenue growth is to understand how to renew our country’s sources competitive advantage.
Our country has clinched a small piece of the global BPO pie, through a number of competitive advantages such as relatively lower wages, and good supply English-speaking resource pool in with business and finance backgrounds. However, these advantages are eroding fast as new emerging low-cost countries are stepping up to capitalize on the BPO opportunities, such as Bangladesh, Pakistan, and Latin American countries.
To sustain a major revenue and employment source for our country, it’s urgent now for our country to invest in and develop new sources of advantages to sustain a major revenue and employment source for our country. But what do we develop? What do we invest in?
TPI predicts that the softening of growth in BPO globally will be offset by the potential of knowledge process outsourcing or KPO. KPO refers to the outsourcing of high-value complex tasks and processes to specialized service providers. As compared to traditional BPO, KPO delivers ‘knowledge’ or content expertise that demand advanced analytical and/or technical skills and some decision-making or decision-support processes; rather than process expertise that simply involves executing standardized processes. Some examples of KPO are market research services, data search, integration and analysis, research and development services.
Our country has been engaged in KPO areas such as animation, engineering design, software development, and digital content, but they comprise only 12 percent of the total BPO revenue. We need to develop these subsectors and increase their share in the overall BPO revenue. Government and industry can help achieve these by developing a good supply of resource pool of animators, developers, and engineering, and helping BPO and start up firms to offer these services to client abroad.
Another approach with bigger impact to sustainability is developing and transforming the current BPO offering i.e. call center, back office and transcription services to KPO services. For example, call centers that we know now i.e. inbound and outbound calls, may evolve to higher-value KPO activities such as those involving complex technical support and data analysis for product development and marketing. This would involve upgrading the skills of call center agents with its attendant technologies, and upselling and marketing the service to existing and potential clients.
According to estimates by research firm, Evalueserve, revenues from the KPO market will grow globally from US$1.29 billion in FY 2003, to US$17 billion by FY 2010. This implies compounded annual growth rate of 46 percent, for the global KPO market. Given our talented human resources backed by government and industry support, we should be able to capture some of this market.
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Reynaldo C. Lugtu, Jr. teaches management and marketing courses in the MBA Program of De La Salle Professional Schools. He may be e-mailed at rlugtu2002@yahoo or visit his blog at http://rlugtu.blogspot.com/.
Despite this gloomy backdrop in the BPO global landscape, the global BPO market is projected to reach 173 billion dollars by 2007 – a huge market considering that the Philippines only garnered $3.45 billion dollars in 2006.
According to estimates of the Business Processing Association of the Philippines, the BPO sector’s revenues are expected to grow almost threefold to $12.1 billion by 2010 from the end-2006 level of $3.45 billion. Leading this growth is the call center subsector revenues which will reach $5.29 billion in 2010, a significant 97-percent growth over three years.
How can such growth in the local BPO sector be achieved despite the slowdown in the global market? The answer lies in the transfer of BPO business from maturing markets to emerging ones like the Philippines.
According to research firm Evalueserve COO Ashish Gupta , “as BPO has got commoditized [in India], the very low end work will soon shift to destinations like Bangladesh and the Philippines”.
India’s low-end BPO such as call centers and transcription services are already shifting some of its operations to the Philippines, with the recent setting up or ramping up of operations of companies such as Infosys, HTMT, IBM Daksh, and Genpact.
Despite these, it’s still arguable that the Philippine BPO sector will soon slow down, become commoditized, and reach maturity just like what’s happening now in the global market and in India.
So how can the country sustain the growth in the sector in five to ten years? Key to sustaining the BPO revenue growth is to understand how to renew our country’s sources competitive advantage.
Our country has clinched a small piece of the global BPO pie, through a number of competitive advantages such as relatively lower wages, and good supply English-speaking resource pool in with business and finance backgrounds. However, these advantages are eroding fast as new emerging low-cost countries are stepping up to capitalize on the BPO opportunities, such as Bangladesh, Pakistan, and Latin American countries.
To sustain a major revenue and employment source for our country, it’s urgent now for our country to invest in and develop new sources of advantages to sustain a major revenue and employment source for our country. But what do we develop? What do we invest in?
TPI predicts that the softening of growth in BPO globally will be offset by the potential of knowledge process outsourcing or KPO. KPO refers to the outsourcing of high-value complex tasks and processes to specialized service providers. As compared to traditional BPO, KPO delivers ‘knowledge’ or content expertise that demand advanced analytical and/or technical skills and some decision-making or decision-support processes; rather than process expertise that simply involves executing standardized processes. Some examples of KPO are market research services, data search, integration and analysis, research and development services.
Our country has been engaged in KPO areas such as animation, engineering design, software development, and digital content, but they comprise only 12 percent of the total BPO revenue. We need to develop these subsectors and increase their share in the overall BPO revenue. Government and industry can help achieve these by developing a good supply of resource pool of animators, developers, and engineering, and helping BPO and start up firms to offer these services to client abroad.
Another approach with bigger impact to sustainability is developing and transforming the current BPO offering i.e. call center, back office and transcription services to KPO services. For example, call centers that we know now i.e. inbound and outbound calls, may evolve to higher-value KPO activities such as those involving complex technical support and data analysis for product development and marketing. This would involve upgrading the skills of call center agents with its attendant technologies, and upselling and marketing the service to existing and potential clients.
According to estimates by research firm, Evalueserve, revenues from the KPO market will grow globally from US$1.29 billion in FY 2003, to US$17 billion by FY 2010. This implies compounded annual growth rate of 46 percent, for the global KPO market. Given our talented human resources backed by government and industry support, we should be able to capture some of this market.
------------------------------
Reynaldo C. Lugtu, Jr. teaches management and marketing courses in the MBA Program of De La Salle Professional Schools. He may be e-mailed at rlugtu2002@yahoo or visit his blog at http://rlugtu.blogspot.com/.
Comments
Regards,
kpo services
Julienne
Inbound Call Centers
India has won its spurs as the world’s outsourcing destination of choice. Currently the country has a commanding share of the global outsourcing market.
India is undoubtedly the most favored IT/BPO destination of the world. This raises the question why most of the big MNCs are interested in outsourcing their operations to BPOs in India. The answer is very simple- India is home to large and skilled human resources. India has inherent strengths, which have made it a major success as an outsourcing destination. India produces the largest number of graduates in the world. The name of India has become synonymous with that of BPOs and IT industry hence the name BPO India.
Besides being technically sound, the work force is proficient in English and work at lower wages in comparison to other developed countries of the world. India also has a distinct advantage of being in a different time zone that gives it flexibility in working hours. All these factors make the Indian BPOs more efficient and cost effective. In order to meet the growing international demand for lucrative, customer-interaction centers, many organizations worldwide are looking to BPO India.
A subset of outsourcing, Business Process Outsourcing (BPO) involves contracting the operations and responsibilities through a third party service provider. From the last couple of years, the BPO industry has evolved as the most substantial sector in the Indian market. India has emerged as the most favored location for all Bpo services across the globe. This has accelerated the Indian economy to the heights, progressively boosting the statistics depicting the growth in the years to come and it has been however forecasted that by 2020, more than 80% of the world of business process outsourcing services will be served by the Indian companies. Marked as the best place to attain superior quality services globally, the BPO industry is strengthening its foundation in India.
http://phykon.com/
India has won its spurs as the world’s outsourcing destination of choice. Currently the country has a commanding share of the global outsourcing market.
India is undoubtedly the most favored IT/BPO destination of the world. This raises the question why most of the big MNCs are interested in outsourcing their operations to BPOs in India. The answer is very simple- India is home to large and skilled human resources. India has inherent strengths, which have made it a major success as an outsourcing destination. India produces the largest number of graduates in the world. The name of India has become synonymous with that of BPOs and IT industry hence the name BPO India.
Besides being technically sound, the work force is proficient in English and work at lower wages in comparison to other developed countries of the world. India also has a distinct advantage of being in a different time zone that gives it flexibility in working hours. All these factors make the Indian BPOs more efficient and cost effective. In order to meet the growing international demand for lucrative, customer-interaction centers, many organizations worldwide are looking to BPO India.
A subset of outsourcing, Business Process Outsourcing (BPO) involves contracting the operations and responsibilities through a third party service provider. From the last couple of years, the BPO industry has evolved as the most substantial sector in the Indian market. India has emerged as the most favored location for all Bpo services across the globe. This has accelerated the Indian economy to the heights, progressively boosting the statistics depicting the growth in the years to come and it has been however forecasted that by 2020, more than 80% of the world of business process outsourcing services will be served by the Indian companies. Marked as the best place to attain superior quality services globally, the BPO industry is strengthening its foundation in India.
http://phykon.com/