The Business Process Outsourcing (BPO) Industry in the Philippines - An Introduction

September 2012 | Servcorp

In the Philippines, small businesses account for 99% of all business establishments. Small and medium enterprises or SMEs comprise the nearly 800,000 Philippine small businesses which are mainly in the wholesale and retail trade industries, manufacturing, food establishments, real estate, and social and personal services, which collectively employ about 55% of the country's labour force.

One of the fastest-growing industries in the Philippines is the business process outsourcing (BPO) industry which comprise enterprises providing call centre services, customer contact services, legal and medical transcriptions, finance and accounting services and any other work that can be outsourced by companies in the US, Europe and other parts of Asia. The BPO industry in the Philippines earned approximately US$5.7 billion in 2010, and according to World Bank statistics is projected to earn upwards of $30 billion by 2020.

There are more than 200 BPO companies at present in the Philippines; many are small businesses servicing a limited number of clients, but there are also some larger, established ones employing hundreds of people.

The BPO industry is supported and encouraged by the Philippine government which provides  incentives to draw foreign direct investment, with the awareness that increasing the scale and scope of BPO service exports will open up new areas of economic growth for the Philippines.

The country's large, well educated, mostly English-speaking workforce seems a natural fit for this high-skill but also highly labour-intensive industry, which is projected to contribute to as much as 11% of the country's gross domestic product (GDP) by 2020. By then, there will be about 6.8 million Filipinos directly or indirectly employed by the industry.

One of the challenges presently facing BPO companies is the high staff turnover rate, which ranges from 20% to 30% per year. The most common reason for this level of turnover is the high job-related stress levels caused by the heavy workloads imposed by employers, and the pressure to meet performance targets. If the BPO industry is to realise its full potential, companies must protect the health and well-being of their employees by rethinking work procedures, targets and processes. One way of reducing job-related stress, for example, is to allow staff more autonomy to set their own performance targets.

The Philippines' full potential in the BPO industry has yet to be realised, and to do this the country must first continue investing further in its own knowledge economy sector and technology-based infrastructure – education, IT infrastructure, telecommunications, broadband connectivity – to help its workforce become even more productive.  This will go a long way toward sustaining the growth of the industry.