Desserie B.

Aquino Ba4A
Rosalle P. Mascarias

Date Reported:Oct.13,2015

THE ECONOMIC FOOTPRINT OF BPO INDUSTRY

About the Industry
The Department of Trade and Industry (DTI) defines BPO (business process outsourcing)
as the delegation of service-type business processed to a third-party service provider.
The industry is generally divided into the following sectors: Contact centers, back office
services, data transcription, animation, software development, engineering development
and game development.
Contact center- (also referred to as a customer interaction center or e-contact center) is a
central point in an enterprise from which all customer contacts are managed. The contact
center typically includes one or more online call centers but may include other types of
customer contact as well, including e-mail newsletters, postal mail catalogs, Web site
inquiries and chats, and the collection of information from customers during in-store
purchasing. A contact center is generally part of an enterprise's overall customer
relationship management (CRM).
back office services- Systems that do not deal directly with the customer, such as
inventory management and accounts payable.
data transcription-the act or an instance of transcribing a data or the state of being
transcribed.
Animation-a way of making a movie by using a series of drawings, computer graphics,
or photographs of objects (such as puppets or models) that are slightly different from one
another and that when viewed quickly one after another create the appearance of
movement
software development-is the computer programming, documenting, testing, and bug
fixing involved in creating and maintaining applications and frameworks involved in a
software release life cycle and resulting in a software product. The term refers to a
process of writing and maintaining the source code, but in a broader sense of the term it
includes all that is involved between the conception of the desired software through to the
final manifestation of the software, ideally in a planned and structured process. Therefore,
software development may include research, new development, prototyping,
modification, reuse, re-engineering, maintenance, or any other activities that result in
software products.
engineering development-The primary responsibility of development engineers is to
create a product design that fulfills a company or client's strategic goals while integrating
the needs of marketing, sales and manufacturing departments. They oversee research and
design teams, lead testing procedures and draft specifications for manufacturing. They
direct the creation of models or samples and fine-tune designs until they are ready for
production.
game development-is the process of creating a game. Development is undertaken by a
game developer, which may range from one person to a large business. Traditional
commercial PC and console games is normally funded by a publisher and take several
years to develop.

About the Industry

The Philippines gained considerable traction as a BPO location based on the availability
of professionals with the required language skills, cultural affinity with the US (the main
BPO market), and strong customer service orientation of its workforce.
This government openly acknowledged the industry as key driving force for growth and
employment in its Medium-Term Philippine Development (2004-2010).
Companies outsource because they would rather focus on their core business functions
while outsourcing or sending non-core and routine tasks for others to accomplish. Its
growth can be attributed to two main drivers.
Companies outsource
Its
growth
can
be
attributed
to
two
main
drivers:
From the demand perspective, the globalization intensified BPO activities with the
lowering of barriers to trade. This allowed companies to explore alternative locations to
lower operating costs without sacrificing the quality of service.
From the supply standpoint, rapid advancements in information and communication
technology (ICT) made deliver services via the Internet in a cost efficient and timely
manner. Thus, while outsourcing and offshoring have long been part of tactical strategies
of companies, it increased dramatically in the past decade with the depth and coverage of
services evolving into higher value
A history of the BPO industry in numbers
Its one of the most lucrative, fastest growing industries in the Philippines. Heres how far
it's come.Credit is due to handful individuals:
Karen Batungbacal for her early involvement and series of contact center firms; and
Secretary Mar Roxas, who, during his tenure as secretary of the Department of Trade and
Industry, saw the potential of the industry, reached out to key leaders to promote foreign
investment, and helped shape the landscape of BPO into what it is today.
In fact, one of the key contributions of DILG Secretary Mar Roxas made to the BPO
industry was lobbying in congress to revise Republic Act 7916, so that buildings or floors
in buildings could register as an ecozone.
That meant that the budding BPO industries were exempt from paying national and local
taxes, and only had to contribute 5% of their gross income as tax a major enabler
during that time.

A timeline of the BPO industrys milestones in numbers

1992 - Frank Holz, under the Accenture group, created the first contact center in the
Philippines
1995 - The Philippine Congress passed the Special Economic Zone Act, lowering area
requirements for development and offering tax incentives to attract more foreign
investors
1997 - Sykes Asia set up shop and becomes the first multinational BPO company in the
Philippines
1999 - Jim Franke and Derek Holley found eTelecare, more popularly known as the first
call center in the country
2000 - The BPO industry accounted for 0.075% of the countrys GDP
2001 - PeopleSupport, a US-Based outsourcing center, restructured their business, and
moved their operations to the Philippines, providing 8,400 jobs
2003 - The Convergys Corp. opened up two call centres in the Philippines. The
Philippines, along with India, was chosen by then president of the company, Jack Freker,
as part of the companys global expansion and revenue generation plan.
2005 - The Philippines gained 3% of the global BPO market, which accounted for 2.4%
of the countrys GDP
2006 - ePLDT Ventus was at the forefront of the local BPO landscape. This improved the
Philippine domestic economy by 5.4% .11,000 people were employed
across
North
America, Europe, and Asia
2010 - The Philippines was declared the worlds BPO capital! 525,000 employees in call
centres $8.9 Billion in revenue generated .Revenues are expected to soar with a five-year
compounded annual growth rate (CAGR) of 38%.The country continues to become an
attractive location for foreign investor.
2011 The BPO industry becomes one of the biggest and fastest growing job providers in
the private sector. $11B revenue generated and 638,000 Filipinos employed. Revenue
comprised 4.9% of countrys total GDP.
2012 - The BPO industry grows even further. BPO industry grew by 46% annually since
2006.Revenue comprised 5.4% of the countrys total GDP.
2013 -Revenue generated climbs up further to $15.5B and 900,000 Filipinos are
employed full time.

2016 - BPO industry is projected to generate 1.3M new jobs, with 17% annual growth
Local and Global Scenario
The global offshore services market is growing at a healthy albeit slower pace, and will
more than double by 2016. Companies now regard outsourcing far more as a means to
reduce costs for business operations.
Overall, the outlook for Asia/Pacifics BOP market remains positive with the Philippines
aiming for 10% of the total BPO market or about US$25 billion.
The year 2011 saw the industry attain about $11 billion revenues while full-time
employees (FTEs) reached about 640,000. The industry is expected to post roughly 20%
revenue growth for 2012.
Positive effects of promoting the industry
Heightened Public-Private Partnerships (PPP) or greater collaboration among
stakeholders, including government, industry and the academe, is expected to improve
growth and lead the industry to meet Road Map targets and contribute to 9% of GDP by
2016.
The contribution of the BPO sector to the Philippine economy is undeniable. The industry
has given Filipinos jobs with above industry compensation and career paths that will
make them stay in the country rather than seek employment abroad. As such, the value
proposition of the country is anchored on the availability of a skilled and scalable
workforce.
Although lower labor cost in the country vis-a-vis other location is a primary factor in
attracting BOP jobs, the sector, nonetheless offer a premium wage structure compared to
local firms and domestic-oriented industries.
The resulting higher disposable incomes led the Asian Development Bank (ADB) to
conclude that the wholesale and retail sector tops the list of industries where the BOP
industry has the strongest linkage.
Since the sector depends on human capital, the quality of the telecommunications
network, and the quality of institution, the government created the enabling environment
which reaped benefits for both service providers and country, fueling to the overall
economic development.
References:
offeringshttp://investphilippines.gov.ph/industries/manufacturing/it-and-bpo/
http://investphilippines.gov.ph/industries/manufacturing/it-and-bpo/
http://searchcrm.techtarget.com/definition/contact-center
http://www.pcmag.com/encyclopedia/term/38342/back-office
http://www.merriam-webster.com/dictionary/animation
http://www.rappler.com/brandrap/stories/98207-bpo-philippines-timeline

http://panaynewsphilippines.com/2014/09/15/roxas-started-bpo-industry/