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The Business Process Outsourcing (BPO) sector has been proven essential to the Philippines’ economic recovery. In the face of the Covid-19 pandemic, the sector was one of the most resilient industries.
When lockdowns were first implemented in 2020, President Rodrigo Duterte classified the BPO industry, along with food and health care providers, as “essential.” This allowed companies to continue their operations, albeit at a limited capacity and led to steady industry expansion.
The Philippine BPO industry recorded a revenue of $26.7 bn in 2020, growing 1.4% from the same period last year. The industry’s workforce grew by 1.8% between 2019 and 2020 to 1.32 million employees. While these numbers seem small, they are much better compared to the rest of the Philippine economy which recorded a −9.5% slump and its worst unemployment figures in 2020.
For 2021, data from research firm Everest Group showed that the Philippine IT and BPO industry is looking at growth in revenues between 8-13%. The workforce was estimated to grow by 7-8%.
By 2022, the revenue growth of the industry is projected to reach $29 billion.
The Philippines ranks 18th in the 2021 Tholons Services Globalization Index’s Top 50 Digital Nations. Meanwhile, the cities of Manila and Cebu placed 8th and 52nd, respectively, in the Top 100 Super Cities list.
BPO Industry’s continued success
The strong growth of the BPO-industry is also reflected in a higher demand for new office spaces.
According to real estate services firm Leechiu Property Consultants (LPC), the demand for office space will continue to increase despite the pandemic. In the first half of 2022, the expected live requirements will total 224,000 square meters.
LPC director for commercial leasing Mikko Barranda said the omicron variant has only impacted office expansion schedules but not the business confidence of the BPO companies and other firms.
The Philippine BPO industry’s growth amid the pandemic was also fueled by contracts awarded by international companies.
One of these companies is Zoom, which had a meteoric rise as the leading videoconferencing platform during the pandemic. The US company turned to KMC Solutions as its contractor for a “cost-effective solution in the middle of the pandemic.” According to Gian Reyes, vice president of KMC Solutions, the company has tripled its staff in the Philippines since its launch end of 2020.
Furthermore, India’s severe Covid-19 waves last year had prompted some clients to transfer some of their businesses to the Philippines, according to the then-IBPAP president and CEO Rey Untal.
BPO provider Concentrix is among those that redirected work from India to Manila due to the outbreaks. The California-based company currently has around 100,000 employees in the Philippines, making it the country’s largest private employer.
A pillar of the Philippine economy
The Philippine BPO industry is considered one of the two economic pillars of the country, the other being remittances from abroad. Most Filipinos are proficient in English and are digitally literate, making the workforce a good resource for highly-skilled agents. The fluency rate of the population is about 94%, with English as one of the most used languages.
The CEO of PITON-Global, one of the leading call centre in the Philippines, Ralf Ellspermann, mentioned in an interview that a key selling point for BPO providers in the country is agility. Companies have invested in technology and infrastructure over the past 20 years, enabling them to provide quick and flexible responses to changes in business needs.
He added that at this stage, the “Philippine BPO industry offers arguably the best value proposition for global companies looking for providers with a highly skilled workforce, agility, and world-class technologies and infrastructure.”
However, digitalisation also poses certain challenges for the sector.
According to a recent study by airisX, an international outsourcing company, the industry must focus on upskilling & evolution, as the future of the BPO sector will be shaped by robotic processing, chatbots, and automation.
According to the study, AI-powered chatbots posed a threat to the BPO sector even before the coronavirus pandemic. AirisX estimates that 40,000 to 50,000 low-skilled or process-oriented jobs would be replaced by technology in the future.
To prepare the workforce for a shift to automated services and increasingly technical and creative occupations, the IBPAP has launched a “Roadmap 2022”. The project aims to have 75% of the workforce in mid-to high-skilled occupations by this year, up from only 53% in 2016.
At the moment, around 1 million Filipinos are working in the BPO industry.
