AMID US RECESSION
RP outsourcers: ‘Cautious optimism’
By Alexander Villafania
INQUIRER.net
First Posted 16:09:00 12/02/2008
Filed Under: business process outsourcing (BPO), Technology (general)
MANDALUYONG CITY, Philippines – Philippine-based outsourcing giants are now feeling effects of the US recession with some companies seeing a slowdown in demand for services, particularly on medical transcription and animation, industry executives said.
But some are reporting a surge in demand in contact center services, back office operations, software development and gaming.
Nevertheless, the local outsourcing firms are approaching 2009 with "cautious optimism," according to Philippine Software Industry Association (PSIA) President Beng Coronel.
Animation Council of the Philippines (ACPI) President Grace Dimaranan said some of their projects, which are mostly animation series, were postponed or on hold amid the US recession.
Similarly, Medical Transcription Industry Association of the Philippines (MTIAPI) President Myla Reyes said some of their services, mostly serving the US market, have slowed down.
The Philippine outsourcing industry is composed of contact center operators, business process outsourcing, animation, game development and transcription.
The Philippine outsourcing industry is expecting a 35 percent overall growth that is worth $12 billion to $13 billion by 2010.
But given the US recession, Business Process Association of the Philippines (BPAP) CEO Oscar Sañez said they might adjust these targets but assured that growth would remain in the double digits.
"We are not distracted by the US recession. Indeed there will be some effects but the recession situation is also an opportunity. With companies trying to streamline their operations outsourcing is a viable and cost effective solution," Sañez said.
There are, however, concerns on US President-elect Barack Obama's pronouncement to provide tax cuts for companies who will keep operations in the US.
Still, Philippine outsourcers are not threatened by Obama's statements, saying there are no details yet as to how these tax cuts will be implemented.
Philippine contact centers, who are servicing mostly US clients, are still optimistic.
Contact Center Association of the Philippines (CCAP) Benedict Hernandez said tax cuts will not deter US companies from outsourcing if the need arises. Some companies would have to look into the viability of keeping operations in the US or having it outsourced to other countries.
"We're at the forefront of providing the best solutions and we're not afraid that US policies would affect services here," Hernandez said.
Another concern of Philippine outsourcers is human resource or the lack of skilled workers ready for hiring. The rate of hiring is still low due to the specific requirements of the outsourcing industries.
The software industry reported that it is in need for 75,000 workers by 2010 but has only 21,000 so far. The transcription industry is in need of 32,000 but it only has 10,000 people hired. Animation, on the other end, is in need of 25,000 people but has 10,000 hired.
The contact center business, the biggest outsourcing industry, has 220,000 employees but is still in need of 350,000 people. The relatively new industry, game development, has about 300 to 500 people but also hopes to grow to 1,000 employees.
MTIAPI’s Reyes said English speaking skills remain a problem among applicants in the outsourcing business. Thus she said that fundamental education should be further developed if human resource demand is to be met.
The PSIA, CCAP and the MTIAPI are now working with the Technical Education and Skills Development Administration (TESDA) and the Commission on Higher Education (CHED) to integrate specific curriculums in colleges and universities.
Meanwhile, the Game Development Association of the Philippines (GDAP) and ACPI has been conducting school tours to promote creative and artistic development among students.
Sañez said that while the US is still the main target of the local outsourcing industry, the potential of providing services in Europe and some Asian countries is enticing some companies to build new clienteles outside the US.
The PSIA is already looking at Japan. GDAP has clients from Australia, Germany and France. MTIAPI is expanding to Canada and New Zealand.
Meanwhile, ACPI has clients in Italy France, the United Kingdom and New Zealand.
Sañez said that the outsourcing industry has to expand its product portfolio and its clientele beyond the US to partly augment the possible effects of the US recession.
"There will be challenges and requirements could be slightly different. This is an industry that is working very hard to achieve its goals," Sañez said.
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