Power costs, talent supply are top challenges of BPOs

High power rates, a limited talent pool and the rising peso value are among the top challenges seen to place the country’s contact center industry growth at risk if left unattended.

In his State of the Industry report last Wednesday, Benedict Hernandez, Contact Center Association of the Philippines president, said these were the top concerns cited in a survey of their 80 member companies.

He said the concern for cost of operations was now as urgent as the race for talent.

Cost of electricity topped the list and was raised by 70 percent of the respondents, followed by English skills at 63 percent, and talent supply at 49 percent.

“This is partly because of the strengthening of the peso nine to ten months ago. The cost of electricity is also one as well as this issue with the VAT (value-added tax) in PEZA (economic zones) areas,” he said at the opening of the three-day conference on Wednesday.

In yesterday’s CEO Forum held at the Radisson Blu Hotel, Hernandez said while the contact center industry continues to experience phenomenal growth, there are challenges to be met.

Aside from power costs and a competent labor force, Hernandez said the industry needs support from small and medium players, and disaster mitigation and preparedness for the effects of Climate Change.

Economist Bernardo Villegas, who gave a report on the country’s economic outlook the other day, said high power costs would soon be addressed by increased generation capacity.

“The large conglomerates are building power plants and investing in power generation. This will stabilize power prices . I’m optimisting that in three to five years, there will be enough generating capacity to bring down costs,” Villegas said.

Hernandez said concerns over a rising peso have subsided for now with its value placed at P44 per dollar.

More importantly, Hernandez said that CCAP members feel the government should create more policies to support growth.

“Also, how do we mitigate climate change phenomena (as seen in frequent floods) to ensure we continue our operations and deliver what’s expected of us by our clients abroad? We should also include discussions on this,” he said.

Based on CCAP projections, the contact center industry will grow by 18 percent this year with an income of $10.4 billion and employ 586,000 people in the country.

“By 2016, we expect 915,000 people working in the industry generating an income of $16.3 billion,” he said.

Hernandez said the top three outsourcing services include customer service, sales and technical support. The United States reemains the country’s biggest market followed by New Zealand and Australia.

The Philippines is a global leader in contact services but Hernandez said “we shouldn’t rest on our laurels.”

“Clearly our voice services is a differentiated service but how do we protect this especially that most of our neighbors are also trying their best to improve their services?” he said.

He said the private sector has to maximize support offered by the government, such as the scholarship program of Tesda to train “near hires” so they can meet recruitment standards of BPOs.