BPO - A Solution to Combat Financial Crisis

The Philippines has long been established as an ideal offshoring destination in a relatively short period of time. At this time and age when a lot of companies are experiencing the effects of the global financial crisis, outsourcing emerges as the answer to cut costs and enable companies to concentrate on their core competencies. As a key BPO destination, the Philippines will be able to use the global financial crisis to its advantage and combat its effects as companies in the US look for ways to keep the business going. Outsourcing business operations will be a great cost-cutting measure for companies under pressure.

The global financial crisis pushes Philippine outsourcing companies to introduce new services and expand operations in order to meet the increasing demand. The industry strives to develop much better infrastructure, maintain the low costs of labor, and strengthen the labor force to provide high quality services and outputs.

Another thing to take into account is marketing the BPO industry as the perfect outsourcing location, offering much lower costs in labor and operations than other countries such as Singapore and Malaysia which are emerging as offshore destinations in the region.

Aside from the call center industry, the non-voice BPO sector is also expected to be strong in the coming years. This involves Finance and Accounting Outsourcing (FAO), back office processes, legal support, animation, and game development. The IT / software sector will see significant growth. There will also be employment opportunities in the virtual market (virtual assistants).

Most clients come from the US, and is expected to remain as the biggest customer by 2011, followed by UK, rest of Europe, and other countries.

The low cost of labor is still a major factor that attracts companies to outsource. However, BPO buyers are already looking beyond the cost-savings approach. The focus shifts from reducing costs to availability of new products and services, establishing stronger and long-term business relations with customers, and better service delivery.

The Philippines is undoubtedly well-positioned to be the perfect outsourcing hub not only for voice-based services but also non-voice work, but there are existing challenges that BPO players face. Here are some situations that pose a challenge to the industry and the steps being taken by the government to overcome them:

• Diminishing number of qualified workers - Lack of enough skilled workers is still a challenge for the BPO industry. Since outsourcing is the timely solution for companies which are affected by the financial crisis, the country must be ready for the ever increasing demand. It produces a lot of fresh graduates annually, but it is difficult to find workers who have the training and educational background that are necessary for more technical or complex jobs.

  To weather this challenge, the government is offering training programs and short IT courses which will equip students and graduates with the right knowledge and technical know-how that will meet the requirements of the clients. There are also associations such as the Business Processing Association of the Philippines (BPAP) which give assistance to different outsourcing companies and promote the industry in other countries aside from the US.

  Another solution is to look beyond Metro Manila and set up operations in tier-2 cities. Pampanga, Baguio, Cebu, Bacolod, Leyte, and Davao are emerging as excellent outsourcing areas. These will be able to provide additional skilled workers and will serve as new avenues for expansion for existing providers.

• Migration - Brain drain or human capital flight has a negative effect on the BPO industry, and the nation's economy in general. Many highly skilled Filipinos are attracted to career opportunities overseas and are convinced that working in other countries will make their lives better.

  To minimize the number of workers leaving the Philippines for greener pastures and lessen the impact of migration to the economy, the government is providing numerous incentive packages and programs. The fast growing BPO industry will also be beneficial to the economy since the increasing demand will open a lot of employment opportunities for Filipino workers.

The global financial crisis is now taking its toll on numerous companies, and business owners are finding ways to survive. Outsourcing is a timely solution in tough times like this. With a large number of qualified graduates, improved ICT facilities and infrastructure, as well as continuous support from the government, the Philippines can take advantage of this financial crisis by promoting itself as an ideal offshoring location for both voice-based and non-voice BPO work and providing high quality services and outputs at low costs.

The global financial crisis should not hinder your company from staying afloat. If you are thinking about outsourcing your business operations, consider the Philippines, the ideal offshoring location. We at O&OC will gladly help you in making the right decisions in order to be successful in outsourcing. Contact Us now!