IT-BPO industry in Philippines is fast growing Alternative to India

IT-BPO industry in Philippines is seen as the fuel that is boosting its economy, generating nearly $11 billion revenues in 2011. It is growing at 19% in 2012. There are more than 600000 people employed in more than 600 IT-BPO companies spread across the country.

Philippines is becoming the destination of choice for voice and is the second preferred destination, after India for BPO and other software services. Talent availability, high quality services, and cost-effectiveness are driving the outsourcing industry. Companies who outsourced to India, with rapidly increasing salaries in India and the retention problems at Indian BPO centres have started realizing the benefits of choosing to outsource the work to Philippines.

The Philippines government has been stable for more than a decade. Is an open economy which allows 100% foreign ownership in almost all sectors. The industry has become one of the main revenue generators of the country, due to which the government is fully supporting its endeavours. They have set up many Philippines special economic zones and made a Philippines Economic Zone Authority which grants fiscal and non-fiscal incentives of nearly 4 to 8 year income tax holiday to BPO players. Philippines is well-positioned to become one of the best offshore outsourcing destinations in the world. Capital Manila gets the highest concentration of BPO activities of nearly 80%.

Business Processing Association of the Philippines is the primary outsourcing industry body of Philippines. They have also implemented industry specific training programs to improve the skills of workers and train them suitable for BPO work.

Graduated employees with degrees from reputable college can be hired at about $300 per month. Every year there are more than 350000 graduates enriching the professional pool adding to the skilled workforce. Wages are less than one fifth of the U.S employees. Costs of Local communication, electricity and housing are half compared to other countries.

India has healthy relations with Philippines since 1949, both countries have signed the agreement to establish joint commission to increase trade and acknowledge more avenues of cooperation. Indian foreign direct investments in the Philippines count to $500,000.  Its investments in Philippines are mainly in the areas of textiles, IT, steel and Business Process Outsourcing. Several Indian companies like WIPRO, TCS, HTMT, L&T InfoTech, Adyta Birla Minacs and Enact have already set up their BPO operations in the Philippines

Total trade with India has reached   $ 865.12 million which is just short by $ 135 million of the bilateral target of US$ 1 billion of total trade between the two countries. With positive economic environment, Gross domestic product has increased 6.4% in the first quarter and manufacturing index was an impressive 7.1% year on year in April. S&P has recently raised its rating to BB+.

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Written by Gautam Malhotra (gautam.pgdm14c@greatlakes.edu.in)