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The Philippine outsourcing sector and the impact from the global financial crisis

November 19, 2009

The global financial crisis has spared few countries or business sectors from its impact but some countries and sectors have found themselves in a much better position to not only weather the storm but to better position themselves for the coming rebound. One such example is the Philippines and its outsourcing sector and two recent studies show just how the country’s outsourcing industry is not only surviving but is also prospering – at least for the time being.

In the first report from the World Bank (the Philippines Quarterly Update issued November 2009), it was noted that while the Philippine outsourcing sector’s growth rate dipped to 15% (year-on-year) during the first half of 2009, it is projected to grow by about 20% for the entire year – only a small decrease from the 26% growth rate for 2008. The World Bank noted that certain sectors that have experienced substantial disruptions (such as banking) have also been the quickest to react with a large number of banking groups planning to either significantly expand or to establish an outsourcing presence in the Philippines. Moreover, the World Bank also noted that many players in or clients of the global outsourcing industry are pursuing an India plus one strategy and the Philippines with its favorable cost structures, English language and technical skills, seems to have established itself as the preferred backup choice. However, the report also noted that the Philippines still needs to pursue structural reforms to address various business climate related issues and problems with the country’s education system.

The second report, a whitepaper entitled The Philippine Business Process Outsourcing (BPO) Sector and the Global Financial Crisis (a draft version of the whitepaper is available online) written by Ceferino S. Rodolfo, a professor at the University of Asia and the Pacific (UA&P) in the Philippines, noted that a “confluence of factors” that include the global slowdown and problems in India (the Mumbai terror attacks and the Satyam scandal) are providing the Philippine outsourcing sector with an opportunity to consolidate its position as a preferred location for BPO services. Rodolfo noted that:

  • Slower economic growth is expected to lower the inflationary pressure on critical cost items such as rent, salaries and telecom expenses.
  • The Philippine economy in general though has remained relatively stable compared with other economies. 
  • A fairly stable or predictable depreciation of the Philippine Peso as a result of the global financial crisis will have a positive impact on the bottom-line of Philippine based outsourcing operations.
  • Certain types of transactions such as outbound calls for credit collection are increasing.
  • Hiring freezes and retrenchments both at home and abroad are making BPO and call center jobs more attractive.

Rodolfo concludes that the crisis gives the country’s outsourcing sector the opportunity to change negative perceptions about BPO or Call Center related work (i.e. it monotonous and the quality of life for employees is poor) and to present an image to potential employees that the outsourcing industry provides a globally oriented career path.

Both reports show that the crisis is giving the Philippines (and for that matter, other countries) the opportunity to address any longstanding barriers to growth and grab a bigger share of the outsourcing pie.

Related posts:

  1. Impact of European crisis on the Indian BPO Industry
  2. Indian BPO companies increase hiring in global financial gloom
  3. Is geographic diversification a threat to the Philippines’ share of the global outsourcing market?
  4. Will Obama’s proposed withdrawal of tax incentives to outsourcing companies impact India?
  5. Philippines suffers from Leadership issues in BPO industry


Written by JohnU · Filed Under BPO Blogs 

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