Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

The Future of BPO in the Philippines

Posted by butalidnl on 19 April 2010

The BPO (Business Process Outsourcing) industry in the Philippines is going to quadruple in size in the next 5 years. Thus, it will grow from employing about 500 thousand people now, to about 2 million in 2015. This is not only be an expansion in terms of size, but it will also come with significant changes.
Here are some of them.

Careers, Higher Salaries
When the BPO industry grows to two million, it will have to outgrow the current model of young people doing this for a few years and then moving on. When the industry will be 2-million employees strong, it will be too big to afford the present level of turnover.  This means that the industry will have to find better ways to retain personnel, to make them want to stay on longer and make their work in the BPO industry their careers.

For one, this means that salaries need to rise somewhat. From about PhP 12 thousand entry-level now, to about PhP 20 thousand entry-level in 2015. And that staying on will result in  increased pay with experience. This increase will not price out Philippine BPO, since it will be then about 4 times cheaper than their US counterparts.

A BPO agent receiving a  PhP 10 thousand salary would easily be enticed by a salary of $1000 abroad. However, at a salary of PhP 20 thousand, they would not consider leaving unless they receive an offer of $2000 or above. BPO jobs will have to compete with the Overseas job market for qualified workers, and this is another reason why its salaries will have to go up.

And there needs to be certain amenities for BPO workers, especially for those working the night shift: shuttle buses, 24-hour fast food eateries, 24-hour groceries etc. , gyms, etc. And then, there need to be pension plans in place, which are preferably industry-wide plans.  I foresee that BPO centers will then tend to cluster in the same areas, so that the attached services are located together also.

English Proficiency
There needs to be a thoroughly new way in which English proficiency is taught to call center agents. While a lot of the training will probably remain at the company level, the education especially in English, needs to improve significantly. English proficiency for admission as call-center agents may then be done by special courses offered in the various universities.

All this would mean that the demand for good English teachers will increase. English teachers will then be in short supply, and they need to do a lot more teaching, and thus the salaries for English teachers will have to be increased.

Other BPO
As the call-center type of BPO expands, other types of BPO will also logically be brought in. For example, if a BPO center does the accepting of orders for a certain product, then it may be logical to also base that company’s product distribution for Asia or Southeast Asia in the Philippines. And then, logically, also the accounting functions associated with this.  This could be done by BPO companies or by the mother company setting up a Philippine office.

Then consider medical transcriptions. It may be logical to also outsource the analysis of Xrays and Echos to the Philippines.

Qualitative Changes in Economy
The BPO industry, if it succeeds in quadrupling in size by 2015, would also have led to the transformation of the Philippine economy as a whole. While todays 400 thousand workers seem to be able to do there thing without too much effect on the overall economy; 2 million workers will have a more pronounced effect.

For one, 2015 may see a new trend of lower OFW deployments. With BPO work getting more attractive, more Filipinos will opt to stay in the country. OFWs will have to be either more qualified than the BPO workers (and thus earn more than $2000) or less qualified than BPO workers (and earn less than $1000). The layer in-between will be a battle-ground between BPO and OFW.

The extension of high-speed fiber-optic lines all over the country (which is necessary if BPO companies are to spread to more cities) would cause the rapid improvement in internet connectivity throughout the Philippines. Internet access will be faster and cheaper, and a lot of people (even in the more remote towns) will have access to the Internet. And this will have a profound effect on business throughout the country.

The mere volume of the BPO industry will have effects on labor laws, zoning rules, and laws governing ICT.  Transportation networks will have to consider people travelling at the middle of the night. Or, if brownouts are still a problem – there may be “brownout-free” zones established where BPO firms are located.

6 Responses to “The Future of BPO in the Philippines”

  1. Outsource to Philippines said

    The future of the Philippines does look a lot brighter with the help of the rising BPO sector. This is a good opportunity for us to redeem ourselves and restore our former glory here in southeast Asia!

  2. BPO said

    Nice post about the future of BPO in the Philippines.

  3. It makes a lot of sense to look at salary level in order to reduce problems with personnel turn over, however, we also have to look at competitiveness. It is not necessarily good enough that BPO services are 4 times cheaper here than in the US. In the future, we will also have to look at competition from Chinese BPO suppliers IMO.

    • butalidnl said

      I will take the competition from Chinese BPO suppliers to be mainly in other kinds of BPO, and probably not voice. This is because the Philippines has a very deep well of English-speaking people. China also has English speakers, but not so much; and these people will be able to get better paying jobs elsewhere because of their relative scarcity. Malaysia is another possible source of competition; but their salary scale is higher than the Phils.
      Of course, this is not to say that we can simply raise salaries without considering competition. There still needs to be a significant differential between Philippine-based and US-based call centers. Perhaps up to 3:1 will still be possible though, instead of the present 4:1 or 5:1 today.

  4. Morren said

    Hi,

    Awesome post about Future BPO jobs in Philippines and BPO Careers. Very Nice post..Thank you…

  5. This is way back but, the future of BPO these days is much brighter and they’ve seen great amount of revenue in the coming years.

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