As far as business process outsourcing (BPO) is concerned, the Philippines is still the go-to-location.
TeleDevelopment Services, Inc. (TDS), “a pioneering full-service BPO solutions company” that supports outsourcing and offshoring industry around the world, relayed this good news to ScieTech and Digital News.
The company said the country is still the largest offshore location and site selection destination for BPOs, particularly call centers.
“In particular, the Philippines is ahead of fellow offshore destination India and US nearshore locations in Central and South America,” TDS, Inc. noted.
TDS, Inc. cited a recent report from United States-based Site Selection Group (SSG), “a leading provider of global location advisory, economic incentive and corporate real estate services,” which said, among others, that United States firms are in consideration of the Philippines in developing a global site selection strategy.
Located in Dallas, Texas, SSG made its report to help BPO companies determine where to establish their next call center or back office location.
SSG has high regard for the Philippine call center environment.
“The growth of the Filipino call center market has been phenomenal ever since,” the American company, a provider of strategic location solutions, said. “Further, the Philippines has overtaken India as the largest offshore market specifically for voice-related call center work.”
SSG also noted figures from the Contact Center Association of the Philippines (CCAP) showing the number of call center workers in the country at around 1.3 to 1.5 million.
It added that the number of BPO companies that operate in the Philippines has reached more than 1,000 which perform various call center and back office work.
“Notably, the Philippine call center industry has become approximately 10 percent of the country’s Gross Domestic Product (GDP),” SSG said.
A word of caution, though. Not everything is roses in the Philippine BPO industry.
The American company called to mind that it was difficult to get tax holidays on revenue from the Philippine Economic Zone Authority (PEZA).
“The migration of call center jobs onshore and offshore will continue with the economic cycles of the global economy and the fickleness of corporate America.
“Companies will continue to battle with finding qualified call center workers at a reasonable cost as the industry grows unless it is disrupted by other factors,” SSG said.
Growth slowing down
While India and the Philippines may have gained from the call center industry’s astonomical growth over the last couple of decades, growth is subsiding, SSG said.
Recall that SSG’s report in April noted the 9 percent drop of the growth of the Philippines from an average of 17 percent rate through 2022.
SSG identified the major causes for the slow down such as larger-scale market, a stronger US economy, and technological advances. It also named the competition provided by Latin America as well as government policies both in Washington and Manila.
Slow growth’s permanence
On the other hand, India and the Philippines were expected to still be the top two for offshore markets.
“India and the Philippines will continue to be the dominant offshore markets due to their scalability, cost benefits, industry knowledge-base and many other factors. However, these countries need to be prepared that lower growth rates are likely here to stay,” SSG said.
Maturity is like a magnet
Not surprisingly, the maturity of the country’s BPO market has become like a magnet for some big-time global companies
“As the market rapidly matured, it attracted name brand companies like Amazon, Google, Wells Fargo and others who have set up captive, in-house operations,,” SSG revealed.
It added: “Many companies are now expanding into tertiary markets like Cebu, Davao, Dumaguete, Clark and Baguio as the labor market in Metro Manila becomes more saturated.”
SSG warns of disruption in the market caused by many factors that can impact companies’s site selection strategies in these call center locations.
Here’s why.
“In a global economy, there are so many factors that can disrupt growth within a region,” the US company pointed out, adding it is especially true when considering nearshore and offshore markets in site selection.
Among these factors include political instability, government legislation, currency fluctuations, wage inflation, unionization, automation, and emerging industries like online gaming. (EKU)