BPO growth slowed down in 2008

By Jesus F. Llanto, abs-cbnNews.com/Newsbreak

Posted at Feb 09 2009 05:54 PM | Updated as of Feb 10 2009 02:59 AM

The revenue growth of the business process outsourcing industry in 2008 has slowed down to 26% as a result of delays in projects last year, an industry expert said.

Speaking at the 9th E-Services Global Conference in Pasay City, Oscar Sanez, chief executive officer of the Business Process Association of the Philippines (BPAP), said the industry grew only by 26 percent in 2008 because of delay in projects during the last quarter.

“Initially we are estimating that we will be hitting 30-35 percent growth but we did not hit that,” Sanez told reporters. “Some of the projects in the last quarter have been delayed to 2009.”

The latest industry data presented at today’s conference showed that the industry generated revenue of US$6.06 billion last year, from US$4.9 billion in 2007. Data also showed that the number of workers employed by the industry grew by 25% from around 297, 000 in 2007 to 371,965 in 2008.

Sanez said they are expecting a growth of 20-30 percent in 2009. In an interview last December, Sanez told abs-cbnNews.com/Newsbreak that a slower growth in 2009 is expected as companies implement re-structuring policies and review their expansion plans amidst the global economic slowdown and the recession in the United States, where most BPO clients are located.

“A 30 percent growth in 2009 will get us to US$7.5-8 billion dollars,” Sanez said, adding that they are still on track with the target of attaining the 2010 target of US$13 billion, or 10 percent share of the global market.

“We will be able to recover those delays,” Sanez added.

Industry experts are saying that the recession and economic slowdown will be an opportunity for outsourcing hubs like India and the Philippines since it will force most companies to outsource some of the their functions to low-cost destinations.

As in previous years, the contact center comprised the biggest chunk of the revenues and number of workers in the industry. The contact centers account for 68 percent of the revenues and 61 percent of the total workers in the industry.

 

Future growth: Non-voice

Peter Bendor-Samuel, chief executive officer of research and consulting firm Everest Group, said that future growth in the offshore market will be driven by a “diverse and complex” set of opportunities.

“Future growth will be on non-voice as companies move more intimate and complicated work,” Bendor-Samuel said.

The non-voice sector has also registered double digit growth in 2008. Non-voice back office services grew by 119 percent while transcription grew by 32 percent.

“We have seen the growth of call centers in the Philippines but there is a lot more than call centers,” Sanez said adding that the non voice sector can tap on the huge number of accounting and engineering graduates.