BPO executives rank government corruption as major risk in doing business in RP

MANILA, Philippines - Business process outsourcing (BPO) executives have ranked government corruption as one of the major risks associated with doing business in the Philippines.

An online survey commissioned by the Business Processing Association of the Philippines (BPAP) and Outsource2Philippines (O2P) from June 20 to July 29 revealed that 35 percent of the respondents have cited corruption as their major concern.

The survey had a response rate of 26 percent on invitations sent to 685 BPO executives in a broad range of sectors including voice, back-office, IT, finance, legal, medical and creative services. 

In the same survey, it was revealed that almost 40 percent of those surveyed indicated increased competition as another risk. Competition from emerging BPO centers has become a bigger threat due in part to aggressive marketing campaign efforts. Up-and-coming centers in Africa, Latin America and Asia such as Egypt, Costa Rica and China have increased concern over the competitiveness of the Philippines as a BPO location.

“While the outlook is positive, the industry is realistic about potential threats. Respondents appear not to take the outlook for granted and remain vigilant,” BPAP executive director for information and research Gillian Joyce Virata said.

The respondents also identified other potential hurdles to expansion. The tight labor market emerged as a top investor concern, with almost 60 percent of respondents citing labor as a primary, secondary or tertiary concern. Developing and retaining capable middle managers was also identified as an emerging issue.

BPAP noted that as BPOs continue to shift to increasingly complex services, labor concerns are expected to intensify.

But BPO executives and survey respondents alike are optimistic in their forecast for the next 12 months. Close to 80 percent of BPO companies see expansion in their workforce.

“Our previous survey showed a return to optimism in the industry. The current survey shows that sentiment achieving momentum,” BPAP chief executive officer Oscar Sañez pointed out.

The group said the range of services offered by the industry has continued to expand beyond process-based services to more complex, judgment-based services, a trend observed in successive quarterly surveys.

Back-office; IT, data and software; and knowledge-based processes in finance, medicine and legal services are among the increasing number of high-value offerings provided by the respondents’ companies. In all, the companies are engaged in delivering services in more than 20 sectors.

Industry executives also attribute their positive business outlook to improved perception of the Philippines following the May national elections. Almost 90 percent of respondents indicated that the automated election had a significantly positive effect on investor and client perception of the country, while 60 percent cited the smooth transition to the new administration as a confidence-boosting development in the perception of investors.

BPAP said greater optimism in the regulatory and business environments following the election is expected to raise the Philippines’ profile as a stable investment location. Thirty percent more respondents anticipate a stronger relationship with the current administration than with the previous one

“The Philippines has a window of opportunity to enhance its country brand and increase positive visibility to investors,” Outsource2Philippines CEO Michael Alan Hamlin emphasized.

The group added that increasing acceptance of outsourcing appears to have benefited the local BPO industry as client companies focus on cost-saving and productivity-enhancing measures. Clients are also outsourcing more complex processes, increasing the value of services offered by the industry, the survey revealed.