BPO Race: How soon can RP beat India?

According to latest publication of IDEA particularly on Business Process Outsourcing (BPO) India leads this particular industry. Furthermore, the Economist reports that about 85% of the total $40-billion BPO contracts in the world today go to India, which has 250 million English speakers ready to fill in BPO-related jobs. India produces more than a million IT and engineering graduates a year. India is one of the fastest growing leaders in pharmaceuticals, biotech, electrical and mechanical engineering, all of which are related to services rendered by BPO. It also produces other competent professionals such as accountants, lawyers and business-related professionals.

Bangalore, India's most popular IT hub, has posted one of the fastest economic growth among cities in the country backed up by a booming population and sufficient training centers enough to meet labor demands. Indian firms such as TCS, Wipro and Infosys already carry out a lot of mutinational banks' IT operations in more than 50 countries. These companies are competent enough to rival the 5 biggest outsourcing companies that come from USA: Accenture, ACS, CSC, EDS, Hewlett- Packard and IBM. NASSCOM, India's IT-regulating body, estimates that its IT industry would, by 2008, employ 4m people and earn US$57 billion- 65 billion, from exports which account for 7% of GDP, up from 4% in 2004.

As of end-2004, the BPO industry employed about 70,000 workers and earned about US$800 million in revenues for the Philippine economy. According to the 2005-2010 CICT Roadmap, the ICT services sector can generate 802,684 new jobs with a value of P208.7 billion by 2010, up from the estimated 134,250 employment capacity (worth P34.9 billion) by the end of 2005. Moreover, local entrepreneurs are beginning to see the rewards of setting up businesses.

Last year, the ITECC anticipated major BPO opportunities in earnings: call centers ($864 million), medical transcription ($483 million), software development ($268 million), and animation ($40 million). It also expects the number of companies involved in finance and administrative outsourcing to grow from about five in 2001 to thirty to fifty companies this year.

The Gartner Group and the Offshore Development Group reports that the Philippines is expected to take at least 5% of the BPO offshore market pie by 2008. Although the National Economic and Development Authority has not yet released its finding on the contribution of the BPO (specifically the call center industry) to the national GDP, analysts believe that it is still relatively small as the industry is only starting to expand.

Editor's Note: Mr. Ed F. Limtingco, is the VisMin Manager of CIBI Information, Inc., a business information and receivables management company. For credit & collection questions and inquiries, he can be reached at 0917-8309741 or email him at [email protected]