Doom or boom faces the IT-BPM industry (part 2)

Last week, I wrote about the plight of the Information Technology-Business Process Management (IT-BPM) industry and how chat robots and artificial intelligence have become serious threats. The Philippines stands to lose hundreds of thousands of jobs and billions in revenues in the voice-based category if we do not pivot quickly. This pivot involves veering away from voice-based work and climbing the value chain of outsourcing tasks which include software development, game coding and cloud technology, among others. Upskilling our workforce is at the heart of this pivot and what will spell the difference between maintaining our competitiveness or losing it. I called for closer coordination between the IT and Business Process Association of the Philippines (IBPAP), the Department of Education, TESDA and CHED.

The day after I wrote that piece, I re-connected with an old friend, Derek Gallimore, who is a champion of the IT-BPM industry on the private sector’s side. Over drinks and pica-pica at the newly opened The European Diner (TED) at BGC, the British national and I discussed the state of the industry and its future.

Gallimore disagrees with my view that the IT-BPM industry will become increasingly driven by technical skills. He believes that along with technical skills is an enormous demand for simple backroom office tasks like bookkeeping, payroll and HR management, simple graphic design, web development and the like. This market segment is ripe for the Philippines’ taking.

In a world where the vast majority of businesses belong to the small and medium sized category (SMEs), Gallimore asserts that the future of Philippine business process outsourcing lies in servicing SMEs from the west. There are presently 35 million SMEs operating in Europe, the Americas, New Zealand and Australia, all of whom collectively generate $12 trillion in revenues and 60 percent of the global workforce.  Out of 35 million enterprises, only .05 percent outsource their back office functions.

With ever increasing wages and scarcity of labor in the west, Gallimore believes it is only a matter of time before most barber shops, restaurants, retail stores and small traders outsource their simple but time consuming backroom office tasks. In fact, the pandemic has accelerated the need for outsourcing since businesses are under immense pressure to cut costs. For western SMEs, outsourcing to the Philippines makes good financial sense.

Gallimore predicts that by the year 2040, 80 percent of the all SMEs from western countries will outsource its backroom functions. This translates to 30 million outsourcing jobs, enough to employ our booming young workforce.

IBPAP is the umbrella organization for all companies involved in IT and business process outsourcing. It has done an excellent job uniting the industry and championing its development. Its efforts are particularly palpable in government lobbying and skills enhancement. However, I do not believe IBPAP has recognized the potentials of western SMEs yet. Even now, its marketing efforts are still geared towards attracting institutional accounts (eg. banks. airlines, hotel chains, etc.) through relationship marketing and trade expos.

Unfortunately, institutional accounts are a saturated market, not to mention a highly competitive one. I reckon it’s high time that IBPAP recognize western SMEs as potential customers and begin calibrating its marketing efforts to address them.

In typical entrepreneur fashion, Gallimore is not waiting for government or the IBPAP to make its move. He started mobilizing on his own already. With western SMEs in mind, Gallimore established a company called Outsource Accelerator (OA), which can be accessed through www.outsourceaccelerator.com. OA puts the spotlight on the Philippines’ outsourcing industry and works to educate business owners across the globe on the benefits of Philippines outsourcing. OA does awareness campaigns and various promotional activities. Its website contains more than 5,000 articles and podcasts on why Philippine outsourcing is superior to the competition, especially to India. The OA website provides a convenient funnel for interested business owners to explore outsourcing suppliers in our shores.

Listed on OA’s website are some 700 Philippine-based BPO firms that can render the entire gamut of backroom office functions – from executive assistant services to bookkeeping, from transcription to information management. Each of the firms listed on the website are vetted by Gallimore himself to ensure capability, reliability and professionalism.

Potential clients are asked to fill a questionnaire when they first visit the website. This allows OA to better understand their requirements. It then matches the client with a corresponding BPO supplier. In many ways, the OA website acts like Alibaba.com. Whereas Alibaba connects the world to Chinese manufacturers using an easy-to-use, trusted platform, OA connects the world to Philippine BPOs.

The OA platform is gaining strength, traffic and authority every day. About 720,000 potential clients visited the OA website last year, a considerable percentage of which became paying clients for local BPOs. This year, Gallimore expects over a million visitors. Each client generated by OA translates to $54,000 in annual revenues for the country, considering that western SMEs typically engage three employees. OA is arguably the country’s most aggressive promoter of Philippine BPO services today.

Gallimore is paying due attention to how the Philippines is positioned in the outsourcing world. He is making a deliberate effort to position the Philippines as the “Swiss Bank” of outsourcing. It may not be the global giant, but it has the most extensive experience. It also boasts of the world’s best executive talent and plentiful highly skilled workers.

At the end of our talk, I came to realize that Gallimore and I are correct on three points. First, it is only a matter of time before voice-based services become obsolete and we must pivot quickly to preserve the jobs and revenues we derive from it. Second, demand will continue to increase for highly technical fields such as software coding, cloud technology and artificial intelligence. And third, an enormous market remains untapped among western SMEs and the Philippines is in the best position to fill the demand.

With this realization, IBPAP, the Department of Trade and Industry and the Department of Education will do well by revisiting the IT-BPM road map and take into consideration the enormous market for the taking among western SMEs.

Andrew Masigan’s e-mail address is [email protected]. Follow him on Twitter @aj_masigan