Amidst China Threats, PH Stands Firm to Defend the BPO Industry

As per Tholons June report, China outranked the Philippines in terms of competitiveness.

Philippines’ outsourcing industry, amassing $23 billion, is facing a lot of risks: People’s Republic of China is quickly becoming a huge threat, the government is considering to ditch some of the incentive programs and the war in the south is tormenting the investors.

In an interview, Rey Untal, head of IT and Business Process Association of the Philippines (IBPAP), stated that the industry and the government need to get their act together. “The other countries know how big this IT business process outsourcing (BPO) pie is globally and they want to increase their share. This is not a static world.” Untal stated.

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Having a high level of English proficiency, a young workforce and cost-efficient labor, Philippines has become one of the top outsourcing providers in the world having companies like Accenture PLC among others who have invested. However, PH’s rank is currently under threat for China that has surpassed the Philippines. As per Tholons June report, China outranked the Philippines in terms of competitiveness.

“It really is a significant wake-up call,” Untal stated last July 28. “It’s good in a way. Sometimes you need to be jolted. Many of the countries that compete with us directly are enhancing all the parameters that make them competitive – talent, infrastructure, incentives.”

In the past few years, China has crafted modern, high-end technology and industrial parks, and supported universities to offer outsourcing-related courses. China is aiming to grow their outsourcing revenue to $100 billion in 2020, focusing on high-tech digital services, as per the plan laid out by the Ministry of Commerce.

While the Philippines is being threatened by China, the country finds an ally in Singapore. As per the Philippines-Singapore Business Council (PSBC), Philippines’ most recent economic success has made Singapore based firms keener than ever on investing in the Philippines.

PSBC Co-Chairman Guillermo D. Luchangco stated that Singapore-based companies are scouting for partners in information-technology-business-process outsourcing, infrastructure, halal goods, and tourism, and they are eyeing the Philippines’ local companies to provide them.

Loh Chin Hua of Keppel Corp stated Singaporean firms wanting to outsource their services on the country is more long term. Loh added that these companies still see the Philippines in a positive light, despite socio-political issues and the war in Marawi.

Singapore remains as Philippines’ biggest trade partner amassing a trade value of $9.3 billion last year. A fraction of this, around $3.8 billion, comes from exports.

Despite threats, socio-economic issues, and war going on, some local business processing companies still managed to thrive, bagging deals and contracts left and right. Coefficients, for one, has been doing so well the past few years and has built long term relationships with Singapore, US, and Canada-based companies. They also continue to expand the services and portfolio, moving to knowledge process outsourcing and now offering legal process outsourcing.

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