6 Tips to Succeed in Philippine Business Process Outsourcing Industry

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In September 30, 2013, Knowledgefaber, a research and consultancy firm, released the results of its study, which showed that Manila has claimed from the National Capital Region (NCR) of India, Bangalore, and Mumbai the coveted number one spot as the premiere destination for global outsourcing.

The basis of the study is the growth rate achieved by these countries heading toward the end of 2013. Philippines was far ahead of the NCR of India, that is, 15.6% versus 8.9%.

However, the study is interesting not because Philippines usurped the crown from India’s long-dominant position in outsourcing but because during this period, the Indian Rupee enjoyed a comparative advantage against the Philippine Peso in foreign exchange vis-à-vis the United States Dollar. India’s offer is more affordable than that of the Philippines, but foreign companies chose to invest in the Philippines!

The Philippines has always been an attractive destination for outsourcing not only because of comparative cost advantages but also because economies of scale exist.

According to the 2010 data from the Census on Population and Housing, the Philippines’ literacy rate is 97.5%, which is one of the highest in the world. American English is regarded as the primary medium of instruction in institutions and of communication in business.

In a 2012 study conducted by the Global English Corporation, the Philippines is listed as the world’s best country for English, surpassing even the United States!

Companies benefit from outsourcing by capitalizing on comparative cost advantages and economies of scale prevalent in other regions or locations. For countries such as the Philippines and India, the greatest comparative cost advantage is in labor, that is, local workers earn approximately only one-third of the salary of their foreign counterparts.

Outsourcing found its way to the forefront of the corporate “war room” strategy that builds sessions in the new millennium. The market size expanse of global outsourcing has grown from US$45.6 billion in 2000 to US$104.6 billion in 2014. The global outsourcing industry has not been in a period of downturn. At present, the total value of the global outsourcing industry is approximately US$ 507 billion!

The growth of global outsourcing is reflected in the growth of the Philippine business process outsourcing (BPO) industry. From a US$1.3 billion industry in 2004, Philippine BPO industry has grown into a US$15 billion industry in 2014. This industry is also expected to earn gross receipts of US$18 billion in 2015.

I have been involved in BPO since 2009. In the nearly six years of having been in this industry, I have learned that despite the ideal conditions for growth, the present structure and orientation of the industry do not translate to immediate success for anyone planning to start an outsourcing business.

The first BPO company, which I cofounded in 2009, met great success until one highly questionable, spurious, and hotly debated campaign spelled our demise in 2013.

Two months after its closure, I put up Benchmark Global Management Solutions, which has been steadily growing for the past two years. Most of all, this company is running according to my belief on how BPO should be managed.

Although we have not attained the heights of the big players in the industry, the level of success we have achieved in such a short time is enough for me to confidently share with you six tips on how to succeed in running your own BPO company.

1. Represent YOU

Being a prosperous industry, BPO has a lot of “experts.” They will tell you several truisms. Some of which are listed below:

  1. If you’re a small company, you will only get to manage commission-based accounts.
  2. You need the assistance of brokers and intermediaries to get accounts.
  3. You will never get a pay-per-hour account unless you prove yourself with a commission-based account.

I can assure you, NONE of these is true! If you believe and follow any of these, you will either underperform or lose money. Benchmark is a small company, but all of our accounts are either pay-per-hour or pay-per-project. We do not accept commission-based payouts even for outbound projects. Commission-based payouts are one sided, massively flawed in structure, and predominantly responsible for the demise of several BPO companies.

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