While India leads the world in business process outsourcing (BPO), the Philippines is the second largest call centre outsourcing player globally – generating an estimated 300,000 jobs and US$4 billion revenue in the fiscal year ending mid-2008, which is slightly less than India’s US$4.7 billion, according to a study ‘Contact Center Offshoring: Philippines’ by the Info-Tech Research Group.

Enterprises that have call centers in the Philippines include Dell, Citibank, AOL, HSBC, Convergys, Sykes and Telus. Some 60% of India’s outsourcing work comes from the US, 30% from Europe and 10% from the rest of the world.

As the outsourcing trend accelerates, India and Philippines often top the preferred contact centre destinations for European, U.S. banks and IT companies due to their high English proficiency and lower salaries, as labor costs typically make up 60% of a call centre’s budget.

Barack Obama might have spoken but American companies are likely to continue, if not ramp up, their outsourcing activities which can translate into significant cost savings to maintain their global competitiveness.

The Philippines BPO sector is projected to grow between 35% and 40% this year to rake in US$7 billion for the country and it has been one of the fastest growing sectors in the last 7 years. Rick Santos from global property services company CB Richard Ellis said the financial crisis would actually drive more BPO business to the Philippines and about 502,000 sq meters (5.4 million sq feet) of office space is expected to be leased this year, up 52% from 2007.

By 2010, BPO revenues in the Philippines are projected to reach US$12.2 billion at a five-year annual growth rate of 38% (SGV Industry Bulleting-BPO Edition). The Philippines BPO sector is expected to account for 10% of the global outsourcing market by then, double its current stake, and to be employing up to 1 million people.

There will, nonetheless, be some initial pain and casualties such as local BPO provider Advanced Contact Solutions, Inc. (ACS) which recently laid off about 900 workers, nearly one-fifth of its workforce, after a major US-based client went bankrupt.

Even so, U.S. relationship management company Convergys has confirmed that its expansion plans are on track, which include 5 new integrated contact centres in the Philippines. Within 5 years, the Cincinnati Ohio-based company has grown to more than 14,000 employees in 10 contact centre facilities; 6 located throughout Metro Manila, 3 in Cebu City and one in Bacolod City. The last facility employs 700 local Bacolod residents, with plans to add up to 300 by year-end. In India, Convergys has about 13,000 staff and intends to hire another 2500 by end-year.

Contact centre firm PeopleSupport Philippines is now owned by Aegis Services, BPO arm of India’s Essar Group, and currently employs about 8000 staff in Makati, Cebu and Baguio. The newly-merged  entity, Aegis PeopleSupport, has mentioned the possibility of hiring between 5000 to 10,000 agents in the near term to support a local clientele, in particular to tap the growing domestic telecommunications, banking, financial services, health care and retail sectors.

This is Aegis’ 11th acquisition in 3 years. Despite the slowdown, Aegis BPO is continuing to recruit as it forecasts its organic growth rate to maintain at about 35%. In the past 3 months, Aegis said that business from the US market had increased 75% due to a recognized need to outsource or offshore to cut costs, while India sales improved by 54% and the Philippines 25%.

Aegis, India’s fastest growing BPO, also plans to boost its Indian operations by recruiting about 1000 people on a monthly basis till March 2009. The decision is in line with the company’s plan of increasing headcount to 35,000 by end fiscal year 2008–09.

The India BPO industry is estimated to employ about 700,000 people across 25 countries and expected to grow nearly five-fold to US$50 billion by 2012, a study by India’s National Association of Software and Services Companies (Nasscom) and consulting organization Everest Group said.

Nasscom recently cut its hiring forecast for the country’s IT services and call center industry to 200,000 staff (from an earlier projected 276,000) for the Indian fiscal year running from April 2008 through March 2009, due to the global economic crisis which is expected to last for 12 to 15 months.