The current priority for many businesses is to slash overheads in anticipation of next year’s bleak economic outlook. Companies operating in developed markets will be planning to realign resources and aggressively outsource or offshore U.S. or Europe-based functions to low cost destinations, which are ideally in close proximity to Asia’s high potential emerging economies.
A November survey on the 2009 business prospects of the Philippine BPO industry indicated that two-thirds of the business process outsourcing companies in the country plan to expand their workforce next year despite the global economic slowdown. 65% of the 190 survey respondents expect to increase headcount next year, with good to outstanding prospects cited for the ‘non-voice’ BPO services, including back-office operations and animation.
Emerging number one U.S. bank JPMorgan Chase & Co. has joined Citigroup, Convergys and Deutsche Bank, among others, in expanding its BPO operations in the Philippines with the addition of 6000 seats in 2009, which can mean up to 18,000 agents on three shifts. This brings the company’s total number of seats to 8400 by the end of next year from the existing 2400 seats.
JPMorgan has been operating its Makati City BPO facility in the Philippines since 2003, providing its global clientele with basic data entry to complex voice services. The firm’s recently launched contact centre housing 1400 seats at the Net Quad in Fort Bonifacio marks the first phase of its expansion in the country. Fort Bonifacio’s rents range from P600-P800 per square meter each month. The planned seat additions will be located at the Net Plaza, also in Taguig City.
Earlier this week, JP Morgan had announced plans to cut 9,200 jobs at Washington Mutual (WaMu), which it acquired in late September. About 4000 positions will be eliminated by end-January.
The company however remains optimistic on the prospects of its Philippine operations, accordng to Barry Marshall – vice president and senior country operations officer for JPMorgan’s global solutions, who said the company’s assets and revenues in the Philippines grew 300% last year.
Figures from the House information and communications technology committee revealed that JP Morgan Chase Bank N.A. Philippine Customer Care Center reported P1.5 billion (US$31.5 million) revenues in 2007.
Last month, JP Morgan issued a report forecasting that the Philippines is in a relatively strong position to weather the global economic storm as 76% of its economy was driven by private consumption and 50% by services, which are less vulnerable to external shocks. The GDP growth projection for this year is at 4.6%.
The U.S. investment bank added that the country will be able to avert a recession in 2009 and projected 4% growth next year, boosted by stable OFW (overseas Filipino workers) remittances and the country’s growing BPO sector. OFW remittances through the banking system amounted to an average of $1.37 billion monthly from January to September of this year.
In 2007, the top 25 leading contact center operators in the Philippines reported aggregate revenues of P68.5 billion (US$1.67 billion) from leading firms including Telecare Global Solutions Inc., Sykes Asia, PeopleSupport Philippines, Convergys Philippines Services, HSBC Electronic Data Processing, among others.
The Philippines BPO segment, generally considered a sunrise industry, employed 345,000 workers in the first 6 months of 2008 and generated almost US$5 billion revenues last year. The government will be implementing more tax incentives as the BPO sector has been identified as one of the country’s core economic pillars.
In view of the global financial crisis, the industry association BPAP is expecting 30-35% growth this year, down from 45% in 2007, and are looking at making adjustments to their original target of US$12.2 billion revenues (10% global market share) and nearly a million workers in 2010.
