There has been a flurry of headlines about the growth of the Philippines growth in the BPO market, and some headlines have gotten pretty extreme. For instance, “Phillippines overtakes India as world’s BPO leader”. Which puzzled me….So here are some quick facts:
1. The Philippines is definitely a great BPO country
There have been numerous studies that I am sure my readers are familiar with that explain the benefits of the Philippines, which revolves around the ability to understand western culture, language skills, and labor arbitrage. Here is a quick report to bring you up to speed if you want more details.
2. But is the Philippines leading India in BPO?
The answer is definitely not, while it is growing fast, it is no where close to the market penetration that India currently has. Here are some facts:
For India, the BPO market is made up of 5 Million jobs, and 15 Billion in revenue. (Nasscom)The Philipines BPO market is currently at 500,000 jobs and 9 Billion in revenue. (Source is at bottom of the article)
3. Did you catch the math ?
Using the above citations, the average India per job revenue is 3K is USD, and in the Philippines it is 18K. Why the difference? Remember that within BPO is a massive element of non-voice services (e-mail, keying, etc.) and this is what started the India BPO industry. It is low cost, low wage work that is not going to the Philippines. So to say that the Philippines is overtaking India in BPO is a bit of a stretch?
4. So where does the Philippines sit?
So for HR professionals, and Outsourcing Professionals – what should you think of the Philippines? The bottom line is that it is a great Hub for services – similar to using a Brazil, a Krakow, etc. The language services are broad, and also allows for a decent support of the APAC region.
5. So why won’t the Philippines be the leader?
There are a number of key reasons but most have to do with the math around the population. While there are literally thousands of islands in the Philippines, the main location for BPO work is in Manila. Did you know that there is only one city outside of Manila that has 1 Million people (Davao City). The southern islands are still in a state of unrest, and much of the Philippines doesn’t have the population or infrastructure to support BPO. So once Manila begins to tap out the labor supply, and inflation starts to kick in (remember Bangalore?). Here are a couple of interesting data points for you:
The Business Process Association of the Philippines (BPAP) published a rather candid report of their next wave of cities. Here is the link.
Is the inflation starting to happen? The real estate market is starting to max out.