Designed in California, Made in Manila
Matthews Asia
By Teresa Kong
July 6, 2012
When
I saw the hit animation film “The Incredibles” a few years ago, little
did I know that some of the animation was done by artists in the
Philippines. Pixar, the American film studio that outsourced this work
to the Philippines, is just one of many global companies to have taken
advantage of the island nation’s thriving business process outsourcing
(BPO) industry—contracting out work related to back office operations
for cost savings.
The
BPO industry began emerging in 2000 and has grown at a rate of 30% over
the last decade. While it accounts for only 5% of the Philippines’
gross domestic product, it ranks third in generating foreign exchange
for the country, behind only tourism and remittances. It is also a key
generator of new jobs in the Philippines, creating work for more than
638,000 employees in 2012. That figure is estimated to grow to 1.3
million by 2016, according to the Business Processing Association of the
Philippines. Most of these jobs are currently located in Manila, but an
estimated 150,000 jobs are located in other so-called “next wave
cities” such as Cebu.
BPO
services can be largely categorized into “voice” and “non-voice”
services, with “voice” involving customer sales, technical support or
other call center work. The animation industry epitomizes the evolution
of BPO services in the Philippines, which has moved up the value chain
from simpler call center services to increasingly complex work such as
medical transcription and accounting. In 2010, the Philippines became
the world’s top provider of BPO voice services and ranks second in
non-voice services after India. Job attrition rates are generally higher
for voice-related services as the work often requires nighttime shifts
to serve a global customer base in varying time zones. Attrition falls
considerably for non-voice services in which employees can work more
typical hours with more career development opportunities as their skills
and experience increase. The typical profile of the average BPO
employee is a college-educated woman in her mid-20s who generally earns a
starting salary of a few hundred dollars a month and receives some
health and other benefits.
On
a recent trip to the Philippines, I toured one BPO center located in a
posh Manila office building attached to a shopping mall that catered to
overnight BPO workers with 24-hour services. Security at the office
building was tight, assuring a high level of confidentiality since BPO
employees may have access to sensitive customer information.
Coincidentally, on my return flight home, the top story on the front page of the local newspaper featured BPO-related news: a major U.S. West Coast bank announced plans to send back office work from California to the Philippines. Global firms will likely continue to be attracted to the Philippines’ large pool of college-educated workers, relatively low costs and multilingual skills.
The
subject matter contained herein has been derived from several sources
believed to be reliable and accurate at the time of compilation.
Matthews does not accept any liability for losses either direct or
consequential caused by the use of this information.
Matthews Asia Funds are distributed in the United States by Foreside Funds Distributors LLC
Matthews Asia Funds are distributed in Latin America by HMC Partners
© 2012 Matthews International Capital Management, LLC
(c) Matthews Asia
