The Future of IT Outsourcing in the Philippines

In a nutshell, outsourcing can be defined as the delegation of in-house core and non-core functions of companies to other providers that possess expertise in delivering specific services.Over the years, the Philippines has become the new Mecca of business process outsourcing. In fact, it is identified as the third biggest industry in the global arena. Eighty percent of BPO operations are concentrated in the call center industry. The country takes pride in its expertise in customer service and technical assistance functions. These strengths must be the qualifications for the Philippines to be tagged as the “Call Center Capital of the World”. The IBM Global Locations Trend in New York, released a report in 2010 confirming the lead of the country against its major competitor—India. The Philippines now has 350,000 call center representatives serving industries in banking, travel, telecoms and others.Since 2006, there has been a significant growth in the outsourcing business. Figures show that the Philippine outsourcing industry annually expands by 46 percent. In relation to this, Raja Mitra, consultant for World Bank, conducted a study with more focus on the Philippines information technology business process outsourcing (IT-BPO). He predicted that if the government would succeed in developing this sector, the outsourcing industry could go up to or over $50 billion by 2020.Apparently, the Philippines has been triumphant in outperforming such that it eventually became an attractive destination not only for outsourced voice core functions but for delegating non-voice services like information technology. In his report, Mitra also mentioned that 5 percent of the Philippines’ total gross domestic product (GDP) in 2010 came from the outsourcing sector. He even expressed confidence in the IT industry. He believes that it can contribute to raise GDP up to 11 percent if the government can direct more efforts in strengthening the country’s IT sector to make it more adequately advanced for IT-BPO to flourish. Such efforts would eventually result in an unprecedented growth in the country’s economy.  Admitting that the outsourcing industry has provided employment for many Filipinos, Mitra stated, "It is important to simultaneously develop the IT, telecom, education and other knowledge economy sectors and to enhance the potential synergies between BPO and other ICT sectors and that so both in terms of external and domestic markets. Such a development offers significant promise it can contribute importantly towards achieving sustainable and inclusive economic growth".At the moment, the Philippines IT industry is said to still be developing. But as the competition in the software development sector intensifies and US-based companies search for ways to lower overhead costs, the industry sure has a bright future ahead of it. In Philippines case, if the government will just be able to positively deal with the challenge of strengthening its IT infrastructure, the country will reap the benefits of more opportunities of attracting foreign investors to put up their business centers in the Philippines and start outsourcing their IT functions in a country with a lot of potentials in terms of its skilled IT workers and economic agility. There should be no setbacks for outsourcing clients as Philippine outsourcing companies remain to exemplify reliable and quality services, high international compliance, and competent professional workforce in the information technology sector.