The ADB said in its Asian Development Outlook 2008 that skills shortage is a leading constraint to the local BPO industry’s target to capture 10 percent global market share in 2010.

"Such expansion will require nurturing of higher value-added services such as software development and medical transcription, as well as supply of labor with appropriate skill," the report said.
 
The report said that greater cooperation between the BPO firms and the educational institutions is needed to solve the skills shortage and for the industry continue to expand rapidly.

The BPO industry, the report added, grew rapidly because of the huge number of English- speaking Filipinos and low wage and office rents. It also said that the industry has generated jobs for college graduates, contributed to GDP growth through the expansion of the services sector and become an important foreign exchange earner.

The findings of the ADB echo the sentiments raised by industry experts during the 8th Global Sourcing and Conference in Manila last February. Experts from around the world said that the Philippines should have a pool of skilled workers to maintain its position as a top outsourcing destination.

Top outsourcing destination

The Philippines was named as the Outsourcing Destination for 2007 by the United Kingdom’s National Outsourcing Association.

The Business Processing Association of the Philippines, an organization of outsourcing and offshoring (O&O) firms, estimates that BPO industry can provide US$13billion and employ a million jobs by 2010.

The industry, however, employed around 320,000 as of 2007 and needs to augment its workforce by 600,000 in the next three years to meet the target. Recruitment of workers for BPO industry has become more difficult because of the low level of English proficiency among applicants and high turnover rate.

An industry-wide study by the BPAP and Outsource2Philippines.com in November last year showed that 46 percent of the companies included in the study found 6 to 20 percent of applicants are qualified. Of the companies surveyed 66 percent said they have to offer free training and remedial English classes to their new hires.

Attract investments outside NCR

The report noted that the BPO industry in the country is "heavily concentrated in the capital, " and there is a need to attract investments in other regions where the cost of doing business is cheaper and where there is an abundant supply of talent.

"Encouraging more services providers to set up in other cities, where wages and rents are lower, would help it to keep costs down and to spread its employment benefits," the ADB report said.

An inventory by the BPAP showed that 81.9 percent of the workers in the offshoring and outsourcing industry is in the National Capital Region. Remaining regions in Luzon account for 7.6 percent. Visayas and Mindanao account for 9.3 percent and 1.2 percent, respectively.

India, too

But the shortage of skilled workers for this industry is not entirely unique in the Philippines. Citing a 2005 study by the National Association of Software and Services Companies (NASSCOM) and McKinsey, the ADB Outlook said India needs to solve its skills shortage to remain as a global leader in the information and communication technology (ICT) and the BPO industries.

"To maintain its edge, India will require 2.3-million strong ICT and BPO workers in 2010. Current projections suggest likely a deficit of 500,000 workers of such workers, foreshadowing a possible contraction in the global market share," the report said.

The ADB Outlook also said that the skills gap may "slow or prevent Indian BPO and ICT firms from moving into-higher value segments and activities…[and] suggests that these two industries will be unable to keep up their frenetic pace of expansion." (abs-cbnNEWS.com/Newsbreak)

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