The global economic crisis is slowing down the demand for services in some sectors of the business process outsourcing (BPO) industry and experts are saying they may revise growth targets for 2010.

At the ongoing 2-day BPO Summit Philippines 2008 in Ortigas business district, industry leaders from the various sectors of the BPO industry said that the slowdown in the United States—where major BPO clients are located—and in other major economies have slowed down their operations.

Industry leaders from the non-voice sectors of the BPO industry like animation and transcription said that the financial crisis has been affected by decreasing demand from the United States.

Grace Dimaranan, president of the Animation Council of the Philippines, said some of the projects they have were on hold due to the recession. “Some animation series where reduced.”

The animation sector has been growing by an average of 38 percent during the past three years, data from the Business Process Association of the Philippines (BPAP) showed. In 2007, it generated a revenue of US$105 million or 2 percent of the US13 billion generated by the entire BPO industry in 2007.

Meanwhile, Myla Reyes, managing director of the Medical Transcription Industry Association of the Philippines (MTIAPI) said that some of their operations slowed down as a result of the economic meltdown.

The transcription sector generated US$197 million or 4 percent of the total BPO revenues. For the past three years, the sector is growing at an average of 24 percent.

Oscar Sanez, chief executive officer of the Business Process Association of the Philippines (BPAP), said that there could be some adjustments to the industry’s target of generating revenues of  US13billion—or 10 percent of the global market share—and employing around 1 million workers.

“Let’s just wait for the 2008 numbers to come out,” Sanez said.

Slowing growth

The BPAP expects the local BPO industry to continue to post double-digit growth this year—about 30 to 35 percent--in spite of the tough environment overseas.

This is lower than the previous year's robust 45 percent growth.

Meanwhile, Benedict Hernandez, president of the Contact Center Association of the Philippines (CCAP) expects the call center sector to grow by 23 percent this year.

“We are still lucky because we are growing,” Hernandez said.

Contact centers, which comprise the huge chunk of revenues and employees of the BPO industry, have been growing by at an average of 52 percent during the past three years.

Last year, it generated 74 percent of the revenue of the BPO industry.

"Businesses will continue to find ways in order to save costs, so outsourcing really is a solution for them," said MTIAPI’s Reyes.

Several companies, however, remain positive. Call center software vendor company IP-Converge said demand for cost-saving services was on the rise as companies prioritized products that can save the most amount of money for operations.

"This situation gives us leverage, we're taking advantage because companies want to be thrifty," said IP-Converge business development director Mimi Dizon.

Slowdown lowers attrition

Fred Kumetz, chief executive officer of transcription firm eData Services, said that the slowdown has resulted in lower attrition rates. Kumetz cited the case of India where attrition has declined from 35 percent in 2007 to 20 percent in September 2008.

“There is a freeze on recruitment in many large BPO companies,” Kumetz said adding that the labor pool is worried about the security of their jobs.

“Employees have to be careful before they switch job,” Kumetz added.

Non-voice sector

Nikhil Rajpal, global services and practice head of global consulting firm The Everest Goup, said that the non-voice sector of the BPO industry is expected to grow in the coming years. “Voice sector will grow but opportunities will skew towards non-voice sectors,”

The non-voice BPO includes animation, back office, software, engineering and transcription. Voice BPO, on the other hand, refer to the contact centers.

Sanez said the growth non-voices sector can give the Philippines an opportunity to earn US$130 billion. “The BPO market has huge growth potentials with all “non-voice services” representing the biggest opportunity.”

Sanez said that among the sectors in the non-voice BPO that the Philippines can tap into are as follow: healthcare, finance and accounting, human resources, information technology outsourcing, engineering services outsourcing and animation and gaming.

These sectors, Sanez said, required a huge number of workers with specialized skills.

Fred Ayala, president of the BPAP said the non-voice BPO can provide diverse career opportunities that will be seen as alternative to going abroad.

“Non-voice sector needs our accountants, nurses, lawyers, editors, human resources managers, financial analysts and engineers,” Ayala said.

Ayala said that the Philippine BPO industry must not rely only on the performance of the contact centers, especially amid the global financial crisis.

“We cannot reach the target by depending on call centers again,” Ayala said. --With a report from Michelle Orosa, ABS-CBN Business (abs-cbnNEWS.com/Newsbreak)

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