BPO industry needs prudence, not worry

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IN a session during the Management Association of the Philippines annual general meeting this week, Rainerio Borja, who is the treasurer of the Information Technology and Business Process Association of the Philippines (IBPAP), discussed some of the alarm stakeholders in the Business Process Outsourcing (BPO) industry are feeling toward the unpredictability of policy under the Philippines’ own President Rodrigo Duterte, and especially Donald Trump, the US president-elect who will formally take office in a little less than two months.

The BPO industry is right to be alarmed, particularly about Trump, who has vowed to “bring back jobs to the US” and curb the practice of offshoring, as well as to some extent Duterte, whose foreign policy focus so far has been to turn away from the US, the biggest source of the Philippines’ BPO sector.

The implications for the Philippines of a serious downturn in the industry are disturbing. The BPO sector is expected to surpass $25 billion in revenue this year, and exceed remittances, the traditional mainstay of the economy for the past several decades, either this year or next. A retraction in the BPO industry would have a drastic impact on the entire country, almost certainly causing a deep recession. That would be difficult to recover from, because it would require the development–in the midst of an economic downturn–of a different sector to take its place.

IBPAP’s Borja had a sensible piece of advice for his audience: “Focus on what you can control.” The BPO industry in the Philippines may have some influence over Philippine policy, given its importance to the economy, but it certainly has none over the policies of soon-to-be President Trump. All the BPO sector can do, Borja suggested, was be flexible and prepared for changes, and otherwise expend its efforts in ways that sustain and improve the industry.

One of those ways is to expand the industry’s reach to different source markets. The Philippine BPO sector now is overwhelmingly American, but as businesses in Asian countries grow–including businesses right here in the Philippines–there will be more demand for BPO services closer to home. President Duterte’s Asia-oriented foreign policy in that case is a benefit that the BPO sector should take full advantage of, as it eases the introduction of the Philippines to many potential new clients.

Another way is to anticipate and work to be on the leading edge of technological changes in the industry. It seems inevitable that the BPO sector will not be the mass employer it is now forever; already, according to property consultant and services provider Colliers International, automation has taken over some of the simpler tasks (such as encoding) once done by people in the industry. It is a natural evolution in almost any industry, and there are even examples in living memory. For instance, up until the early 1990s, telephone companies still employed live operators; now, there likely is not a human telephone switchboard operator anywhere in the world.

Most companies, fortunately, do not believe that increasing automation will actually displace much manpower, but to ensure that it does not, BPO companies and the government must be able to see changes on the horizon and retrain the workforce to take on new roles and apply new skills.

The BPO industry is one globally competitive sector that the Philippines excels in, and so it is right that potential risks arising from unexpected political changes be taken seriously. But any fear should be set aside, and a determination to approach the business with a flexible, forward-looking perspective be taken up in its place.

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4 Comments

  1. Yonkers, New York
    01 Dec. 2016

    It will be prudent if not wise for the BPO industry in the Philippines to prepare for a worst-case scenario where a President Trump will make good on his vow to bring back all those jobs now held by 1.2 Filipinos in the BPO industry to the United States.

    Perhaps Duterte can ask the help of his newly-found friends Chinese President XI JINPING and Russian President VLADIMIR PUTIN.

    He is precluded from the asking for help from the European Union because he is already PERSONA NON GRATA to it with his uncouth and vulgar tongue which lashed out at the EU and the European parliament with his patented “PUTANG INA MO!.:

    MARIANO PATALINJUG
    patalinjugmar@gmail.com

  2. jaime dela Cruz on

    it would be folly for Trump to bring home the BPO industry to the U.S.A. The people who voted for Trump are looking/waiting for real jobs that could sustain the “American dream”. The white workers of America are looking forward to the days when each workers house has a motor home or a camper in its driveway again. They do not want jobs that pays minimum. Just consider what BPO pays their rank and file employees here in Manila, convert that to US dollar and compare that to the minimum pay in America. If Trump offers that kind of pay to the people he promised “good paying jobs” to, there will be a backlash he wouldn’t know where it came from. Plus the companies using BPOs will go out of business if they start paying the American wages for call centers. That’s the reason why they came to the Philippines and India to begin with.

  3. Well, blame the big foul (and bad breath) mouth of Duterte. The Philippines will be down the drain when the BPO will disappear because of him. Let this stupid president get BPOs from China and Russia and he will get zero. Duterte said, “We will be able to survive without the U.S.”. Yes, Duterte and his family will survive because they already accumulated billions of pesos for his children and grandchildren. How about the poor? How do they survive?
    Duterte wanted to be like Kim Jun Il of North Korea and Fidel Castro but Duterte has no brains. His IQ is too low.

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