Philippine KPO Companies Showing Growing Competitiveness in the Global Market
In recent years, the number of Philippine Knowledge Process Outsourcing (KPO) companies has been increasing as its Business Processing Outsourcing (BPO) industry matures. Unlike BPO firms, KPO companies provide higher value services that require advanced information search as well as analytical, interpretation and technical skills.
Typical services offered by KPO companies include business and financial consulting, legal processes and transcription, health information management, medical and pharmaceutical expertise, Intellectual Property Research, contact centers, creative services, animation and engineering design, among other things.
The country’s KPO companies are showing strong growth. Back office or non-voice contributed $1.1 billion to the country’s total outsourcing revenue in 2009. KPO companies specializing in computer game development posted a 50 percent rise in revenues in the same year.
“The back-office and KPO sector has been growing at a faster rate than the voice-based sector and we believe this trend will continue,” according to Joyce Virata, executive director for information and research of the Business Processing Association of the Philippines (BPAP). “In the next four or five years, we may see the voice and non-voice sectors at about the same size in the Philippines.”
In fact, some industry analysts even say the Philippines is becoming an increasingly attractive alternative to India as a global KPO hub. It is moving toward higher-value services and Philippines is now in a position to take on higher-value jobs, after proving its worth as a premier destination for call center services, Richard Mills, director of the Canadian Chamber of Commerce of the Philippines, said.
The country’s affinity for Western culture and the English language continues to be make the country highly suitable to absorb KPO functions from North American companies, experts says. In this regard, Philippines KPO companies are a viable destination.
Inexpensive but high quality work force, which is the backbone of the BPO industry, is also the main selling point of Philippine KPO companies. The country has over 120,000 midwives, 100,000 Certified Public Accountants, 95,000 licensed physicians, 40,000 medical technologists, 40,000 dentists, 26,000 electrical engineers, 22,000 electrical and communications engineers, 22,000 chemical engineers, 16,000 architects, according to a 2006 data from the Professional Regulation Commission. All in all Philippine KPO companies have access to over two million licensed professionals in various fields.
Additionally, the Philippine government is doing its share to support the emerging KPO sector. KPO companies enjoy a number of exemptions, including duties and taxes, export taxes, fees, dues and licenses, if they set up operations in one of the country’s Philippine Economic Zones, particularly in the so-called Cyber Corridor.
The Cyber Corridor are key cities across the archipelago that were identified by the private sector, the academe and government as the strongest potential locations for BPO and KPO companies that provide back office, software development, medical transcription, engineering design, animation, game development and voice services. The government identified the construction of physical infrastructures that enable BPO and KPO companies to thrive as one of its top priorities
“We worked to speed up the telecommunications network infrastructure by bringing down the cost of connectivity. We supported wider public access to communications and information services through the provision… encouraging the provision of broadband services in cities and identified growth areas, and a redundancy of telecommunications gateways,” Philippine President Gloria Macapagal Arroyo said at the 9th e-Services Global Sourcing and Exhibition in Manila last year. These infrastructure improvements have been among the most important reasons why BPO and KPO companies have been flocking to the Philippines, she added.
A recent research study comparing the Philippines with other major outsourcing countries also revealed another reason why KPO companies in the country are getting receiving global attention. Outsourcing to the Philippines KPO companies are safer than outsourcing to India, according to the study. The report quotes a survey where over half of the respondents (52%) viewed KPO companies in the Philippines present lower risks than those in India while only 31% believed the risks were equal. Despite the limitations such as an inadequate supply of trained labor, the survey showed 81% of the respondents said KPO in the Philippines is a high growth prospect.
While the Philippines will continue to service non-core processes from other countries, it is simultaneously advancing its capability to handle processes of increasingly greater complexity. That many multinational companies are talking about Philippine KPO companies in the same light as Indian KPO companies is an indication of the gains the fledgling KPO industry has achieved, the report said.
