The Future of Knowledge Process Outsourcing in the Philippines
The Philippine’s Knowledge Process Outsourcing (KPO) sector is rapidly becoming one of the outsourcing industry’s biggest players. The knowledge process outsourcing sector has also grown in both size and total revenues in the past couple of years. Initially, the country’s locally owned and foreign-owned BPO companies offered only simple data entry services, call center services and non-core back-office services. However, as the demand for more complex offshore outsourcing solutions rose, many knowledge process outsourcing firms in the Philippines and in other outsourcing nations as well started expanding their portfolio of services. More complex and specialized knowledge process outsourcing services are now being offered by several KPO companies in the Philippines.
Currently, most knowledge process outsourcing firms in the country offer a wide range of services such as medical transcription, legal research and processing, publishing, transaction processing, and content production and editorial. Several KPO firms from countries with emerging KPO industries also offer these services, so the Philippines’ knowledge process outsourcing industry knows that it needs to step up in terms of both the quality of its services and the array of services it can provide. Local and foreign companies looking for cost-efficient solutions look to offshore outsourcing firms to provide them with high quality services for lower the cost. During the global financial crisis in 2009, many multinational firms moved several departments to outsourcing countries such as the Philippines. These businesses saw the fiscal advantages of outsourcing offshore, and now some of them have also started considering transferring core services to offshore locations.
The knowledge process outsourcing sector of the country realized this opportunity and rapidly expanded its portfolio to include specialized services in the field of procurement and supply management, game development and animation. The Philippines’ knowledge process outsourcing sector believes that it will be able to fulfill demands from foreign and local clients because the county has a large, highly skilled talent pool.
Knowledge process outsourcing companies that offer procurement and supply management services realize that the scope and relevance of this field have grown over the past years and now transcend traditional concepts of purchasing. Procurement outsourcing involves outsourcing all or parts of a company’s procurement functions to a neutral and external knowledge process outsourcing provider. It becomes the KPO firm’s responsibility to ensure the delivery of greater economies of scale, turn fixed assets to variable costs and reduce costs. The KPO company has to provide strategic and accelerated processes to help its client company attain a competitive advantage. Currently, knowledge process outsourcing companies in the Philippines that provide procurement outsourcing services cater to organizations involved in consumer packaged goods, oil and gas, manufacturing, high technology, services, public sector, construction and property development, non-profit, transportation, utilities and telecommunications.
Despite the bias against outsourcing, knowledge process outsourcing industry members are urging potential clients to look at the advantages of outsourcing procurement services to KPO companies. Procurement and supply management are important for organizations to realize their objectives. Outsourcing these services will allow the companies to focus more on their core competencies. These organizations will also benefit from outsourcing these services because most KPO firms that provide procurement services have process and domain expertise on supply management and procurement.
The game development and animations sectors are considered as the next big players in the Philippine knowledge process outsourcing industry. Animation and computer game development are still fledgling sectors compared to other sectors in the industry, but they were able to contribute an estimated $4.5 million to the Philippine BPO industry’s total revenues that amounted to $7.3 billion. Filipino game developers and animators are known to be very skilled and capable of satisfying client requirements when it comes to programming and animation.
There is, however, one major difficulty that both sectors must address: talent pool. The knowledge process outsourcing sector does not have a big enough talent pool of trained game developers and animators. This might become a problem when foreign clients start flocking to the country’s game development and animation studios and they can’t respond to these demands. These particular sectors in the knowledge process outsourcing industry need a bigger talent pool with more trained artists and developers to cater to foreign animation studios and game studios that come to the country to outsource.
The knowledge process outsourcing industry is expected to address this shortage in digital illustration and game development professionals. Currently, one university in the country has a game design and development program which produces graduates annually. The local animation sector, on the other hand, has old alliances with large animation studios such as Disney which employed Filipino artists even before the dawn of digital arts. Professionals with background in information technology and programming can be trained in game development if they have the desire to pursue another career and earn big money.
These emerging sectors that offer very specialized services can become key players in the KPO industry of the Philippines. The government, industry experts and business groups all believe that the BPO, KPO and ICT industries will grow in the following years, with industry growth translating into double-digit revenues.
