The Future Of BPO Industry in The Philippines & Growth Opportunities 2023
The BPO industry is growing exponentially year on year, bolstering the economy, and at last count employed 1.3 million Filipinos
That figure is growing month by month as many workers are finding that they can work from home, avoid expensive travel on a lower-paying wage compared to professionals, and hold down the job as lockdowns continue to happen sporadically. But to remain employable in an ever-competitive industry, you need to continue to grow your skills sets to hold on to your job or move to other better-paying ones if you plan on switching careers. Nexford University provides a skills-based curriculum that equips graduates with the skills that meet the requirements of employers right now.
2021 marks a turning point in the BPO industry, as remote work becomes mainstream and talent shortages only widen in the US. Here we outline how BPOs are changing, the skill sets that are driving that change and forcing BPO employees to improve theirs – and how employees and employers can take steps to capitalize on those changes in the coming years.
The importance of Business Process Outsourcing (BPO) in the Philippines
The Philippine BPO industry contributes nearly $30 billion to the economy each year. It is estimated that 1.3 million Filipinos were employed in over 1000 BPO companies in 2019, and that figure is showing 8-10% growth every year. It is estimated that the country holds 10-15% of the global BPO market. Its services are oriented to its former colonial power, the USA, and also serve Europe and nearer neighbors, such as Japan, New Zealand, and Australia.
More recently, the rise of digital platforms has facilitated freelancing. Here, rating systems and global competition create a highly competitive and uncertain industry.
There are an estimated 1.5 million Filipino freelance workers on these platforms. In an article by Forbes, the Philippines ranked sixth among the fastest-growing markets for freelancers in 2019, with a 35% growth from the previous year. More so, ever since the pandemic happened, the so-called “gig economy” has grown significantly in the country, opening up far more opportunities for lower-skilled workers.
Types of Business Process Outsourcing
There are several types of business operations that can be outsourced. Typically, BPO sectors focus on back-office operations (HR, finance, and IT) and front-office operations, such as customer support and call centers. Other processes that are commonly outsourced include:
- Data mining and input
- Transcription services
- Software development
- Animation services
- Game development
These operations require a large workforce investment, but staff are not necessarily needed on-site. As a result, these processes are easily outsourced or offshored to cut costs. So, if you are a remote worker, you are certainly in the driving seat.
If you’re a Filipino worker planning on getting into the BPO sector in the Philippines, there has never been a better time and place than right now. This is because you can provide services for overseas corporations including facilitating travel and insurance cover, customer support for technology, and telehealth services, all of which are struggling to find top talent.
Why the Philippines excels at BPO
The Philippines has become one of the most popular outsourcing destinations in the world. And it’s easy to see why as this has a direct correlation with the levels of competencies by its workforce. With a high level of English language proficiency, a hospitable and courteous culture, and a world-recognized education system, the country is a hotspot of talent waiting to be tapped. In 2001, the Philippine government put measures in place to support BPO companies to reduce unemployment and in 2021, that support has grown exponentially to curb the COVID economic collapse.
So, if you are on the inside of the industry, or on the outside looking to get in, you can be confident that you will be given a large proportion of the necessary tools to succeed in your chosen career.
How COVID-19 affected the BPO industry in the Philippines
The BPO industry has fared better than most through the COVID-19 pandemic. With governments forcing work-from-home measures on a global scale, companies have been forced to take the plunge into remote work, despite their reservations.
It is no surprise that outsourcing saw an unprecedented growth rate on the back of the pandemic. A recent Forbes article denotes that as remote work is predicted to rise to 300% of pre-pandemic levels, the role of the BPO industry can only become more important.
In a study conducted by Sprout Solutions, it was found that the BPO industry (31%), information and communication (9.79%), and healthcare (8.51%) sectors were the biggest industries that let employees work from home during the Enhanced Community Quarantine implemented last March. Something for workers in the Philippines to strongly consider if they want to continue working remotely post-pandemic.
Impacts and opportunities for the Philippine’s BPOs
The COVID-19 pandemic has catalyzed radical changes in the way business is carried out around the world. Not only has it opened the doors for more remote workers to provide services to businesses based overseas, but it has also highlighted the areas of business that can be automated to improve the bottom line.
The impact of these changes on the BPO sector will be significant. Roles that have traditionally been outsourced – including data processing, transcription, and a large proportion of call center work – will rapidly be replaced by technology solutions (such as automation) or freelancers with minimal overheads. Automation can be perceived as a threat, or an enabler. Regardless of how you see it, it’s here to stay and so you should get to know what it means to your career in BPO industry.
BPOs who stay fixed on their pre-pandemic plan are likely to find themselves undercut by other providers. That means you as a BPO worker could be well placed to being able to have the pick of companies and industries who are actually the ones doing the undercutting.
Far from being a blow to the BPO industry, this change can be seen as an evolution. As the role of BPO companies in certain roles becomes obsolete, the opportunity arises for growth in a different direction. High-skill services of workers that involve creativity, ingenuity, and uniquely human understanding are going to be in greater and greater demand. This means if you wish to get ahead and stay ahead of the chasing pack, you need to be constantly looking to upskill or reskill.
Software development, market research, e-commerce, medical transcript preparation, fraud investigation, data security, and related operations, are just a few of the knowledge-based processes that will be increasingly outsourced to BPOs. Meaning that BPOs will have to be widening their range of worker talent pools that they can call on. Could that be you?
This knowledge process outsourcing, or KPO, is the next evolution of business process outsourcing.
2021 Market Analysis: BPO in focus
Currently, 85% of outsourcing work comes from US companies, and a large proportion of the remainder is from businesses located in the UK and Australia. In these countries, employers report:
- Job vacancies are hard to fill because of the lack of candidates with the required skill set.
- Transferable skills, such as teamwork, literacy, and numeracy, are important. However, the problematic skill-shortage relates to specific skills for specific industries.
- 31% of companies that are affected by a skills shortage look to contracting with an outsourcing business.
The data shows that the skills sought by these companies are no longer the low-cost, clerical duties they once were. Today’s businesses want to outsource to financial teams, legal and paralegal teams, HR teams, marketing teams. Teams that can dissect big data and sort out their cloud computing.
In short: business process outsourcing is taking a turn for the professional, so workers need to become more professional to thrive rather than just survive.
BPO companies are future-proofing themselves
To ensure BPOs have a secure future, management will need to embrace the shifts occurring in the outsourcing industry. Cheap labor is no longer the focus: Instead, global, and local companies are looking for the services of highly skilled, English-speaking workers that can offer professional quality work. If you are looking to get into the Philippines outsourcing market, and you want to stand a chance of becoming employable, you will need to substantially increase your levels of English proficiency, or risk losing a post to someone who is fluent.
And it is a good business model: as the quality of the work sought increases, so does the price the clients are prepared to pay. That can all be derailed if employees feel that they are lacking the education deemed necessary to develop required skills to progress their careers in the BPOs they work for. If not addressed, this can lead to unnecessary churn and the high cost of acquisition and training in a highly competitive BPO market. Universities, such as Nexford, can help empower workers with new and sought-after skills to help reduce the brain drain.
Looking through this list, you may notice a number of BPOs services that are set to become automated over the coming decade – while services they don’t currently offer will grow in demand.
While it might seem daunting, in many ways, this is a golden opportunity for BPO companies based in the Philippines, and you as a potential or current employee, to take advantage of this trend. The former BPO model frequently saw bright, qualified Filipinos working in repetitive jobs that didn’t match their education level.
The shifting landscape presents companies with a unique investment opportunity and workers with a unique opportunity to cash in. Now is the time for BPO providers to harness the intelligence of their staff to provide services uniquely fitted to the needs of client companies.
If you are in the know, you can use this as leverage to move up the career ladder in the organizations of these BPO providers.
The key for you is to develop a diverse range of skills within a BPO so that you can offer every service your future employers need – as the IT and Business Process Association Philippines (IBPAP) put it, “the specific investor needs and hot buttons”. Indeed, the Technical Education and Skills Development Authority (TESDA) are already undertaking a workplace skills survey to identify the skills that will be in demand for the 4IR. By investing in upskilling staff now, BPOs can protect the value of their business into the future.
Why BPOs need to upskill their teams
Having identified the skills BPOs want to develop in their teams, the next decision is how to go about it.
Once, upskilling a team would have meant recruiting staff with a specialized skill set. But as we are increasingly aware, there are no qualifications that last for life. The ability to keep learning and developing skills is vital and investing in existing staff is the best way for BPOs to ensure they not only bring the right skills into their companies – but keep them there.
Research has shown that staff who engage in training with their company are 25% more likely to remain with that company – whilst the return on investment for the employer is 600%.
By focusing initial efforts on reliable staff in roles that may soon be automated, BPOs can maximize on staff loyalty whilst improving business prospects.
Obviously, this necessity to upskill and reskill extends to you as an employee of BPOs, should you wish to remain employable. This is especially important in light of the increasing levels of automation that is becoming rife in all industries. If the organization is not providing it, you need to approach a reputable university to acquire the soft skills necessary to help you stand out from a growing BPO workforce. These soft skills can extend from digital fluency and lifelong learning, through to analytical thinking and data-driven decision making. To name just a few.
Any university will do?
Unfortunately, it’s not as simple as you enrolling in a part-time course at the local university. Research shows that whilst universities and BPO companies may be aligned in their perspective of which skills are needed, many Philippine universities have outdated curricula, and there is a miss between the competence assessed by universities and the workplace reality.
When making the decision on how to develop these advanced skills in their teams, BPOs must be sure to make a wise investment with a university that will win them contracts with future clients. If people are working remotely, why shouldn’t BPOs help them to procure valuable skill sets by education them locally via 100% online university learning?
The trends of the fourth industrial revolution, automation and AI mean that changes to the BPO sector are inevitable. Indeed, the wheels are already in motion, and the services that were valued yesterday will not be a priority for outsourcing tomorrow.
One of the criticisms put forward by studies that evaluate the quality of BPO employment is the lack of opportunities for upward labour mobility and acquisition of knowledge and skills during employment. It is widely observed that BPO companies in the Philippines recruit highly educated and skilled workers.
Jobs in the BPO sector do not necessarily imply a skill upgrading of the workforce employed since the tasks assigned are often routine and do not involve a lot of knowledge transfer to the employees. This skills-based perspective can help you identify whether you have the opportunity to obtain transferable skills that can be used in your further career, especially when longer-term employment within the sector itself is not guaranteed or preferred.
Employability is closely linked to you being multi-skilled since this enhances the range of jobs that you have access to, so the need for BPO workers to seek out acquiring those skills elsewhere or risk redundancy or demotion is of paramount importance.
The coming years will see BPO businesses differentiated by the diversity of the professional skill sets and services they can provide to client companies. The 2021 advice to BPOs is to start developing and protecting those skill sets from the get-go. Their competitive edge depends on it.
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About the Author
Mark is a college graduate with Honours in Copywriting. He is the Content Marketing Manager at Nexford, creating engaging, thought-provoking, and action-oriented content.