BPO, Property Sectors No Strange Bedfellows

by Dennis Estopace | Business Mirror , 10-08-2012

The business process outsourcing (BPO) sector generates billions for the country and probably millions for the real-estate developers.

Jose Carmelo J. Porciuncula, head of business operations and capital markets of property-management firm KMC MAG Group Inc., and Michale McCullough, the firm's co-founder and managing director, agreed. Porciuncula and McCullough said they believe that the BPO sector "contributes a lot" to the property sector's growth by stirring not only the office-space market but also the retail sector. Also, according to McCullough the BPO sector is helping build a really strong middle class. He said commercial and office spaces in Metro Manila are 99 percent leased out because of call centers, where the sector hold fort. "We're seeing the biggest year in terms of take-up, and the year [2012] is not over yet," McCullough added.

KMC MAG Group Inc. posted P3.4 million in revenues at end-December 2009 and is predicting a 0.4 to 0.5 million-square meter take-up at year's end. Porciuncula said that they have seen such brisk deals at the Fort Bonifacio commercial business district. "Here, as soon as a contract is signed and the buildings rise, lights come on after two months." Those lights might as well be shining on the Philippine BPO sector, whose revenues, according to a statement from the International Outsourcing Summit (IOS), grew to $11 billion in 2011.

The 201 revenues accounted for close to 13 percent of total global industry revenue if $87.32 billion, according to the Business Processing Association of the Philippines (BPAP) and India's National Association of Software Services Cos. (Nasscom). The local BPO industry is also credited with helping in job generation as direct employment jumped 44 percent from 423,000 in 2009 to 638,000 in 2011. If the Philippine BPO industry "grows another 20 percent this year, considered by many to be at least a somewhat conservative estimate, revenues will exceed $13 billion and account for a slightly higher share of the rapidly expanding global market pie," the IOS statement said.

While the Philippines is considered the global leader in voice services and a strong competitor in complex, non-voice services, India still accounted for 58 percent of global IT [information technology-BPO revenues in 2011 on the strength of IT and software services," the statement added. "Software and software services account for the vast majority of India's IT-BPO export revenue - 87 percent of exports - and Nasscom says software and services will grow almost 15 percent this year," it said. 

In contrast, the non-voive BPO services in the Philippines accounted for almost 33 percent of totla IT-BPO revenues last ear. Such BPO services ranged from health-information management to engineering and project management services. "Although voice-services revenues continue to grow rapidly at around 20 percent, growth in the non-voice services is outpacing growth in voice services," the IOS statement said. The statement added that health-information management "grew more than 170 percent last year, and IT outsourcing, which includes software and software services, expanded almost 40 percent."

Porciuncula and McCullough said the party's not yet over for the Philippine BPO and real-estate sectors. "It will [be over] if the BPO [sector] stops growing 20 percent to 25 percent annually," according to McCullough. Porciuncula said the party would go on especially if other players who have been invited show up.

Anna Marco, KMC MAG Group Inc. Associate Director, said the noise does not come only from big-named BPO firms. "Call centers start at small scale, and when they grow, they would eventually drive office space. So while we're seeing the bigger ones growing even bigger, it should be noted that smaller ones are also coming in, providing the continuous cycle marking this the golden age of both the property sector and the BPO industry," she said.

And, Marco added, "If the government and the private sector work [together] well and form a proper labor pool, especially the 18 to 25 age group, and we keep producing good graduates from which business can draw from, I think we're good, not just for BPO [companies]."

Indeed, the sector has been short of what the BPAP described as "quality" workers. Since 2009, the BPAP has embarked on a program to generate manpower to meet the demand for such workers, with the Aquino administration throwing it support on top of existing trade incentives given to the BPO sector.

Last year the government said it will release P500million ($11.6 million) to help train "knowledge" workers for the sector. "A stable supply f qualified labor is among the top concerns of IT-BPO executives, who believe that the industry can continue to grow between 20 percent annually if labor supply is sustained," the ION statement said.

The BPAP has said it is targeting this year $17,000 college graduates and other professionals who might consider a career in the BPO sector. The sector aims to generate 1.3 million jobs by 2016.

Its work force stands at 640,000, according to the Healthcare Information Management Association of the Philippines. The association was looking at some 400,000 unemployed nurses as of February this year and hoping that some in this idle batch might give a BPO career a shot.