Archive for the ‘banking’ Category
Beyond outsourcing
August 26th, 2009
Here are two ways to look at the latest statements of the World Bank regarding the business process outsourcing & industry in the Philippines.
Outsourcing is the practice of contracting the operations of specific business functions to a third party provider, most common of which are call centers.
The bank says that despite the global economic slowdown, outsourcing will grow by an estimated 20 percent for the full year and increase the percentage of Filipinos it employs relative to the work force.
Last year, the industry grew 28 percent year on year. It employs 1 percent of the working population.
Outsourcing firms, which started locating in Metro Manila but now are setting up in key cities all over the country provide an entry- level salaiy that is relatively higher than that of other industries. Communication skills are the only basic requirement. This attracts the young and those who cannot find opportunities in their own fields. It helps boost consumer demand besides.
The industry has not been immune from the slowdown’s effects. With clients mostly from the crisis-stricken retail industry in the US and other countries, outsourcing firms have scaled down activity in voice services. Still, a 15-percent growth was observed in the first six months of 2009, a respectable rate given the uncertain environment.
But the bank’s chief economist for the Philippines warns that the
government must not rely on this industry to shore up the economy
which is projected to register minimal, if not flat, growth this year.
Eric Le Borgne said that the services industry, of which outsourcing is a part, has acted as the employment safety net of Filipinos. “The service sector in the Philippines is large, but it reflects a failure to boost economic activity rather than a mark of success in diversifying the structure of growth.”
Indeed services have kept the economy afloat when output from the more traditional agriculture and industry sectors suffered a dent from the crisis. This is not to say that all the attention should be on keeping this advantage without regard for the other sectors. The government must work on its more basic and structural industries that will make the economy less susceptible to external shocks.
Whether outsourcing will live up to its promise is uncertain. What is sure is that basic services like food security health care, education and housing as well as infrastnicture and business climate stability need the government’s attention if it wants to provide a better life for more Filipinos aside from remaining competitive in a growing industry.
