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Unrest has little effect on Philippine outsourcing market

"The administration of President [Gloria] Macapagal-Arroyo has seen its share of political instability over the last five years. The most significant of these was the Oakwood Mutiny of July 2003. Like most social movements manifesting unrest towards government policy, the Oakwood Mutiny was originally perceived to have long-term drastic effects in the economy. This was eventually proven to be untrue for the local and offshore IT industry in this country as the resilience of Philippine society prevailed in succeeding years.

Analysts found renewed growth for the remainder of 2003 and the event being relegated to being a mere nuisance," XMG Inc. told in a statement, as quoted by INQ7.net. The IT research firm also believes the recent pronouncement of state of emergency, which has now been lifted, and the ruckus at the Philippine marine headquarters carry "no fundamental negative effects to (the country's) economic growth."

In the short term, XMG expects some offshore contracts to be suspended or cancelled owing "to insufficient understanding of the real meaning behind events of social unrest in Philippine society." But the sentiment will get better in less than a year so long as the country does not suffer further political unrest.

He indicate that the state of emergency has minimal impact on the country's outsourcing market. Service providers have continued to take on a "business as usual" attitude though they admitted that regular business meetings experienced disruptions due to political protests. Nasdaq-listed ICT Group, Inc., for example, revealed plans to expand its operations while eTelecare Global Solutions announced it will recruit over 3,000 new agents in the Philippines. Nevertheless, "the current situation in the Philippines heightens the need for companies to have multiple global sourcing locations and to have multi-country, multi-location disaster recovery plans in place," PRNewswire quoted neoIT CEO Atul Vashistha as saying.

According to the Business Process Association of the Philippines, the Board of Investments and the Commission on Information and Communications Technology, the Philippine outsourcing industry is expected to create 103,000 new jobs in 2006, a 44-percent increase from 2005. This is in spite of the threat coming from other countries like India and China.

Additionally, the outsourcing industry is expected to bring in .7 billion in revenues this year. Among the outsourced industries in the Philippines are information technology, call center work, animation and software development. All these sectors are bullish about the prospects of growth. The Philippine animation industry is currently a million business, while the global animation outsourcing industry is valued at billion. The BOI also noted a significant increase of information technology-related projects that registered in 2005. The biggest growth is expected in the outsourced call center with a projected 70-percent growth.

The booming outsourcing industry in the Philippines is considered vital in keeping the country’s economy viable. The government recognizes this fact, which is why incentives had been drawn up for foreign companies planning to set up offshore offices here.

The local outsourcing industry is seen to continue growing because of an ever growing demand from the United States. The Philippines remains the most favored nation for outsourcing ventures, after India because of the Filipinos’ excellent knowledge of the English language as well as their familiarity with Western culture owing to the country’s historical affinity. Another factor is the Filipinos’ culture of hospitality which allowed them to carve a niche for quality customer service.


About the Author: Global Sky is a US owned and operated call center based in the Philippines offering US Quality at Offshore Rates. Find out more about Philippines call centers and call center outsourcing. Also check out our call center services.




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