State of the Outsourcing Nation As of June 2017

Business process outsourcing has made a sizeable impact on the economy of the Philippines, creating more than a million job opportunities for Filipinos. Its influence has been so strongly felt in the recent years that remittances by OFWs will soon be surpassed by outsourcing revenues.

According to Philstar writer Boo Chanco, it is expected to have more than 7 million by 2022. Last year, it has generated 25 billion dollars in revenue and is predicted to go to 40 billion in the next five years as well.

Should Philippine outsourcing continue to progress at this rate, it will comprise fifteen percent of the world outsourcing market.

This is, however, if things run smoothly. As this industry is now a key player in the country’s development, it may feel the effects of current world and local events more than others will. Political shifts in climate will also affect the operations of both new and established corporations in the Philippines-may it be an outsourcing company in Davao, Cebu, or Metro Manila.

Here are some of the latest news concerning the local BPO industry:

Data Privacy Asia 2017 to be held in the Philippines

One of the biggest summits in Asia dedicated to data privacy will be held on July 20, 2017 at Makati Shangri-La, Metro Manila. This may be beneficial for the outsourcing industry, as data privacy is important for the protection of the personal data of both clients and outsourcers. Nearby countries such as Singapore have strong data security. They will be able to share their knowledge in forum this 20th of July.

There has already been a mandate that ensures the safety of data privacy: Republic Act 10173 or the Data Privacy Act of 2012. With the addition of the upcoming conference, Filipino BPO companies can pick up pointers on how to improve their security even further.

Study by ILO says: Automation a risk to BPO employment

According to the International Labor Organization, majority of Filipino BPO workers are in danger of losing their jobs to robotic automation. Many jobs that were done by human virtual assistants are now performed by artificially intelligent VAs.

The industries that are vulnerable to unemployment are ranked as follows:

  • 89 percent – Business Process Outsourcing (BPO)
  • 88 percent – Retail and Trade
  • 70 percent – Hotel 8 percent – Banking

For other industries, their risk rate is at 42 percent.

Many companies have opted for an automated workforce as they require no rest days, therefore increasing production. This is in contrast to human employees that require at least one day of rest per week. Automation also lessens the budget allocated for employee salaries.

BPO Companies Concerned by Tax Benefit Reduction

The real estate consultancy firm Colliers International Group, Inc has stated that the recent cuts in the tax perks given to outsourcing corporations in the Philippines will hamper with the industry’s progress. It will lessen the country’s power as a competitive player in the global BPO market.

As of late, the Philippine government has been revising their taxation policies in hopes of increasing their budget for the various national infrastructure projects.

One of these revisions has targeted the incentives given to BPO firms run by foreign companies. Another has put VAT (value-added-tax) to sales made by outsourcing. Making BPO offices no longer VAT-free will make the country unappealing to those who wish to invest in the industry.

It should be noted that these tax perks are a large reason for the country’s attractiveness in the eyes of foreign BPO investors.

It remains to be seen if the latest national events will have a long-term effect on the status of the Philippine BPO industry. This only goes to show, however, the growing sway that outsourcing and outsourcing company in Davao holds over a large part of the country.

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