News: July 2008 Archives

As Business Process Outsourcing (BPO) continues to thrive in the Philippines, various sectors become increasingly responsive to the needs of this industry. In fact, the education sector and the government are adopting measures to support Philippine outsourcing by developing initiatives and design curriculums meant to equip graduates with sufficient competencies essential for the continued success of the industry.

            A case in point is the creation of a talent working-group meant to offer insights on labor and employment market trends, issues and directions, and plays "applicants' advocate" role during the design and testing of talents. CHED, DepEd, TESDA, and the umbrella association of outsourcing firms in the country, BPA/P (Business Processing Association of the Philippines) spearhead the campaign in preparing students to be ready for possible employment once they graduate.

            Aside from these, there are also partnerships between companies and universities in the pursuit of modernizing the curriculum to be more industry relevant. One school in Makati is currently strengthening its use of the English language by transforming the call center English program into a required English conversation class. Another school responded by way of providing a call center elective to graduating students wherein those who pass are guaranteed with call center jobs after graduation.

The various government agencies and educational institutions initiated the said activities the moment they found out that graduates are actually not equipped enough for them to qualify for employment in BPOs. Research studies show that out of the 400,000 fresh college graduates every year, only a quarter are proficient in the command of the English language, and are eligible to work in call centers and various BPOs. There is a glaring discrepancy between the jobs the industry can provide and the pool of workforce produced every year by college institutions. The industry can provide 600,000 new jobs by 2010. This can never be filled up by the few qualified graduates at hand.

For the mean time, various efforts are being adopted in order to improve the employability of graduates. The outsourcing industry provides a remarkable number of opportunities. Therefore, it is worthwhile to know that the government and the concerned sectors are finding ways in order to meet the said demand. After all, those efforts are for the benefit of all; on the part of the firms who are seeking assistance, and on the side of a nation where unemployment remains a pressing issue.

The financial indecision that occurs from the credit crunch is likely to lead to many outsourcing deals being renegotiated, reduced in scope, or terminated in 2009. The International Law Firm Pinset Mansons warns the industry that many investors would probably go into dispute.

The Law Firm also stated that long-term transformation projects may be delayed or terminated because businesses will most likely look at short-term cost cutting rather than at the longer-term benefits.

Many IT outsourcing deals come under pressure during times of financial uncertainty. This is because a better deal could be done in the depressed market or the anticipated level of expenditure on transformation is no longer sustainable.

Pinset Mansons recommends that businesses review their current outsourcing contracts so they would understand their options such as get-out clauses. They may also plan for the best strategy in advance.

Some companies, however, may use the credit crunch to outsource, it was reported yesterday and was found out that the credit crunch will "drive a new wave of outsourcing and offshoring in financial services as cash becomes tighter".

The growth of outsourcing industry today is indeed unstoppable. But according to the research and consulting firm Forrester Research, jobs have been lost in the IT sector in the United States because software outsourcing is actually low paying IT jobs. Among these low paying jobs are software programming, computer support specialists, and/or computer operators.

The high paying jobs are system analysts, network analysts and research analysts that are still dominating in the market as well. The jobs in this sector estimated the growth at a steady rate of 4% to 5% every year. It requires domain knowledge and idea about the internal working of IT systems and business process in this area. In software outsourcing these qualities are difficult to come through.

The jobs that are not affected by software outsourcing are system analysis and application development, which the rate increased of 6% per year. The reason of this increase is that the on-going demand of these areas is still increasing.

By outsourcing to low-cost countries like India and The Philippines, software outsourcing job rate would probably increased, but buyers still need in-house workforce as well to customize and upholder software. Large numbers of foreign companies are shipping jobs in Offshore Software Development, BPO and Call Centers to their Indian contributors or contractors, in India or The Philippines with a mind set of cutting costs by way of Offshore Outsourcing.

According to a research report, the forecast of software outsourcing industry in the near future might be declined. In addition, attraction of cost savings in software outsourcing is still very high and because of that, increase in jobs like software programmers will be extremely less.

Furthermore, the market of software outsourcing which has major costs savings today will decrease by 2008. Major reason behind this is the decreasing gap between the US salary and the outsourcing countries such as India, as it will lower the salary in US. While in India and other offshore software development countries, salary rise will be very high and this will also decrease the costs saving because of lack of availability of resources.

It is true that the offshore outsourcing industry is still increasing, and still surviving, because of lower costs from countries like India and Philippines, who really dominate in this industry.