This is a continuation of my column last week.

As, implied here last week, the emerging industry in the services sector of the country’s economy is BPO or Business Process Outsourcing. BPO includes such as business data processing, finance and accounting
services, customer contact centers, and medical transcriptions.

It is expected to grow by more than 10 percent, far above the national economic growth target of around 6.4%.

The emergence of this industry is caused by the much improved information and communications technology that enables workers in the Philippines to do jobs for clients overseas.

The motivation of companies relying on Philippine labor for these jobs is, of course, profit.

They spend only about one-tenth on labor in the Philippines compared to what they spend in the U.S. or Europe.

In a highly competitive market like the U.S. and Europe, the lower labor cost gives companies the edge that enables them to get more clients and thereby boost revenues and profits.

In addition to cost reduction, a major reason for outsourcing is to improve efficiency and effectiveness of their (the companies who outsource) internal processes.

What the private sector in this region can do is to understand better the needs of the BPO clients and initiate efforts to meet them in accordance with standards of the industry such as on-time deliveries, high
percentage of accuracy, low operating costs, and so on.

To be able to get such clients, we also need to improve on our infrastructure and business climate.

Stability of operations should be a primary concern, particularly of our telephone companies who will provide the internet connection through which the outputs will be transmitted to clients. A critical question is:
Will our telephone companies be able to meet industry standards such as high speed and redundant (fail-safe) connectivity?

Knowing first hand the problems of these telcos in this regard gives me a lot of apprehensions. In recent weeks our local telephone companies suffered downtimes (no internet connection) from 6 to 48 hours.

Such a low quality of performance will not meet the standards of BPO.

These companies must invest in more equipment and get them up-to-date and redundant so that no such interruptions occur. Until this is done, BPO firms will not consider this region a prime location.

Another issue is on reliability of power. Brown – outs are a no – no in this business. Such sudden and unannounced power outages can do a lot of damage to files and inability to deliver outputs to clients. But this is
another matter which can be the subject of next week’s column.