Business Outsourcing in Philippines | CNBC International

Summary

The video discusses the rapid growth of the Business Process Outsourcing (BPO) sector in the Philippines, now the second-largest source of foreign exchange, generating over $15 billion in revenue and employing nearly 1 million people. Despite this success, the country struggles with attracting foreign investment due to strict regulations, corruption, and inadequate infrastructure, costing the economy significantly. However, under President Aquino, improvements in governance and investor confidence suggest a positive outlook for future investments, positioning the Philippines to capitalize on upcoming economic opportunities if necessary reforms are implemented.

Takeaways

• 😀 The BPO sector in the Philippines has grown significantly, generating over $15 billion in revenue.
• 🌍 It is the second-largest source of foreign exchange for the country, creating nearly 1 million jobs.
• 📈 The industry experienced a 17% growth last year, with expectations for continued expansion.
• 🇵🇭 The Philippines is recognized for its Westernized culture and large English-speaking population, making it attractive for BPO services.
• 💼 Teleperformance is a major employer in the Philippines, with around 23,000 employees, among over 800 BPO companies operating there.
• 💰 The country offers cost advantages for companies, prompting shifts from American, Japanese, and Korean firms looking to move from China.
• ⚠️ Despite its advantages, the Philippines has restrictions on foreign investment in key sectors like telecoms, transportation, and banking.
• 🚦 Red tape and corruption pose significant barriers to foreign direct investment (FDI), limiting the country’s capture of FDI in Southeast Asia.
• 🛑 Poor transportation infrastructure leads to significant economic losses, with traffic congestion costing the economy about $3 billion annually.
• 🚀 Recent government initiatives under President Benigno Aquino have aimed to enhance governance and improve the investment climate, signaling a positive outlook for future investments.

Q & A

What has contributed to the rapid growth of the BPO sector in the Philippines?

The BPO sector in the Philippines has experienced rapid growth due to its cost-effectiveness, a large English-speaking workforce, and the country's Westernized culture, making it attractive for global companies.

How much revenue does the BPO sector generate for the Philippines?

The BPO sector generates over $15 billion in revenue annually.

What percentage growth did the BPO sector achieve last year?

The BPO sector grew by 17% last year.

How many people are employed in the BPO sector in the Philippines?

Nearly 1 million people are employed in the BPO sector in the Philippines.

Which company is mentioned as a significant employer in the Philippine BPO sector?

Teleperformance is mentioned as a significant employer, with approximately 23,000 employees.

What are some challenges the Philippines faces in attracting foreign investment?

Challenges include bureaucratic red tape, corruption, and restrictions in key sectors like telecommunications, transportation, and banking.

What impact does traffic congestion have on the Philippine economy?

Traffic congestion costs the Philippine economy about $3 billion annually in wasted time and opportunity costs.

What changes have occurred in the investment climate since President Benigno Aquino took office?

Investor confidence has increased, with a focus on good governance and infrastructure development aimed at improving the investment environment.

How does the Philippines compare to China in terms of operational costs for BPO and manufacturing?

The Philippines is considered cheaper for BPO and manufacturing compared to China, which is facing rising operational costs.

What is the potential for future investment in the Philippines according to the script?

The script suggests that the Philippines is well-positioned to catch the next wave of investments, provided it continues to implement necessary reforms.