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NEWS UPDATES Asean Affairs        4  February 2011

Manila slips in global outsourcing ranking

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THE Philippines' ranking as a preferred location for business process outsourcing (BPO) and call-center operations fell a notch mostly because of lack of skilled people, according to a survey of multinational companies.

In its Global Services Location Index 2011, A.T. Kearney said the Philippines dropped from eight to ninth place out of 50 countries considered attractive locations for off-shoring service activities.

The country scored a total of 5.69 points.

In 2009, the country was ranked eight with a total score of 5.60 points. The government is banking on the growth of the off-shoring business such as BPO, call centers, medical transcription and other e-services to help address the country's unemployment and generate more foreign exchange.

The A.T. Kearney survey analyzes and ranks the top 50 countries worldwide for locating outsourcing activities, including IT services and support, contact centers and back-office support.

Each country's score is composed of a weighted combination of relative scores on 43 measurements, which are grouped into three categories: financial attractiveness, people and skills availability, and business environment.

The Philippines scored high in financial attractiveness with 3.18 points, but low in terms of people and skills availability and business environment at 1.31 points and 1.16 points, respectively.

The report said the Philippines remains an off-shoring behemoth, employing half a million people in the BPO sector and generating $7.2 billion in revenues in 2009.

Amid fierce competition from other regional players, the government has launched a plan to build a virtual BPO university and extend training in call-center skills to an additional 10,000 students to retain its competitive edge.

Compared to its neighboring countries, the Philippines is still behind Malaysia, which ranked third; Indonesia, fifth; Thailand, seventh; and Vietnam, eight. The most attractive locations are India and China because of the combination of human resources and low cost.

"While India, China and Malaysia remain top off-shoring destinations, wage changes and currency flux lead to major changes in the rankings," A.T. Kearney said.

"There is significant diversity in the ranks of these top Asian players. India is the all-around standout, able to provide manpower for any type of off-shoring activity," the management consulting firms aid.

It added that the Philippines' long-established tradition of providing leading call-center support remains strong.

China provides competitively priced high-end analytics and engineering, while Malaysia attracts IT services off-shoring.

Counterparts in Indonesia, Vietnam and Thailand are in their relative infancy.

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