Growing potential for world-class business

Impressive growth has cultivated a fertile soil for business process outsourcing in the Philippines. SPi Global has enjoyed the bounty and is redefining how Filipino BPO companies take on the challenges ahead

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The BPO industry has long persisted as an effective means of increasing company flexibility in a range of diversified markets. Whereas historically the offshore component has been dominated by companies in India, its rule has since been offset by the emergence of new and developing economies.

No other nation has experienced quite the same growth in BPO as the Philippines. Having clawed a promising share of the global industry’s market and generating employment for nearly a million young and talented Filipinos, the country is strongly positioned to benefit from this global trend.

One company that early on recognised the country’s potential for growth, and one that has since spearheaded innovative changes in the industry, is SPi Global. The company’s success has seen it awarded our Best BPO Company, Asia – 2013. In light of this latest achievement, CEO Maulik Parekh spoke to European CEO about the global BPO industry, the emergence of the Philippines, and the company’s plans for the immediate and long-term future.

What are the factors contributing to the rise of outsourcing?
There are a great many factors. However, the top three reasons are: controlling costs, improving operational efficiency, and the availability of skilled resources.

Fortunately, these considerations are readily provided for by BPO companies, especially in Asia.  Outsourcing partners, like SPi Global, can provide expertise and value at lower costs due to economies of scale.  By entrusting non-core processes to outsourcing service providers, companies give themselves the ability to focus on their core competency. Asia also has an ample supply of educated and skilled English-speaking labour – language capability being especially important. Geographic presence is also important for large-scale operations. Companies are increasingly resorting to near-shore and offshore set-ups in outsourcing their non-core business functions. By having multiple locations where work can be distributed, we are able to manage risks better.

Another important factor is government support. In the Philippines, for example, BPO companies are supported with tax incentives and campaigns to further develop the supply of qualified manpower. The government also supports the development of cities to better facilitate BPO companies, most of which are situated in the capital. Indeed government receptiveness to BPO companies allows for a greater measure of competitiveness and, more importantly, a means of economic growth.

What is the current state of the global BPO industry?
I believe the BPO industry is on a trajectory for growth. Over the years, we’ve seen companies outsourcing many non-core business processes – including customer care, claims, payroll processing, finance and accounting, and collections, to name a few – and capitalising on core business operations. Increasing competition and cost pressures have forced them to do so.

There are estimates that the BPO industry will grow by 5.4 percent a year to $93.4bn by 2015. But in the Philippines, the growth is much more robust at 25-30 percent, while India will grow by ten to 15 percent. The trend is shifting more and more towards high-level knowledge work such as IT outsourcing, animation, game development, and finance outsourcing, to name a few. Voice outsourcing, or call centres, will still grow, but non-voice outsourcing will grow even faster. It’s going to be a knowledge-driven game in the future where functional expertise and domain knowledge are given more premium.

How do you see the global BPO industry developing?
As companies seek to focus on their core areas of expertise, you will see them relinquishing control of non-core functions to third-party providers. This is true for both voice BPO and non-voice BPO. As I said, outsourcing call centres will continue to grow steadily, but non-voice, including the more knowledge-driven and creative processes such as animation and IT outsourcing, are just beginning to bloom. Non-voice covers a lot. They include healthcare information management, content solutions, software development, animation, and legal services, along with a host of others.

North America, Europe, the Middle East, and Asia will likely continue to be the source of big BPO contracts. Developed countries will be looking at Asia in particular, especially in fields of customer care, payroll processing, HR, engineering design, and R&D.

The Philippines is starting to rival India in the BPO industry. Why is that?
India is still the leader when you consider the BPO industry in its totality, but in voice BPO the Philippines is unmatched. Experts have enumerated a number of reasons for this: that Filipinos have a neutral accent and one that is easily understood by Americans; the cost of outsourcing services is low in the Philippines; a growing number of graduates with degrees and skills relevant to BPO operations; and an endemic service culture.

America is not the only market we’re looking at. SPi Global has recently set up an office in Australia, where we think there’s a great deal of untapped potential. Australian companies are likewise becoming increasingly open to the idea of outsourcing non-essential processes.

How has SPi Global helped develop the Philippine BPO industry?
We pride ourselves on being the pioneer in the Philippine BPO industry, having begun more than 30 years ago offering content conversion services to European and US-based companies. We later expanded our services to include healthcare information management and customer relationship management.

In the last ten years, we’ve expanded our operations, acquired companies to strengthen our portfolio of services, and increased the number of employees to tap opportunities and satisfy an ever-growing demand. We’ve time and again demonstrated that a company based in the Philippines can be truly world-class. We are particularly proud of that.
We’ve also generated a vast number of jobs in Philippine provinces where the local populations have often struggled with unemployment. The likes of restaurants, malls, and a host of other businesses have since sprouted and become part of an ecosystem we helped create.

SPi Global is also an active member of the Information Technology and Business Processing Association of the Philippines (IBPAP), which oversees the development of both the IT and BPO industry, and fosters partnerships with local and central governments. This organisation is very important to all of us in the BPO industry.

Where have you expanded overseas, and what opportunities are you seeing in these regions?
Since our beginnings in the Philippines, we’ve explored a number of progressive opportunities, having set up various centres in India, Vietnam, the US, and Latin America. We just opened a new call centre in the US, with the intention of bolstering our call centres throughout much of the Philippines.

In India, we’ve acquired companies involved in educational publishing to supplement our existing services. Education publishing is one exciting area we’re pursuing now that the US government has mandated the use of e-textbooks. Our operations in India, Vietnam, and the Philippines likewise support leading publishers in the scholarly, scientific, technical, and medical fields in Europe, where the bulk of our clients are located.

Why should an international business looking to outsource its operations choose SPi Global?
BPO is a people business, and what sets us apart is our culture. This culture is shaped by our values I AM MoRE (Integrity, Accountability, Meritocracy, Malasakit – a Filipino word which means genuine care and concern – and Respect) We are proud of our 18,000 expert and educated employees throughout the Philippines, India, Vietnam, and the US who each offer knowledge process and customer relationship management solutions to a wide range of markets. Our service culture is one differentiating factor many of our clients have come to appreciate.

What is your vision for the company?
Indeed there is much room for us to grow. Our internal growth plan is to see our $250m company achieve $500m in revenue by 2016. Having seen a great deal of BPO companies worldwide, there is most definitely no other place in the world to rival the Philippines in terms of genuine passion and enthusiasm for the BPO industry.