Friday, June 17, 2011

Philippines lifted by outsourcing boom | Hot Penny Stocks

Philippines lifted by outsourcing boom

By Benjamin Pimentel, MarketWatch

MANILA (MarketWatch) ? A phone call from the U.S. related to a broken home computer, a magazine subscription or an insurance claim is typically expected to be routed to a call center in Bangalore or Mumbai.

Increasingly, that call may also end up in Manila.

The Philippines? fast-growing business-process outsourcing industry has turned the Asian nation into a major center for off-shored information tech services. The country recently passed India as the world?s top outsourcing destination, according to a report by the services arm of International Business Machines


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? ? which has a major presence in the country.

Manila Outsourcing Boom: Many Jobs, All-Night Work

The key to the explosive growth of Manila?s outsourcing industry is the wealth of young and educated English-speaking workers in the Philippines. But as MarketWatch?s Ben Pimentel reports, many companies also struggle to find people with enough management experience.

The outsourcing industry has become a major driver of employment growth, highlighted by the presence of major IT services companies such as IBM, Accenture


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?and Convergys


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However, that growth has come at a cost, as the industry and the Philippines struggles with social issues among young workers who sleep during the day and work at night ? and for whom happy hour is 6 a.m.

?Ten years ago, we had maybe about 25,000 people in the industry,? said Jose Mari Mercado, business development director at Convergys in the Philippines, who said that number reached about half a million last year.

?The interest in the Philippines has really grown tremendously in the last five years,? he added.

While business outsourcing is typically associated with call centers, the industry actually covers a range of IT services, including customer relations, human resources, accounting and even more specific functions, such as mortgage processing.

In 2010, the Philippines? IT and business process outsourcing grew 26% to $8.9 billion, according to the Business Processing Association of the Philippines. Workers and professionals employed by the industry grew by 24%, the industry association said.

Globally, outsourcing is expected to grow at an annual rate of 5.3%, reaching $191 billion in 2015, according to an IDC report.

?The BPO services landscape has crossed the chasm and is now poised to significantly impact the efficiency of a customer?s operations,? analyst Mukesh Dialani said in a statement.

Last month, Standard & Poor?s issued a neutral outlook on the overall IT consulting and services, citing ?an elevated level of caution on spending on IT services that were more discretionary in nature.? But S&P, citing data, also pointed to ?pockets of strength? including projected growth in business outsourcing.

Diversifying geographies

Like India, the Philippines steadily emerged as an outsourcing center due largely to an educated, English-speaking workforce, a legacy of its colonial past. The Philippines was a colony of the United States in the first half of the 20th century.


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India initially became the choice destination given its higher profile in the tech industry. But Mercado of Convergys said the Philippines steadily caught up as corporations, many of them based in the U.S. and covering a range of industries, grew more familiar with its capabilities.

?They meet the people and they get to talk to agents and suddenly they realize these guys not only speak English, but they know American culture ? they know what the U.S. is like,? he said.

Benedict Hernandez, a senior executive at Accenture in the Philippines, also cited an international development that helped draw more attention to the Philippines: tensions between India and Pakistan in the early 2000s.

?What we saw around that time speeded conversation on our client side on doing work in the Philippines,? he said. ?I think people woke up and said, ?What if something happens and we?re heavily invested in one geography???

Convergys now has roughly 25,000 employees in the Philippines, mostly in Manila, but also in other cities such as Cebu and Bacolod in the central part of the archipelago.

The Cincinnati, Ohio-based company is focused mainly on customer relations, offering call center support for companies in different industries, including telecommunications and publishing.

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Volume: 7.05M

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Volume: 6.63M

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Source: http://www.hotpennystocks.co/wall_street/top_stories/philippines-lifted-by-outsourcing-boom/

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