Business process outsourcing in the Philippines

This Act provided lower area requirements for developments and tax incentives, which consequently attracted foreign investors.

Immequire (RP) and Tele Response Center, Inc. (US) 5. ePLDT, Inc. and Echostar Communications Corporation 6. ePLDT, Inc. and Teletech Holdings, Inc.[citation needed] The signing of MOUs started the growth of BPO industry in the Philippines, Ambergis Solutions was established that year as a call center for US-based clients in the utilities, IT, travel & hospitality, telecommunications and financial services industries, and hired 5,500 employees.

The American company Echostar and ePLDT established a $5.5- million call center in Makati City located at Reposo corner Jupiter Streets with an initial 500 seats.

Teletech, whose founder-CEO Kenneth Tuchman invested heavily and employed more than 21 thousand workers in the Philippines during President Arroyo's administration.

(Ref: Department of Trade and Industry, New York Office) Also in the same year, a US-based outsourcing center called the "People Support" moved its operations to the Philippines, generating 8,400 jobs for the country.

It was at this time when Jack Freker, the president of Convergys Corporation, announced the incorporation of the Philippines in the revenue generation plan and the global expansion of the company.

A year after, with ePLDT Ventus leading in the BPO industry, domestic economy increased by 5.4% and 11,000 more people were employed.

Due to the lower cost of producing specific goods or services in another country, outsourcing has become a common business strategy for many multinational firms.

In the Philippines, Captive Markets seem to be gaining some growth although the economic landscape still has third-party outsourcing holding the majority industry presence.

This is due to the fact that in recent cases of crises there have been observations on positive growth for third-party outsourcing firms as opposed to captive markets.

In the Philippines there are examples of these setups, including Citi, American Express, JP Morgan, Wells Fargo and the currently-growing Capital One, which are all United States–based multinational companies.

This involves the beginning of the model, which includes the purchasing of property and equipment, with due diligence lasting up to the point of running the BPO center itself.

This model is preferred by companies that do not have any specialized expertise in the new country of operations, hence needing a local partner or vendor to assist with market entry strategies.

[7] Growth in the BPO industry continues to show significant improvements with an average annual expansion rate of 20%.

The IT and Business Process Association of the Philippines (IBPAP) also projects that the sector will have an expected total revenue of $25 billion in 2016.

Arguably it is in the best interest of BPOs in the country to adapt new practices and leverage technologies to keep up with the pace and meet the evolving demand of clients.

Due to this event, the subsector was projected to continue holding the largest contribution to the industry's growth in the following years.

According to a UA&P (University of Asia and the Pacific) industrial economist, the voice subsector was expected to continue a robust growth rate until 2020, but was projected to slow down or degrade by the end of that year due to speculation by the BSP (Bangko Sentral ng Pilipinas), the Philippines' central bank, that a shift in reliance from voice sources of information will occur, turning the demand to non-voice information sources.

[9] Though the industry outlook has been positive on the overall, there remains the issue of forecasted threats caused by policy shifts that may be undertaken by the country's government.

According to industry characters, the threat here was that although tax costs would decrease, the change, even if reduced to 10%, might serve as a deterrent for foreign companies to enter the Philippine market due to a consequent reduction of the country's competitive advantage.

The call/contact centers, being the largest sub-sector in the Philippine BPO industry, have been a major subject on a case study on health and working conditions.

The case study addresses that these psychosocial stressors may also be a major cause or amplifier with regards to the health issues stated above.

Negros Occidental Governor Alfredo Marañon Jr said that IT will close the gap between the rich and the poor: "65% of our population is below 35 years old.

"[18] However, a 2012 report by the Asian Development Bank notes that the growth in the BPO industry has barely trickled down to most of the Philippine population.