Philippine BPO industry beats 2022 targets with hybrid work setup

Call centers and peers optimistic for 2023 despite recession fears

MANILA -- Philippine call centers and other outsourcing companies beat revenue and hiring targets last year and expect more growth in 2023, as global businesses continue seeking ways to cut costs.

The economically vital business process outsourcing (BPO) industry, which provides support services to companies from Amazon to Zoom, saw revenue increase 10.3% to $32.5 billion, and staff count rise 8.4% to 1.57 million, the IT and Business Process Association of the Philippines (IBPAP) reported Tuesday.

Financial services, health care, retail, technology, and telecommunications drove growth, it added. The trade association had forecast 8% to 10% revenue expansion and headcount growth of 7% to 8%.

For this year, IBPAP said the industry could see its workforce reach 1.7 million and revenue hit $35.9 billion, expansions of 8.3% and 10.5%, respectively.

The group, citing its own survey, said 83% of outsourcing companies expect to post growth in 2023 "despite a potential global recession," while 17% were "neutral with their forecasts."

The result of the survey also showed that organizations will continue to outsource and use global business services to cut costs, the association said.

The better-than-expected performance in 2022 is the latest good news for the sector. In September, the government allowed PBO companies with work-from-home arrangements for their employees to retain tax incentives. Many outsourcing companies operated under an investment regime that required staff to work on-site to enjoy tax perks, and the hybrid work setup was initially a temporary measure taken in response to the pandemic.

Amid intense lobbying for hybrid work to be made permanent, IBPAP pledged to generate 2.5 million jobs and $59 billion in annual revenue by 2028, the end of President Ferdinand Marcos Jr.'s six-year term.

The lofty targets come as the call center industry faces a number of challenges, such as automation, as well as difficulty hiring qualified workers and rising competition with other outsourcing destinations like India, Poland and South America.

"We still have a long way to go, but [the] Philippine [industry's] stellar performance in 2022 brings us closer to generating 1.1 million new jobs for Filipinos," said IBPAP President and CEO Jack Madrid in a statement.

"It's also a testament to the collective efforts that the private sector, government, and academe have exerted to retain the industry as an indispensable pillar of the economy," he said.

Source: https://asia.nikkei.com/Business/Companies/Philippine-BPO-industry-beats-2022-targets-with-hybrid-work-setup#:~:text=The%20economically%20vita