Friday, September 05, 2008 Taking up the outsourcing challenge By Yuleta Ruiz Orillo University of the Philippines Cebu College
AFTER export-oriented industries and tourism, information technology (IT) and IT-enabled outsourcing investments have emerged as the newest growth driver of the Cebu economy.
Outsourcing in software development and data transcription services have been in Cebu since the 1990s, but the industry grew rapidly only after 2000.
The Cebu Education Foundation for IT (Cedf-It) estimates that the number of software developers increased from 850 to more than 5,000, while IT-enabled service workers increased from 7,000 to more than 20,000 from the 2001 to 2007.
Between 2001 to 2007, around 70 percent of investments were in information and communication technology (ICT).
One question posed during the Sun.Star Economic Forum last Aug. 20 was: Can this growth be sustained?
On the demand side, the global market for outsourcing services is huge and growing. Of the estimated $450 billion global addressable market, actual penetrated market was only $45 million in 2005 and is expected to grow to $130 billion in 2010.
The Philippines aims to increase its share of this global market from five percent in 2005 to 10 percent in 2010. According to Cedf-It, “Cebu would like to capture 20 percent of this national target.”
Among the challenges faced by the industry, the most serious concern is sustaining the supply of the right quality of human resources. Outsourcing firms need high quality workers who can perform in a global work environment, can communicate well with international clients and colleagues, are technically competent in their fields and are computer literate.
But the low hiring rates in the industry indicates that many applicants do not meet the skill and competency requirements.
Outsourcing companies also have to compete with other industries in attracting qualified workers. As a new industry, many people are still not familiar with outsourcing and the many career opportunities that it offers.
Outsourcing is usually associated with call centers and the problems of working as call center agent. The industry is, in fact, highly diversified and offers career opportunities for managers, accountants, software developers, engineers, human resource practitioners, animators and other knowledge workers.
According to the Business Process Association of the Philippines (BPAP), the outsourcing industry has three sub-sectors: business process services (BPO), IT application services (ITO) and engineering services (ESO). BPO includes call centers, non-voice services (such as finance, accounting and transcription), and high-end services, like research and animation.
ITO includes software development, IT infrastructure services, system integration, and application development and maintenance. ESO, on the other hand, includes manufacturing engineering and architecture design services.
One strategy identified by BPAP to address this challenge is promoting awareness on career opportunities in the outsourcing industry.
Potential workers, particularly high school students who are still deciding on what career path to take, need to be informed about career opportunities in the outsourcing industry, especially in higher valued BPO, ITO and ESO services.
Cebu responded well to the initial challenge of fast- tracking development of the outsourcing talent pool by upgrading the skills of workers and through the development of training programs in higher education institutions.
Now, the challenge is generating more interest and attracting more people to invest in a career in the outsourcing industry.
