‘Niche services’ benefitting SMEs

MORE business opportunities are in store for Cebu-based SMEs for information technology-enabled services (ITEs) with the growing demand on “niche services,” an official from the Game Developers Association of the Philippines (GDAP) said.

Cesar Tolentino, GDAP executive director, said the small and medium enterprises (SMEs) that comprise 99.6 percent of all registered businesses and employ 70 percent of the workforce can fuel more growth in the thriving business process outsourcing (BPO) industry in the country.

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“There is room for at least a thousand more SME BPOs or for possibly $5 billion more in revenues on top of the $7.2 billion revenues generated in 2009,” Tolentino said at the 7th Sun.Star Economic Forum yesterday.

Tolentino said that of the 600 BPO companies registered in 2009, at least 200 can be defined as SMEs.

SME BPOs account for less than 20 percent of all workforce employed in the BPO industry and contribute to less than 20 percent of total revenues in the BPO sector or $1.4 billion.

“There is still more space for growth for SMEs in the BPO. There is still untapped potential revenue that SMEs can generate in the industry,” Tolentino said.

He said SMEs may explore the typical business areas for BPOs such as voice services (call centers), non-voice services (back-office BPOs such as human resource management, accounting and finance, purchasing, and office administration), software development and IT services transcription and data migration, animation and game development, and engineering and design.

Tolentino said niche services are better market focus for SME BPOs since most US-based companies look for specialized services.

“They look for small BPOs that can facilitate their billing and collection services or can handle document preparation such as financial documents for Securities and Exchange Commission,” Tolentino, a freelance consultant and industry analyst, said. He said, however, that the challenge of SME BPOs lies in having multi-functional business units or departments and in acquiring pool of multi-skilled talents.

Sample niche areas for SME BPOs are billing and collections, financial statement preparations, employee benefits management and advertising campaign conceptualization, design and execution.

SMEs can also explore other BPO areas like animation, game development, graphic arts and design, interior design, architectural design, industrial design, and fashion design.

“These areas are suitable for SMEs due to the small headcount requirement versus other BPO types like call centers and transcription companies,” he said.

Bonifacio Belen, executive vice president and operational head of Teledevelopment Services, said that to encourage more SMEs to join the BPO industry, they will strengthen the awareness on IT industry among Cebuano entrepreneurs to address the knowledge-gap between the industry and SMEs.

“There maybe few SMEs that get into the BPO industry because they don’t know how the industry works. They don’t know the product and the market of the outsourcing industry,” Belen said.

Industry players also planned to revive the Smite or Small and Medium IT entrepreneurs, an association that helps small based IT entrepreneurs to further attract local investors to invest in the growing industry.

“This will definitely be the next phase of development in the IT industry of Cebu,” said Cedf-it president Gregg Gabison.
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