Woeful political, fiscal environs shrink investors’ interest in the Philippines BPO sector
Even as it continues hold its position among the leading IT and BPO service providers in the Asia-Pacific region, now it has become important for the Philippines to undertake immediate and stringent measures to overcome the country’s pathetic political and fiscal situation if it wants to retain its rank among the top service providers as well as to steer clear of the cutthroat market.
Quoting a recent report published by the global business research and consultancy firm Gartner, on Top ten offshore service sites in Asia-Pacific and Japan, a business website reports that though Philippines was ranked among the top IT and BPO service providers in the region, it did not receive very encouraging evaluations owing to the weak political and economic conditions prevailing in the country. According to the Gartner report, while inexpensiveness of the services is a vital aspect, the prevailing political and economic conditions have given rise to skepticism among several firms while shifting business to offshore sites. In fact, Gartner said that like in the Philippines, the political and economic situation was also in turmoil in neighboring nations like Indonesia, Thailand and Vietnam.
On the other hand, the study by Gartner ranked Australia, New Zealand and Singapore highly vis-à-vis the political and economic environments in these countries. In addition, these countries were also appreciated for cultural coherence, language, legal maturity and security as well as privacy of data and intellectual property (IP). While Vietnam and Indonesia were ranked poorly for infrastructural facilities, China, Vietnam, Thailand and Indonesia did not receive high ratings for language and cultural consonance. Interestingly enough, the Gartner study ranked Vietnam as the least expensive offshore location for information technology and business process outsourcing services in the Asia-Pacific and Japan region, the country was ranked lowest vis-à-vis privacy and data and IP security.
India and China were again found to be the most favored offshore destination for IT and BPO services, with the Philippines posing a threat to their leadership in this sector. According to Jim Longwood, vice-president (research) at Gartner, the study noted that while this was the first time that Indonesia entered the list of top ten best offshore destinations, Asian nations like the Philippines, Malaysia and Vietnam were working hard to maintain their place against the other prominent offshore destinations in the region. Longwood said that many Asian nations have made substantial investments in the IT and BPO outsourcing sector and have reaped advantage of the augmented demand for cost-effective services.
While the study noted that the recent global economic recession had compelled many firms to look for cost-effective offshore destinations, it also emphasized that it would no longer be a fruitful ideal to remain inexpensive, but also lay stress on other related areas, such as labor pool, infrastructure, educational system, language, political and economic environment, globalization and legal maturity, cultural compatibility, data and IP security and privacy.