IT-BPO sector undergoes paradigm shift

MANILA, Philippines - After a decade of fast growth, the information technology-business process outsourcing (IT-BPO) industry is undergoing a paradigm shift that is redefining the business model for many of the industry’s leading services providers.

Although IT-BPO is expected to continue to demonstrate robust expansion, executives are finding that their clients view “optimization” of business processes a requisite to engagement, and the capacity to contribute to “transformation” of their businesses the most compelling advantage for outsourcing business processes.

Infosys BPO CEO and nanaging director Swaminathan Dandapani told delegates to the recently concluded International Outsourcing Summit (IOS) here that the IT-BPO industry is undergoing a “paradigm shift from optimization to transformation,” suggesting that clients expect the companies to which they outsource business processes to take responsibility for enhancing processes, identifying new opportunities as they do so, and capitalizing on them to improve revenues and profitability.

Doing that, Dandapani said, requires an intimate knowledge of clients’ businesses. “I feel like I’m running 92 different businesses,” he said, rather than merely a large BPO services provider. The executive advised delegates to continually ask themselves if what they are doing is increasing their clients’ profits as well as revenues, providing a hint of the complexity of the services IT-BPO firms are expected to deliver. Accountability, he added, extends to the bottom line.

The Philippines appears well positioned to leverage the opportunity the paradigm shift is creating. Aegis Ltd. managing director and CEO Aparup Sengupta said doing business in the Philippines has been a wonderful experience as “the business-friendly regulatory environment, excellent infrastructure, and large talent pool are major positives and our clients have also endorsed our faith in the Philippines.”

However, if the Philippines is to achieve its potential as an IT-BPO hub in the next five years, it must increase awareness of its capacity to deliver increasingly complex services that can transform the way businesses operate. Everest Group managing partner (India) Gaurav Gupta said that extensive interviews and research into the Philippines’ IT-BPO industry revealed a surprising level of complex service work being undertaken here in a broad spectrum of industries.

 “The problem is that awareness of the Philippines’ capacity to deliver these services is low. Companies view the Philippines as the world leader in voice BPO. What they don’t realize is that it is also a significant provider of non-voice, complex services.”

Gupta said the industry - through the Business Processing Association of the Philippines (BPAP) - and government should work together to market the Philippines as a center for transformative business processes.

Everest Group and Outsource2Philippines (O2P) were engaged earlier this year by BPAP - with the support of the Commission on Information & Communications Technology - to develop a road map for the industry over the next five years. Entitled, “IT-BPO Road Map 2011-2016: Driving to Global Leadership,” the study suggests that the Philippines can generate up to $25 billion in revenues annually and provide 1.3 million jobs by 2016 under the right circumstances.

An in-depth look at the road map is being organized by BPAP and O2P with Gupta as the principal speaker later this month.

 “Our final BPAP-O2P CEO briefing for this year will be the first step in implementing the goals set in the Road Map 2016,” BPAP CEO Oscar Sañez said. “The Road Map 2016 was developed with the active involvement of many industry executives. The briefing provides the venue and the opportunity to disseminate these recommendations to an ever larger segment of the industry, as well as to government officials, who must play a key role in our continued development.”