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"One of the most competitive aspects of the Philippine economy has been the rapid growth of its services sector since 1980. Contributing to 53.2% of the GDP in 2006, segments such as telecommunications, business outsourcing and financial services have leapfrogged into the limelight, making the country one of the fastest growing BPO (Back Office Processing) destinations in the world." (Thomaswhite.com)
Business Processing Outsourcing in the Philippines
The convergence of technology and globalisation paved the way for BPO. Companies are delegating some of their business operations to third-party service provider usually in other countries because it is much cheaper to operate their business operations in these regions than their own.
The Business Process Outsourcing (BPO) has grown exponentially over the years and is the fastest growing industry in the world. Businesses are realising BPO's potential to allow their business to perform better while at the same time lowering its costs. Because of the significant role of BPO, industry experts forecasts continuous growth in the next 10 years [Rodolfo, (2005), "Sustaining Philippine Advantage in Business Process Outsourcing"].
At the start of the decade the call centre industry rapidly grew in both revenue and employment. Call centre services in the Philippines contributes 12% to the country's GNP. Moreover, it is has been one of the biggest employers for Filipinos.
Call centres are the biggest sector in the BPO industry in the Philippines. The employment particularly in the call centre sector had been growing exponentially over the years. In 2000 there were only 2400 call centre professionals and by 2005 this number grew to 112,000 with revenues totalling more than $1 billion, from revenue of $24 million in 2000. The BPO industry currently employ around half a million people and according to estimates released by the government, as more investors come in to expand the business the BPO industry could be employing more than 920,000 workers by the end of 2010. Industries from the pharmaceutical to the technological are taking up residence in the Philippines, lured by the high standards of the education system, the low cost of operations, and the cooperation of the government in introducing new business to its people. According to industry experts, the call centre industry in the country could generate over US$12 billion in revenues by 2010. (Phillippine IT Offshore Network )
Philippines being one of the most attractive BPO destinations in the world benefited significantly from the exceptional growth of this industry. The country earned great revenues from its five major IT and business sector: call centres, animation, medical transcription, business process outsourcing which includes shared service centres and application outsourcing (development, maintenance and management) for multinational companies.
According to the Department of Trade and Industry during the years 2001-2005 the BPO sector in the country has been growing by an annual average of about 160%. In 2004, the industry has made about $1.655B in revenues, much higher that of $350M revenues generated in 2001. Call centres had $863 million; Medical Transcription at $482 million; Software Development at $267 million and lastly the Animation had $39M. The DTI's forecast for the medical transcription is to grow further in the next few years. It is considered as the fastest growing subsector having 130% growth in revenues between 2001 and 2004. It was followed by call centres at around 50%; software development at 30% and animation at 25%. (DTI:2005)
BPO in relation to the economy
The Philippines' business process outsourcing (BPO) industry has 15% market share of the global outsourcing market and has been the fastest-growing segment of the Philippine economy. Although industry revenues slowed from 40% growth during 2006 and 2007, the BPO sector has been relatively resilient in the middle of the global financial turmoil, generating more than $6 billion in revenues in 2008 (up 26%) and $7.2 billion in 2009 (up 19% and equivalent to about 4.5% of Philippine GDP). (state.gov.ph) The Philippines economy compared to its neighbouring economies did not entered recession during the credit crisis. During 2009 these countries experience recession with Japan leading the way at -5.1%, Thailand at -2.8%, Singapore at 2.5% and Malaysia at -1.2% (Habito:2010) Government spending, a looser monetary policy, and the country's relatively resilient business process outsourcing industry were said to be the main reasons for this.
The International Data Corporation (IDC) named the capital city of the Philippines, Manila as the top BPO destination in the Asia-Pacific region. The country has also been named as the 'Off Shoring Destination of the Year', for the second time by the United Kingdom's National Outsourcing Association last October 2009. Three other cities in the Philippines were included by the London Financial Times in the survey of 'Top Ten Asian Cities of the Future', thus confirming Philippines' position as a major player in the business operations outsourcing market. (tradechakra.com)
Philippine competitive advantage
Because the American companies are the main business clients of the BPO, particularly the call centre industry, the Filipinos have a big advantage because they are proficient in American English. In addition to this, the Philippines are a former colony of the USA the two countries have a very similar education system. The English in the Philippines is based on North American English. This English is taught at a very early age in schools making Filipinos versed in it including pronunciation and diction. The English language is widely spoken in the Philippines. The language is used in media (print and broadcast) education, religious affairs, in business and in everyday communication. There are no subtitles on movies or television shows because it is expected to be directly understood. Even poorly educated people would still have a basic understanding of English. Gartner (2002) described the Philippines' English proficiency as "world class", mainly because of their ability to understand idioms, adopt accents and nomenclature. In addition, the verbal skills of Filipinos are clearer and can be better understood by the American consumers than other BPO destinations. In addition to this a high percentage of population is proficient in English (72%) and the country has one of the highest literacy rates in Asia (95.2%) (CIA World Factbook:2003)
In addition to English language skills, the Philippines boasts high competency in IT.Â
With the increase in competitiveness, improvements in communication and the amount of money that could be saved businesses are increasingly pressured to move some of their business operations abroad to stay competitive. This is the result of globalisation. The business operations will go to the most country that provides the highest cost-benefit ratio. BPO is estimated to reach the size of $180 billion in 2010 (McKinsey & Company). The business process outsourcing industry was dubbed by the government as the "Sunshine Industry" due to the enormous growth it has experienced in the last 10 years. It is the fastest growing industry in the Philippine economy.
The Philippines is catching up fast on India in outsourcing. Despite the global recession the demand for outsourcing is at an all time high. Even if the Philippines' workforce in BPO is under 50% of India's BPO workforce, the Philippines' revenues from BPO are half of India's.
The Philippines is looking to over take India in the call centre industry in the next few years. Some of the America's big businesses looking to the Philippines for outsourcing, the list includes the biggest providers in America of broadband, cell phones, and high-definition TV.
Businesses all over the world are realising the Philippines' competitive advantages, "such as vast pool of highly qualified and skilled labour with unmatched level of American English proficiency and strong customer service orientation; highly reliable and cost efficient telecommunications infrastructures; and competitive cost structures that make available world class services at significant cost savings, there is no doubt that the country will soon become the global BPO hub. The Philippines, once a cub in business process outsourcing, will eventually grow to become a tiger." (PITON:2006)
Textiles and Clothing
Textiles and clothing is one of the largest manufacturing and exporting processes in the country and a huge employment absorber. Egypt poses a high comparative advantage for a variety of Textile and Clothing products, which it has developed into a competitive advantage in major foreign markets. This industry contributes with one quarter of Egypt's non-oil export proceeds, with Cotton textiles comprising the bulk of Egypt's TC export basket. The public sector accounts for 90% of cotton spinning, 60% of fabric production and 30% of apparel production in Egypt. Egypt has one of the largest spinning and weaving enterprise in Africa and the Middle East. The private sector apparel industry is one of the most dynamic manufacturing processes in Egypt.
play a crucial role in the economy of the country. The government is engaged in the supervision of craftsmanship and textile export. http://www.mapsofworld.com/egypt/economy/textile-industries.html
Egypt's textile industry, growing at an average rate of 6.5% annually, is a key component of the Egyptian economy. It employs more than half a million Egyptians and is a crucial foreign exchange earner. Egypt's exports of textiles are estimated at $1.3 billion per year, accounting for 25% of total Egyptian exports.
the textile sector accounts for 27% of Egypt's industrial production, making it the second largest industry in the country after processed food. The government has been trying desperately to reverse this trend, first allocating $58 million for the textile industry in April, and then following up with a promise to pay $0.50 per kilogram for yarn produced from Egyptian cotton
For long, Egypt has been known to be the colossus among the dwarfs in the cotton world, rivalled only by American Pima cotton
Egypt is the world's largest exporter of cotton and its textile industry is large.
Egypt Overview of economy, Information about Overview of economy in Egypt http://www.nationsencyclopedia.com/economies/Africa/Egypt-OVERVIEW-OF-ECONOMY.html#ixzz0p8FBXWJQ
The steadfast support from the Egyptian Government and the European Union (EU) has triggered a wave of modernisation and restructuring in Egypt's textile and spinning industries, with an increasing number of small and medium sised companies investing in advanced machinery and equipments to enhance production capacity and quality of output.
The â‚¬80m - given in four instalments - that the European Union earmarked to support the restructuring of the Egyptian spinning industry two years ago is being effectively utilised, with â‚¬19.5m being used by the Ministry of Investment to help restructure the sector and retrain workers, while the remainder is being used to privatise and modernise the public sector spinning and weaving companies in Egypt.
The modern methods and techniques applied in the manufacturing and production of textiles in Egypt There is a steady improvement in the quality of materials and use of different types of fabrics.
The Egyptian Government has also extended their support to the local textile industry by abolishing all tariffs on imported textile machinery and reducing tariffs on imported threads and other supplies for the industry. Textile exports also have been receiving a boost following several international bilateral agreements with leading importers of textile products such as the USA and EU.
According to FEI statistics, there are 4,250 weaving, textile and clothing manufacturers in Egypt, with their production accounting for 26% of national industrial revenues and 24% of industrial exports. Total Egyptian exports of ready-made clothing itself are estimated at $448m per annum, making Egypt the world's 38th largest garment exporter.