Contact centers generate highest IT exports

Call center companies generated most of the revenues according to information technology-based services in 2005, Bangko Sentral ng Pilipinas said. Based on the 2005 Benchmark Survey of information technology-based services, Bangko Sentral ng Pilipinas said exports revenue constituted 69.5%, or $1.4b of the $2b according to business process outsourcing (BPO) industry.

“Call centers and the medical and legal transcription subsectors were too much dependent on foreign earnings, with some 95% of their revenue coming from exports,” BSP Governor said.

Call centers, medical and legal transcription, animation, software comprise the business process outsourcing industry. The industry’s exports revenue in 2005 was 53.6% higher than the $882m reported in 2004. The research on business process outsourcing aims to determine the industry’s economic contribution. By area of destination, most of the Information Technology-enabled services catered to the United States market, which accounted for 86% of the total revenues. The call centers comprised the biggest share of the industry’s revenue, with 49.4% share in 2005.

The software sector contributed 20% of the overall revenues while other subsectors contributed 29.3%. The value-added ratio of the business process outsourcing (BPO) industry was estimated to increase from 56% in 2004 to 63% in 2005, indicating the growing contribution of the BPO industry to the gross domestic product. This implied that for every P1 of output generated by the BPO industry in 2005, the value added to the economy or GDP was P0.63. Investments of the business process outsourcing industry amounted to $491m. Of this, about $328m, or 66.9% represented foreign equity. The call center had the biggest foreign equity ownership among the subsectors at 87.6%.

Employment generated by the BPO industry increased 46.1% to 138,002 in 2005 from 94,448 in 2004 of which call centers provided two thirds of overall employment. Compensation was recorded at P42.4b in 2005 from P26.4b in 2004. The research covered a total of 317 contact center companies that are members of information and communication technology associations as well as those registered with the Department of Trade and Industry’s attached agencies, the Philippine Economic Zone Authority and Board of Investments. BSP official said the research may be understated as the government only obtained information from 203 companies with response rate of 69%.

The official said BSP has to intensify its efforts to compel the contact center companies to respond to its survey, adding the research on earnings could also help determine business process outsourcing income tax. The BSP aims total capture the business process outsourcing (BPO) statistics for a complete picture of the country’s balance of payments (BOP). Business process outsourcing inflows are currently recorded in the services account, which is one of the major drivers of the economy. Determining the contribution of the business process outsourcing in the economy will specifically adjust the country’s balance of payments and national income accounts.