HISTORY OF BPO IN THE

PHILIPPINES

(GROUP 1)

MEMBERS:

Villalon, Mark Angel G.............................................................................What is BPO and Types of BPO Services

Suna, Christian Lou...........................................................................................................................History of BPO
Duran, Reyna Mae.....................................................................................................BPO in the Philippines (1990s)
Caña, Arnel........................................................................................................BPO in the Philippines (2000-2006)
Amarga, John Vincent C....................................................................................BPO in the Philippines (2010-2013)
Marino, Christopher..........................................................................................BPO in the Philippines (2016-2020)
Paculanang, Criesa Melyn L..........................................................................BPO in the Philippines (2021-Present)
 One of the most robust sectors in the Philippines right now is the information technology
and business process outsourcing (IT-BPO) sector. More than just a lucrative enterprise, the IT-
BPO sector has also proven to be the largest and fastest growing industry in the country. There is
no denying its major role in providing quality jobs and encouraging economic activity and
investment even in areas outside Metro Manila.

Of course, the IT-BPO industry was not an overnight affair. Credit is due to the handful of
individuals who saw the potential in the business in its early stages. Among them are the likes of
Rainier “Bong” Borja, who is often regarded as the most articulate voice of the Philippine BPO
industry; Karen Batungbacal for her early involvement and series of contact center firms; and
Secretary Mar Roxas, who, during his tenure as secretary of the Department of Trade and Industry,
saw the potential of the industry, reached out to key leaders to promote foreign investment, and
helped shape the landscape of BPO into what it is today.

 What is BPO?
 Business Process Outsourcing refers to the process of contracting standard business
functions to be handled by a party outside of the company. It mainly consists of customer-
related services like marketing and technical help. The BPO sector has a broad scope and
is gaining importance day by day.
 Business process outsourcing (BPO) utilizes third-party vendors or subcontractors to carry
out certain parts of their business operations.
 BPO began with large manufacturing companies to aid with supply chain management,
 Today BPO has grown to include all sorts of sectors, including services companies.
 BPO is considered “offshore outsourcing” if the vendor or subcontractor is located in a
different country; for instance, in the case of customer support.
 BPO today is an industry unto itself, with companies specializing in facilitating BPO to
companies around the world.
 The breadth of a business’ BPO options depends on whether it contracts its operations
within or outside the borders of its home country. BPO is deemed “offshore outsourcing”
if the contract is sent to another country where there is political stability, lower labor costs,
and/or tax savings. A U.S. company using an offshore BPO vendor in Singapore is one
such example of offshore outsourcing. BPO is referred to as “nearshore outsourcing” if the
job is contracted to a neighboring country. Such would be the case if a U.S. company
partnered with a BPO vendor located in Canada. A third option, known as “onshore
outsourcing” or “domestic sourcing,” occurs when BPO is contracted within the company’s
own country, even if its vendor partners are located in different cities or states. BPO is
often referred to as information technology-enabled services (ITES) because it relies on
technology/infrastructure that enables external companies to efficiently perform their roles.
 Types of BPO services
A. Voice Process
- Voice process means using telephonic communication to handle customers and
provide solutions to their problems.
a) Inbound
- This process handles all incoming calls of the customers and these calls may be
regarding various types of issues.
b) Outbound
- This process typically involves a combination of automated voice messages, pre-
recorded messages, and live agent calls. This can be used to promote products or
services to potential customers.

B. Non-Voice Process
- The non-voice process refers to dealing with customers using channels other than
phone calls and performing various front-end and back-end operations.
a) Front-office BPO
- Focuses on activities external to the company, such as marketing and customer service.
b) Back-office BPO
- Entails the internal aspects of a business; payroll, inventory purchasing, and billing.
  History of BPO
 Traced back to the 1700s Industrial Revolution when companies began shifting production
to countries with lower labor costs but was not viewed as business strategy at that time.
 Large corporations were not completely self-sufficient in the 1970s, so they looked for
ways to focus more on their core competencies to improve their performance.
 Outsourcing was officially recognized as a business strategy when Eastman Kodak
announced in 1989 that it was outsourcing its information systems to companies such as
IBM, DEC, and Businessland.
 BPO, or Business Process Outsourcing, has its roots in the 18th century when businesses
began outsourcing specific tasks to external service providers. Over time, the concept
evolved, with large corporations outsourcing specific functions in the 1950s. However, it
wasn’t until the 1980s that BPO truly took off due to the growth of telecommunication
networks and advancements in technology. In the 1990s, businesses realized the potential
of outsourcing customer support services to external call centers, reducing costs and
allowing them to focus on core competencies. Offshore BPO emerged in the early 2000s,
with companies recognizing the benefits of outsourcing to countries with lower labor costs,
such as India and the Philippines. The availability of a skilled workforce and 24/7 operation
made offshore BPO an attractive option for businesses worldwide. The BPO industry
expanded beyond call centers, outsourcing various business processes, including IT
services, finance and accounting, human resources, and creative tasks like graphic design
and content writing. Today, the BPO industry is a global phenomenon worth billions of
dollars, providing employment opportunities to millions of people worldwide. With rapid
technological advancements, automation and artificial intelligence are expected to be
integrated into BPO processes, enhancing efficiency and enabling providers to offer more
specialized and value-added services.

 BPO Industry in the Philippines through time

I. 1990s: A DECADE OF WHERE IT ALL BEGAN

1992 – Frank Holz founded Accenture Global Resource Center, the Philippine’s very first contact
center, which provided basic services such as email response and service management.

1995 – Philippine Economic Zone Authority (PEZA) which focuses on assisting foreign investors
in facilitating their business operations in some regions of the country was instituted during the
presidency of former President Fidel V. Ramos. Special Economic Zone Act in 1995 provided
lower area requirements for developments and tax incentives, which consequently attracted foreign
investors.

1997 – Sykes Asia established itself as the first multinational BPO company in the Philippines.
Sykes Enterprises Inc (Sykes) is a business process outsourcing company. It provides customer
engagement services. Sykes specializes in providing primarily inbound outsourced customer
management solutions and services on a global basis with an emphasis on technical support and
customer service.

1999 – Jim Franke and Derek Holley, former employees of a multinational management consulting
firm, founded eTelecare (Philippine’s first call center). eTelecare Global Solutions provides
outsourced service through voice, email, and chat for companies in such industries such as
consumer electronics, telecommunications, financial services, travel, and media. It offers customer
service, technical support, sales, and market research services from contact centers in the
Philippines, United States, Nicaragua, and South Africa. eTelecare was founded as eTelecare
International in November 1999 by Jim Franke and Derek Holley] two alumni of the call center
consultancy of McKinsey & Company. It calls itself the first Filipino Call Center. Over time more
offices were added. It provides business process outsourcing (BPO) services focusing on the
complex, voice and non-voice based segment of customer care services. The company provides a
 range of services, including technical support, customer service, sales, customer retention, chat
and email from both onshore and offshore locations.

II. 2000s: A DECADE OF GROWTH AND DEVELOPMENT

2000 – BPO industry contributed at least 0.075% of the Philippine’s GDP.

2001 – Former Trade Secretary Mar Roxas established the Contact Center of the Philippines with
an objective of raising awareness and encourage members of the contact center industry to share
ideas.
- PeopleSupport, a US-Based outsourcing center, restructured their business, and moved
their operations to the Philippines, providing 8,400 jobs

2003 – Covergys Corp. planned a global expansion and revenue generation. The Philippines and
India was chosen by Jack Freker, the company’s then-president. The company has opened two
call centers in the Philippines.

2005 – The BPO industry increased its share of the global BPO market to 3% which accounts up
to 2.4% of the Philippine’s GDP.

2006 – The Philippine BPO industry began to grow at a rate of 46% per year. ePLDT Ventus was
at the forefront of the local BPO landscape. This improved the Philippine domestic economy by
5.4%. In 2006 the government was able to identify nine employment-generating factors, namely
cyber services, aviation, agribusiness, health services, mining, creative industries, hotels and
restaurants, medical tourism and overseas employment.
The industry started to rise along with the coming of the new millennium. During 2000, the industry
has accounted for 0.075% of the country’s GDP growth.
Within the following year, US-based outsourcing center PeopleSupport restructured their company and
entered the Philippine atmosphere. It has provided additional 8,400 jobs to Filipinos at that time. In 2001,
seven founding members in the country established the Contact Center Association of the Philippines
(CCAP).
Former Trade Secretary Mar Roxas launched the “Make IT Philippines” campaign, which brought
massive foreign investments in the country and created jobs for Filipino IT professionals. Two years later,
in 2003, one of the biggest players in outsourcing, Convergys, opened up two call centers in the Philippines
as a part of the company’s global expansion.
In 2005, The BPO industry continues to see its growth during the first half of the current decade. It gained
3% of the global outsourcing market, which translated to 2.4% of the country’s current GDP.
SixEleven Global Teleservices was founded. The company became one of the first Filipino-owned
solutions-oriented contact centers in the country.By 2006, the remarkable growth of the BPO industry in
the Philippines surged at an impressive rate of 46% annually, propelled by various factors.

III. 2010s: A DECADE OF TAKING THE LEAD

2010 – The Philippines was named the world’s BPO capital after employing 525,000 people and
generated $8.9 billion in revenue. Revenues are expected to soar with a five-year compounded
annual growth rate (CAGR) of 38% . From this point, the BPO industry continued to grow and
generate more revenue, with the industry providing the most job opportunities in the private sector.
The country continues to become an attractive location for foreign investor

2011 – BPO industry employed a total of 638,000 Filipinos, with 400,000 of them working in call
centers making it the largest and fastest-growing private-sector job market in the country. It also
contributed 4.9% to the Philippines’ total GDP generating 11$ billion in revenue. The country’s
world No. 1 status in contact centers was further strengthened by impressive growth reported by
the Contact Center Association of the Philippines (CCAP), also headed by Hernandez. The contact
center sector ended 2011 with 416,000 employees providing US$7.4 billion in services to the
world. Already the largest contact center hub in the world, the sector posted a healthy 21% growth
in 2011 and remained the largest sector of the Philippines IT-BPO industry at 65% of total industry.
The Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP)
also produced impressive numbers that combined expansion and a first attempt to measure
healthcare information management outsourcing (HIMO) services being done across a range of
business process companies. A preliminary survey indicated that as much as US$277 million worth
of HIMO services were provided to global end-users from the Philippines, with the sector
employing 24,700. Philippine Software Industry Association (PSIA) president Nora Terrado
reported a high 37% growth in revenues from IT outsourcing, compared with just 11% in
employment growth. Anecdotal indicators also point to strong demand for Philippine IT services
into 2012. The Animation Council of the Philippines, Inc., (ACPI), however, revealed that the
sector lost out to some contracts as global competition heated up in back-room animation services,
particularly from countries like China that subsidize animation operations. ACPI reported that its
sector shrank by 10% to US$128 million in revenues in 2011 but it maintained its headcount at
about 8,600 animators.

2012 – The Philippine BPO industry’s revenue accounted for 5.4 percent of the country’s total
GDP. Over 700,000 Filipinos were employed in the BPO sector at that time.

2013 – The industry’s

generated revenue rises to $15.5
billion and 900,000 Filipinos are
employed full-time.

2016 – The Philippine BPO

industry was expected to generate
1.3 million jobs and grow at a 17%
annual rate. In 2016, BPO in the
Philippines continued to
experience a positive growth
rate. Activity in the industry
appears to be robust enough such
that the industry’s projected total income range would reach US$ 40 to 55 billion by 2020.

2017 – “BPO activity in the Philippines saw a notable decline in 2017, with a number of factors
and events contributing to the downturn of this 23 billion-dollar industry. The initial dip came after
President Rodrigo Duterte showed hostility towards the US, which brings in around 70% of the
industry’s turnover. Donald Trump’s victory and his protectionist rhetoric led to a further drop-
off. Investment pledges in the sector experienced a 22% annual drop, according to Dutch financial
services firm ING Bank. Industry officials also concede that investment fell 31.3% year-on-year
in the three months leading up to June. Furthermore, the terrorism crisis in southern Philippines
seems to be denting the country’s image of stability. The annual growth rate of the BPO industry
decreased. The battle of Marawi, which took place in Mindanao, terrified a lot of foreign investors
in placing their investments in the country. Despite the looming challenges, the country’s industry
lobby group, Contact Center Association of the Philippines (CCAP), is still upbeat, with its
analysts projecting the industry to reach US$40 billion by 2022. There are reports that the call
center industry added a total of 1.2 million square meters of office space last year, with analysts at
Jones Lang LaSalle, an American professional services and investment management firm,
claiming to have seen a sharp rise in property development for BPO operators. For an industry
with 1.15 million employees, BPO firms are expected to occupy 485,000 square meters of office
space this year. But the increasing trend of automating customer care services is posing a new
threat to the industry. Artificial intelligence (AI) may “replace 40,000 to 50,000 “low-skilled” or
process-driven BPO jobs in the next five years,” reported Reuters citing Rey Untal, President and
Chief Executive Officer of the IT & Business Process Association of the Philippines (IBPAP).”

2018 – BPO companies in the Philippines added 70000 jobs and generated $1 billion in revenue.
After a slight slowdown in 2017, the industry has recovered.

2019 – According to the World Bank, the Philippines rose from 124th to 95th place and improved
its score from 60.9 to 62.9 out of 190 countries ranked for ease of doing business.

2020 – According to data from the IT and Business Process Association of the Philippines
(IBPAP), the Philippine BPO industry saw revenues rise 1.4 percent in 2020, despite the fact that
the health pandemic had a significant impact on the economy.

2021 – Last year was a watershed moment in the Philippine BPO industry. It now employs 1.3
million people and generates $30 billion in revenue for the economy.

2022 – For the first quarter of 2022, PEZA reported and investment total of PHP 8.14 billion.
Employed over 1.4 million Filipinos which continuously exhibits significant multiplier effect and
generated an additional 4.6 million indirect jobs in support industries like retail, transportation,
food, logistics, and others. For the first quarter of 2022, PEZA reported an investment total of PHP
8.14 billion. Twenty-nine new and expanded projects generated these investments, expected to
create 3,168 direct jobs annually and annual export sales of $232.454 million.

The nation has improved its capacity to offer BPM and non-voice IT services to a broader
international audience. It has proven to be one of the top locations for premium services at more
affordable prices. The expansion included solutions like healthcare information services and
horizontal BPM services in industries like finance and accounting.

By 2022, 15 percent of the entire global outsourcing market will be served by Philippine
outsourcing services. The industry is also expected to expand by 8-10 percent annually for the next
five years. Additionally, the Philippines has constantly been listed as one of the top five locations
in the world for outsourcing.

With 27 percent of the sector’s workforce dispersed across the countryside, the industry
will continue to play a critical role in fostering inclusive growth through established and up-and-
coming IT-BPM hubs outside of Metro Manila.

Given its influence and scope, the BPO industry has been hailed as a life savior for an
economy sinking since the pandemic ripped holes and threatened to drop it.
The Philippine BPO sector handled its problems and changes with the new work-from-
home environment even during the COVID-19 pandemic. Many experts believe this will help it
recover quickly and boost its economy.

Industry players swiftly introduced remote work and cut the duration of shifts after the
outbreak began. Along with the fact that certain BPO companies had to deal with decreased
demand for their services due to project postponements and cancellations, this led to capacity
issues early on.

Despite ongoing lockdowns, working from home has helped the sector grow. WFH added
23,000 new jobs in 2020 when the crisis caused the unemployment rate to reach its highest level
in 15 years.

By the end of 2021, about 60 percent of employees in the IT-BPO sector will work from
home.
 Eighty percent of Filipino IT-BPO workers have stated that they prefer a hybrid work
model over going back on-site.

Despite the challenges posed by the pandemic, the Philippine BPO Industry sector has
already hit the government goal for the revenue and employment targets set for year 2021.

Note: Undoubtedly, many disruptions caused havoc for businesses in 2020 and affected the
Philippine BPO Industry. However, many BPO companies have used this era of disturbance as a
chance to review and rethink their businesses, making them robust and future-proof. As tech-
enabled firms flourished and businesses reduced expenses during the COVID-19 pandemic, the
Philippines’ economically significant BPO industry exceeded revenue and hiring expectations last
2021.

The Philippines must improve and strengthen its BPO sector as it demonstrated its ability to
sustain economic growth during the pandemic.

IV. 2023 – PRESENT AND FUTURE OF BPO IN THE PHILIPPINES

2023 – The IT-Business Process Management sector in the Philippines is projected to grow 8.8%
in 2023 to $35.4 billion in revenue, according to the industry group IT and Business Process
Association of the Philippines (IBPAP).
– Recent data shows the industry progressing towards its 2028 targets, with achievement
of 23% of its job creation and 20% of its revenue goals.

Illustration: A Summary of BPO Industry’s Growth in the Philippines from 2010-Present

(Revenue and headcount of Filipino BPO employees)

BPO Industry's Growth in the Philippines

(2010-2023)
40000
35400
35000 32500
29500
30000
26300 26700
24500
25000 22900 23400
20500
20000 18000
17000
15800
14440 14300
15000 13200 12280 12290 13240
11000 11460 11690
9580 10440
8900 8580
10000 7770
6400
5270
5000

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

HEADCOUNT (in '00) REVENUE in US$ Billion

The figure is growing year by year as Filipino workers are presented with the opportunity to work
in the BPO industry. 2021 was the turning point in the BPO industry as remote work becomes mainstream
and talent shortages only widen in the US. In 2022, the reported revenue of BPO industry in the country
is $32.5 billion which main drivers were areas in healthcare, finance, technology, retail and
telecommunications. The rise of digital platforms also facilitated freelancing and outsourcing in the
Philippines. The Philippines earned the title of “The BPO Capital of the World”.
 Philippine’s BPO industry is targeting 2.5 million Filipino employees producing $59 billion in
annual revenue. Recent data shows that the BPO industry in the country is progressing towards its 2028
target, with achievements of 23% of its job creation and 20% of its revenue goals. The Philippine’s talent
for high-quality IT-BPM services continue attracting foreign companies, especially from the US. The
government’s support for flexible work policies boosts the sector and draws more investors.