The Australian small and medium enterprise (SME) micro-offshoring market provides potential job opportunities for Filipino graduates and professional workers, as the nature of the jobs often includes higher-level professional services, a study released by the Philippine Institute for Development Studies (PIDS) said.
According to the PIDS policy note – Australian SME micro-offshoring in the Philippines: Opportunities and challenges – an increasing number of Philippine-based business process outsourcing (BPO) centers are targeting Australian SME clients by offering micro-offshoring services that reduce the transaction costs.
The report said the potential employment opportunities provided by Australian SME micro-offshoring market provides higher value-added job opportunities in comparison to lower value-added traditional call center BPO work.
“This is an important consideration given that while labor productivity in the BPO sector is higher than the Filipino services sector as a whole, it still lags the labor productivity levels found in Filipino industry and manufacturing by around 33 percent,” the study said.
“It is advisable for the Filipino BPO sector to move up the value-added chain by providing more sophisticated services in order to generate greater labor productivity growth and longer-term lift in living standards,” it added.
The PIDS policy note said Australian firms represent an important and growing BPO market.
As of 2015, the Information Technology and Business Process Association of the Philippines (IBPAP) estimates that 150,000 Filipino workers, or 12 percent of the total Filipino BPO workforce, are employed by Australian firms in the Philippines through such arrangements.
However, the PIDS study said these figures only include firms that are IBPAP members.
The data obtained through the research also suggest that micro-offshoring services are supporting a paradigm shift in the ability of Australian SMEs to engage in such activities.
“The micro-offshoring model allows Australian SMEs to offshore former in-house professional services to the Philippines without having to address many of the traditional transaction costs associated with offshoring strategies,” the study said.
“Likewise, it allows Australian SMEs to gain expertise in operating in the Filipino context, with relatively few upfront costs. This knowledge may encourage Australian SMEs to shift to more long-term captive offshoring models, such as local incorporation, over time,” it added.
The PIDS report also said the Australian SME sector provides a relatively large existing and potential market for the kind of micro-offshoring services being offered by Philippine-based BPO firms.
“The extent and competitive nature of the Australian SME sector also suggest that the growth of Australian SME clients is likely to continue,” the paper said.
“This provides entrepreneurial opportunities for local Filipino SMEs looking to enter and tap this market,” it added.
However, despite the many advantages, the policy note said the BPO sector in the Philippines has to address several challenges, including government red tape, conflicting government requirements, poor infrastructure and traffic congestion, expensive and unreliable utilities, and biased adjudication of labor cases.//
According to the PIDS policy note – Australian SME micro-offshoring in the Philippines: Opportunities and challenges – an increasing number of Philippine-based business process outsourcing (BPO) centers are targeting Australian SME clients by offering micro-offshoring services that reduce the transaction costs.
The report said the potential employment opportunities provided by Australian SME micro-offshoring market provides higher value-added job opportunities in comparison to lower value-added traditional call center BPO work.
“This is an important consideration given that while labor productivity in the BPO sector is higher than the Filipino services sector as a whole, it still lags the labor productivity levels found in Filipino industry and manufacturing by around 33 percent,” the study said.
“It is advisable for the Filipino BPO sector to move up the value-added chain by providing more sophisticated services in order to generate greater labor productivity growth and longer-term lift in living standards,” it added.
The PIDS policy note said Australian firms represent an important and growing BPO market.
As of 2015, the Information Technology and Business Process Association of the Philippines (IBPAP) estimates that 150,000 Filipino workers, or 12 percent of the total Filipino BPO workforce, are employed by Australian firms in the Philippines through such arrangements.
However, the PIDS study said these figures only include firms that are IBPAP members.
The data obtained through the research also suggest that micro-offshoring services are supporting a paradigm shift in the ability of Australian SMEs to engage in such activities.
“The micro-offshoring model allows Australian SMEs to offshore former in-house professional services to the Philippines without having to address many of the traditional transaction costs associated with offshoring strategies,” the study said.
“Likewise, it allows Australian SMEs to gain expertise in operating in the Filipino context, with relatively few upfront costs. This knowledge may encourage Australian SMEs to shift to more long-term captive offshoring models, such as local incorporation, over time,” it added.
The PIDS report also said the Australian SME sector provides a relatively large existing and potential market for the kind of micro-offshoring services being offered by Philippine-based BPO firms.
“The extent and competitive nature of the Australian SME sector also suggest that the growth of Australian SME clients is likely to continue,” the paper said.
“This provides entrepreneurial opportunities for local Filipino SMEs looking to enter and tap this market,” it added.
However, despite the many advantages, the policy note said the BPO sector in the Philippines has to address several challenges, including government red tape, conflicting government requirements, poor infrastructure and traffic congestion, expensive and unreliable utilities, and biased adjudication of labor cases.//
