Reaction Entry (April 30, 2011)

Outsourcing sales growth slows in 2009 --  BSP survey

THE COUNTRY'S business process outsourcing sector managed to post strong growth in 2009 amid the start of recovery from the global economic slump, though it continued the slowdown that began the previous ear, the central bank said in a statement yesterday.

A summary of the results of the 2009 Survey of Information Technology-Business Process Outsourcing (IT-BPO) Services which the Bangko Sentral ng Pilipinas (BSP) conducted last year showed total revenues rising 30.6% to 8.3 billion in 2009 from $6.3 billion in 2008, which in turn saw growth slow down to 44.8% from 50.3% in 2007.

Still good

In comparison, growth of the country's gross domestic product slowed to 1.06% in 2009 from 3.69% in 2008.

All IT-BPO subsectors--contact center, transcription, animation, software development and "other BPOs"--posted double-digit growth rates in revenues in 2009:

• Contact center sales, which accounted for half (50.9%) of industry receipts, grew by an annual 48.2% to 4.207 billion;
• Software development sales, which accounted for 20.3%, rose 18.4% to $1.672 billion;
• Transcription sales, which made up 0.7%, posted the biggest increase of 66.8% to $57 million; and
• Animation, which made up 0.6%, rose 44.2% to $52 million. Sales in the "other BPOs" category grew 13.3% to $2.27 billion.

Increase in sales accelerated in most categories from 2008 to 2009, except for software development which saw growth slow down to 18.4% from 28.6% and other "other BPOs," 13.3% from 73.2%.

Export-driven

Industry exports, totaling $7.7 billion in 2009, accounted fro 93.4% of total revenues.

The US remained the top export market for the industry in 2009, accounting for 73.1% of total export receipts at $5.6 billion, followed by Japan ($1.1 billion for 14.3%), Europe ($531 million or 6.9%), Australia and New Zealand ($258 million or 3.3%) and "other Asia" ($110 million or 1.4%).

Equity investments in the industry grew 32.2% to $2.6 billion in 2009, of which 91.8% consisted of foreign equity. That growth, however, was much slower than the 109.5% in 2008.

Industry employment grew by an annual 25.3% to 444,811 workers in 2009, with contact centers accounting fro 57.5% of the total.

Reaction:

Before going back to school last year, my 3 to 4-year academic hiatus was spent working for an offsourcing company, mainly as an online content writer. I wrote articles with topics spanning the spectrum of interests, often even antipodean in nature (think real estate and health articles). I can personally say that for a job that doesn't require any commutes, it pays very well. I know many who make jokes about call center jobs and agents, but I must admit that working for an offsourcing company, although rewarding, is exhausting. I find it peculiar to read about a slowdown in the BPO industry despite its popularity. This may be because, in my opinion, the country is still not completely embracing the tech industry. 

To wit: the minimal share of animation and software development sectors in the market shows dismal realities for my planned career. Although there is no way of saying whether this recent numbers would linger on in the future to come, with the current pace of the local tech market, that number may in fact remain its sluggish course. On the other side of the coin, however, this small number may be from the fact that many IT graduates either prefer working abroad or are siphoned off by foreign tech companies. Though the latter seems inevitable, the former can still be remedied by, in my opinion, promoting further an embrace toward the importance of technology. The world has gone past the Information Technology Age and the country is barely keeping up speed, and this slowdown may be an evidence of that. There is an unbalanced nature in the way the country lionizes its choice of employment. By choosing to succumb to trend rather than spreading out the focus to include other potential profitable sectors, I fear that the country may not reach a point when it can evenly compete with other BPO giants, like India.

In addition, the popular preference of working abroad is another challenge. What with the unending workforce diaspora that traverses crucial professions (from nursing to IT), this slowdown might hinder the growth of the country's BPO industry through the constant decrease of potential BPO employees. Even with the US holding the highest share in industry exports, without the sufficient number of able-bodied employees, established BPOs and start-ups alike would only find themselves up a stump. I, myself, even prefer to work abroad, mainly because of the money. There are far more opportunities in other countries and most of them are even better than what I can find here. Although I admit that I may become an instrument to the slowdown of the BPO industry in the future, I cannot root myself to this slow-growing industry. Unfortunately, this slowdown is another evidence of the country's reluctance to welcome the imminent confluence of tradition and progression.

While I find it appealing to work abroad, my heart still yearns for a future employment in the country. Yet these numbers are portents of what will be for my chosen career. I know that the Philippines mainly depends on its agricultural market. I, however, cannot live on rice alone. Everyday I am reminded of how much the country is missing out on the advantages of information technology while it places health practitioners to a much higher pedestal. While we produce high-quality health professionals, the same cannot be said for our local IT experts. Without enough focus on my side of the market, I may be forced to look elsewhere. Selfish as it may sound, the reality is that my chosen career remains a minority in the country's sea of industries.

Reaction Entry (April 16, 2011)

*This article was printed on the Economy section of the April issue of TIME Magazine I have at home. I could not find an online copy but this is the entire article, retyped.


Helping Hands? Donations to Japan are lagging behind previous relief efforts. 


As Japan digs out from its devastating March 11 earthquake and tsunami, international donors have been hesitant to commit large sums of money to the relief effort. According to figures compiled by the Chronicle of Philanthropy, U.S. donors gave $105 million to Japan in the first week, compared with $275 million for Haiti after its earthquake last year. (Hurricane Katrina got $500 million in the first week.) Other countries don't appear to be eager to give either. Why? "It's largely because Japan is a well-developed country with an established relief system," says Chronicle editor Stacy Palmer. Even though the World Bank estimate of $235 billion in damage dwarfs the figures for more recent natural disasters, there's a perception that wealthy Japan can handle it. And with uprisings in the Middle East dominating the news cycle, fundraising is likely to continue at its sluggish place. -JOSH SANBURN

Recreation of the inforgraph from the original article.

Source: TIME Magazine, April 11, 2011


Reaction:


Natural disasters are any man's bane. Sufficient preparations, although substantially cut losses in terms of damages, still have a palpable impact on any business firm. Now imagine a country, which is composed of several businesses and households, hit by a major catastrophe. This would easily multiply the effect a hundredfold--millions even.


As someone who has a parent living and working in Japan, I can personally attest to the financial repercussion of the recent disaster. A few weeks after the earthquake, my mother's job was cut drastically to only three hours each day. Without much productivity, a business cannot achieve its goal. Regardless if it's a major company, forced cuts on work hours due to non-conducive working environment has a major impact on the company's output. Efficiency will drop and the wasted resources will pile up, and unfortunately these resources may not be useful once things begin to work in tip-top shape again. Translating this scenario nationally can result in a downward trend in economic wellbeing. Regardless of Japan's wealth, she is still in need of financial aid from other countries. Using its position in the economic hierarchy of the globe as an excuse seems a tad bit unreasonable. Yes, there are a lot of other current issues, including the unrest in the Arab Springs, but Japan had always been there for others in times of trouble. They may have a lot of money now to cover some of the costs of rehabilitation but the long-term effects of this disaster to their economy will not only affect their shores but others as well. 


The natural disaster that happened in the country not only affected the native citizens but foreign workforce as well. Consider my mother, she has been working in the country for eleven years and this is the only time that she felt a considerable lag in personal financial progress. Because of the substantial cut in work hours, she also had to cut expenses, which means that we, her children living in the Philippines, should also adjust dramatically. The budget adjustment has reduced the household's economic pie and we have to determine how to promote equity as much as possible by trimming our expenses here and there. Unfortunately, finding another job poses a difficulty because not every business in Tokyo is hiring. Why aren't they hiring? Aside from the natural disaster that rendered most of the equipments out of commission, the majority of the city is in disarray. In addition, because of the dismal conditions of the Fukushima nuclear plants, the country had to impose a mandatory four-hour blackouts. This, in my opinion, is one of the causes of the disaster that has the largest impact in the economy. Four hours of blackout can severely attenuate the productivity of a business. Imagine how much output they can produce in those four hours. Aside from the blackout, the tsunami hit a major agricultural site of the country. Rice, one of Japan's major produce, was severely affected. And now due to the increasing fear of radiation leaking out of the nuclear plants, many turned to other food sources, mainly processed ones. The only problem here, though, is that these goods are also distributed among families in evacuation centers. Naturally, a quota was placed on the purchase of these goods. For instance, stores cannot allow a buyer to buy cup ramens in bulk; there is a limit to how many they can purchase. Why? This is simply because of the food shortage the country is facing.


On the bright side, this natural disaster also produced more jobs. Sendai, for instance, the most hard-hit area of the country, has been recruiting able-bodied personnel for reconstruction jobs. This is a good opportunity to increase the employment rate of the country. Of course, workers should not expect excellent living conditions because most of Sendai was wrecked by the tsunami and earthquake. But that is not much of a trade-off considering the opportunity of earning a modest income.


On a final note, I just want to say that we should not belittle these problems because they have long-term economic impacts. It is extremely unfortunate that other countries are reluctant to send assistance to Japan, especially now when the country needs aid the most. Even I, who have been living in the Philippines all my life, am experiencing the financial impact of the recent natural disaster that hit Japan. I dearly wish for Japan to recover fully from their misfortune. Unfortunately, I know now that will take more time since Japan is rehabilitating itself alone. Any country, regardless of wealth, will require help after a major natural disaster. But because the world today is plagued with war and unrest, it may be long before Japan can receive the sufficient help it needs to rise from ruin.