Everybody is talking about the BPO bubble that has saved the Philippines economy and created jobs not only for Filipinos in Manila but also in the provinces. Eveybody's happy about recent expansions of established call centers and entries of new BPO companies in the Philippines. Recent developments, however, have made me think otherwise that this "BPO bubble" will soon be bursting and leave us knocked downed flat on our backs.
Think about it, two big things have recently been developing which should get economists worried. First, the continued strengthening of the local currency Pesos against the U.S. dollar has made it very very hard for outsourcing companies to scrape out profits. Most of the time, some call center companies are just left breaking even. Not good if they've got loan payments to pay of course. Secondly, the impending recession on the U.S. economy may not have a direct effect on the outsourcing business here but as times get harder in the U.S., Americans will spend less and less therefore companies will lose a lot of business. This loss in earnings will then make American companies look at other places where they can cut back and mend these losses. Guess where the areas of cut-backs will be?
Non-core business segments like customer services usually get the axe first when it comes cutting back expenditures and lessening operating costs. I make this conclusion based on experience. I have worked for clients that went under before and I have seen very good looking business go elsewhere.
When outsourcing clients see rising costs and no cost effectiveness in doing business here, there's is always that danger of business going to other places where they can find it. We may not see the demise of BPO business in the Philippines yet but the factors I've mentioned will definitely set a bad trend most of the people are not talking about yet.
»» read this call center blog post
Think about it, two big things have recently been developing which should get economists worried. First, the continued strengthening of the local currency Pesos against the U.S. dollar has made it very very hard for outsourcing companies to scrape out profits. Most of the time, some call center companies are just left breaking even. Not good if they've got loan payments to pay of course. Secondly, the impending recession on the U.S. economy may not have a direct effect on the outsourcing business here but as times get harder in the U.S., Americans will spend less and less therefore companies will lose a lot of business. This loss in earnings will then make American companies look at other places where they can cut back and mend these losses. Guess where the areas of cut-backs will be?
Non-core business segments like customer services usually get the axe first when it comes cutting back expenditures and lessening operating costs. I make this conclusion based on experience. I have worked for clients that went under before and I have seen very good looking business go elsewhere.
When outsourcing clients see rising costs and no cost effectiveness in doing business here, there's is always that danger of business going to other places where they can find it. We may not see the demise of BPO business in the Philippines yet but the factors I've mentioned will definitely set a bad trend most of the people are not talking about yet.
