Offshore Transaction Processing Outsourcing Service Providers Enjoy a Return to Financial Health

Surveys get a handle on the pulse of the Philippines industry. Growth, while gradual, continues unabated.

PITON recently completed its first-quarter survey with those on the front lines of the offshore transaction processing outsourcing services Philippines industry, offering new insights into sector trends and projections.

Each quarter, PITON’s advisors and approximately 20 offshore transaction processing outsourcing service providers Philippines, answer our questions on the offshore transaction processing outsourcing services Philippines market on a proprietary and confidential basis. Here are some key findings from the survey.

Offshore transaction processing outsourcing services Philippines Market Demand. Offshore transaction processing outsourcing services Philippines market demand remains healthy, but its growth rate has declined a bit in the previous months. Still, it is rising gradually at a little over 20 percent, and corporations’ desire to purchase offshore transaction processing outsourcing services Philippines remains undiminished. Forty percent of PITON ’s advisors cited demand as “increasing,” compared with 59 percent of other offshore transaction processing outsourcing service providers Philippines.

HRO Leads Market Demand. In the first quarter, HRO was the strongest offshore transaction processing outsourcing services Philippines area. This year’s first quarter was no different. HRO providers validated the same advisor observations, with 92 percent citing payroll and 69 percent citing benefits as those in the greatest demand.

BPO Sales Cycles. In PITON ’s experience, the average length of the offshore transaction processing outsourcing services Philippines sales cycle is nine to 12 months, starting with lead generation and qualification and ending with a signed contract. However, sales-cycle lengths vary significantly by deal, depending on process areas, clients, offshore transaction processing outsourcing service providers Philippines, and whether sourcing advisors were involved.

In the first quarter, 30 percent of PITON ’s advisors cited that the offshore transaction processing outsourcing services Philippines sales cycle was lengthening. In addition, the number of advisors citing “shortening sales cycles” declined for the fourth consecutive quarter.

While PITON advisors see the offshore transaction processing outsourcing service provider Philippines sales cycle lengthening, 30 percent of these offshore transaction processing outsourcing service providers cited last quarter’s Philippines’ sales cycle as shortening, the highest level of citations over the past four quarters in the country.

This discrepancy is most likely explained by a number of factors. First, offshore transaction processing outsourcing service providers Philippines are being highly selective on the deals they are pursuing and electing to “no bid” at unprecedented rates. Second, these offshore transaction processing outsourcing service providers Philippines are targeting opportunities that are slightly smaller in scope and have more definitive close dates. Third, a small subset of PITON ’s clients have lengthened negotiations due to a lack of transition capacity and resource shortage from their preferred offshore transaction processing outsourcing service provider Philippine

Offshore Hot Spots. Seventy-five percent of advisors and 84 percent of offshore transaction processing outsourcing service providers cited countries in Asia like the Philippines as the preferred multi-shore location, followed by Central/Eastern Europe (58 and 59 percent, respectively); Central/South America/Caribbean (41 and 31 percent, respectively).

Pricing. Offshore transaction processing outsourcing services Philippines pricing in the quarter was considered stable by 70 percent of advisors, while 20 percent cited pricing as more favorable to offshore transaction processing outsourcing service providers. This pricing development has allowed offshore transaction processing outsourcing service providers Philippines to be less reliant on dropping their prices to win business. This pricing equilibrium between the buyer and the offshore transaction processing outsourcing service provider Philippines is healthy for the industry as a whole.

Contract Profitability and Return on Invested Capital. The financial health of offshore transaction processing outsourcing service providers Philippines appears to be stabilizing. Consolidation has certainly helped, as has a more diligent pursuit selection. Virtually every offshore transaction processing outsourcing service provider cited profitability in the Philippines as steady or improving, marking the first time that this has occurred since the surveys were introduced a few years back. In the quarter, 65 percent of offshore transaction processing outsourcing service providers Philippines said their contract portfolios would reach profitability in 12 to 24 months, and a significant percentage stated they would break even in less than 12 months. More than 70 percent reported a return on invested capital of 10 to 20 percent.

It finally appears that offshore transaction processing outsourcing service providers Philippines are no longer simply on the path to profitability. They are actually achieving it.

To learn more about our industry-specific BPO capabilities please contact us by calling +1-310-844-7805 or by filling out our inquiry form. We look forward to hearing from you.