Knowledge Center Article

“Captives” Bring Growth Impetus to Philippine Offshore Services

By Art Williams / 6 January 2012

Captives have indeed contributed immensely to the development of the Philippine IT-BPO industry over the years by their sheer number and tenure alone. There are eighty companies operating ninety-seven captive units in the Philippines, employing an estimated 60,000 workers, a recent industry survey noted. A significant number of these captives have been operating in the country for at least eight years, while some have provided the advantages and benefits of “in-sourced” services for as much as fourteen years.

Accelerators to the captives’ development

Most of these in-house operations supply voice-based, IT-related, and back-office services. It was observed, nonetheless, that a growing number of captives are moving into non-voice and higher-value offshore services. Because of the ongoing global economic difficulties adversely affecting their home base, parents of these insourcing units are further accelerating the development of their captives.

These companies are more than convinced that their captives can immensely contribute in managing their costs better and driving operational efficiencies higher. To implement their offshoring strategy, it is also noteworthy that, other parent entities have found it advantageous to adopt a hybrid approach in their Philippine offshore operations by using third-party service providers, particularly in transactional processes.

Beefing up IT infra, managerial talents

Significant investments in IT infrastructure and skills enhancement among the Philippine captives are expected to continue for the long term. There is an acutely deepening issue on ageing of the human resources across major developed countries all over the world, the industry study showed. As a result, transitional economies like the Philippines with young, low-cost, and skilled talents will continue to fill the gap in the shrinking working population in the developed nations.

The Philippine captives are likewise being geared up to develop their local management capability. This is being encouraged and preferable to the parent firms sending over their expatriate managers due to the significant cost savings that will be generated. Corollary to this, current technologies have enabled the adoption of virtual training methods that will further accelerate manpower development and at the same time save on travel and accommodation expenses.

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