The Philippines is the leading provider of business process outsourcing. Call center revenues increased annually by over 30% since 2001. The country ranked top 10 in A.T. Kearney’s Global Services Location Index since 2004. Since the company’s establishment in 2001, Ventus has grown to become the largest Filipino-owned call center in the Philippines, with over 6,500 employees, seven locations, and revenues in excess of $120 million. Although the company enjoyed sustained growth, the global financial crisis has raised a number of important issues.

While India has attracted the world’s attention as the global hub for outsourcing, the Philippines has quietly emerged as a leading provider of business-process outsourcing, particularly in the call center arena. It is estimated that the revenues of the Philippine call-center industry have increased annually by over 30 percent since 2001. The Business Process Association/Philippines (BPA/P) projects that revenues in the BPO sector will increase from $3 billion in 2006 to $13 billion in 2010, while the number of people employed will grow from 230,000 to 900,000 during the same period. Employment in contact-center facilities will reach 330,000 people in 2010. To date, The Philippine BPO industry contributes nearly $30 billion to the economy each year. It is estimated that 1.3 million Filipinos were employed in over 1000 BPO companies in 2019, and that figure is showing 8-10% growth every year. It is estimated that the country holds 10-15% of the global BPO market.

The Philippines has experienced a surge in the number of foreign companies that have established footprints in the country, most notably Indian third-party outsourcing providers, like Genpact and Daksh, and captive operations of multinational companies, such as Dell and Hong Kong and Shanghai Banking Corporation (HSBC). Midmarket and smaller outsourcing firms from the United States, such as StarTek and The Resource Group (TRG), have also entered the Philippines in recent years.

Moreover, the Philippines is viewed by several industry experts as the top location for voice business-process outsourcing. According to A.T. Kearney’s Global Services Location Index, the Philippines rated very favorably in terms of compensation competitiveness, infrastructure cost, and tax and regulatory costs. Additionally, the Philippines boasts a large, high-quality, college-educated, and English-speaking labor pool. The country graduates over 400,000 students per year, with the large majority in the following areas: commerce- and business-related fields; engineering, information technology, and computer sciences; and medical and allied/natural sciences.

First, the U.S. recession impacted companies that have traditionally fueled the growth of the BPO and call-center industries in the Philippines. The hardest-hit sectors include outsourcing providers to banks and financial-service firms, retailers, and travel and leisure firms. Second, a number of companies with outsourcing plans prior to the financial crisis had to cancel programs or put them on hold due to funding difficulties, management turnover, or lack of business visibility.

Third, consolidation in industries, such as in banking and finance, has resulted in loss of business for a number of BPO providers. A growing number of customers are consolidating their global service supply chains to fewer locations or selling off their captive operations to other providers.

Finally, mounting U.S. unemployment has changed the labor-cost arbitrage dynamics of international outsourcing. Some outsourcers are responding to this change by repatriating work back to the United States, demanding price concessions from offshore providers, or increasing service-level requirements.

Question :

a. What will be the best path for growth for Ventus?

b. Evaluate the various options discussed in the case. What path would you recommend that Ventus take? Why?

Answer rating: 100% (QA)

a The best path for growth for Ventus can be determined by considering the challenges and opportunities presented in the case Some potential growth paths for Ventus could include Diversification of Se... View the full answer