BPO firms in Philippines looking at windfall from Satyam scandal

SINGAPORE/MANILA - With a billion dollar revenue fraud dealing the Indian IT sector a body blow, BPO firms in the Philippines are hoping to make capital by getting some of the business from the West.

Leading politician Representative Joseph Santiago said the unravelling of the massive revenue fraud at Satyam Computer Services would dissuade multinational companies from seeking BPO services in India. He said firms in the Philippines could reap the bonanza with more Western firms diverting business to the Southeast Asian country.

The disclosures about Satyam would ‘force Western firms to rethink their plans to do new business, or contract out additional back office work to BPO providers based in India’, Congressman Santiago said in a press statement Monday.

‘The Philippines is in a superb position to capture whatever outsourcing business that India stands to lose on account of Satyam’s troubles,’ said Santiago, chairperson of the House of Representatives information and communications technology committee.

Soon after the Mumbai terror attacks too there was speculation in the local media that IT firms in the Philippines would be the beneficiaries of the uncertainties caused by the attacks and security concerns of international corporates. Global property consultant CB Richard Ellis had then said the attacks would likely drive more business to the Philippines as multinational firms re-evaluated the security situation in India.

Santiago, a former chief of the National Telecommunications Commission, boasted that the IT industry in the Philippines had remained free of any taint.

‘Fortunately for us here in the Philippines, we’ve never had any fraud at a BPO provider of a scale comparable to what happened at Satyam. This could be due to the higher corporate governance standards and more rigorous controls here,’ he said.

However, IT analysts in Singapore discounted Santiago’s claims saying there could be no comparison of the scale of the IT and BPO operations in the two countries.

In recent years, the Philippines has emerged as an outsourcing services hub, but Philippine IT and BPO solution providers do a mere fraction of the business conducted by Indian IT companies. According to Philippine Software Industry Association figures, the country’s IT firms earned $423 million in revenues from outsourcing and product software in 2007, up from $200 million in 2005. With 28,000 software engineers employed in the sector, the country has set a target of $1 billion by 2010.

Many Indian software companies, including Wipro and Infosys, have set up BPO offices and call-centres in the Philippines taking advantage of lower operational costs there. Also, as more and more companies resort to ‘out-tasking’ or the farming out business processing functions piecemeal to smaller outfits, the Philippines has emerged as a destination of choice due to its infrastructure and English-speaking work force.