MEASUREMENT OF THE BUSINESS PROCESSING OUTSOURCING (BPO) IN THE

1
MEASUREMENT OF THE BUSINESS PROCESSING
OUTSOURCING (BPO) IN THE PHILIPPINE SYSTEM OF
NATIONAL ACCOUNTS (PSNA) by Estrella
V.Domingo Assistant Secretary General APEC
Capacity Building Seminar Workshop on Measurement
of International Trade Services Renaissance
Makati City Hotel, Makati City,
Philippines October 1-3, 2008
2
OUTLINE OF PRESENTATION

• I. Introduction
• II. Scope and Coverage
• III. Data and Data Sources
• IV. Estimation Methodologies
• V. Issues and Future Direction

3
BPO Industries in the Philippines
4
BPOs in the Philippines

• Philippines becoming a rising hub for BPO
• related services
• Revenues from IT services, mostly BPOs, reached
• US 2.9 B, growth of 45
• Exports amounted to US 2 B about 69 higher
• than 2005 level

5
BPOs in the Philippines

• Major BPOs in the Philippines
• a) contact centers
• b) software development
• c) animation/creative services
• d) data transcription
• e) back office processing and
• engineering design

6
BPOs in the Philippines
7
Scope and Coverage in the PSNA
8
Scope and Coverage PSNA
Non-Contact Center
BPO Industry
Contact Center
Back office
Inbound and outbound Voice operation services
for purpose of sales, customer service,
technical support, others
Medical Transcription
Legal Transcription
Other Data Transcription
Animation
Software development
Engineering development and digital content
Subject to data limitations
9
Scope and Coverage PSNA

• BPO is captured under
• Gross Value Added (GVA)
• of Private Services (production side)
• and Exports of Services (expenditure side)

10
Scope and Coverage PSNA

• GVA of Private Services include services in
• Education
• Medical and Health
• Recreation
• Hotel and Restaurant
• Personal and Business

Includes BPOs
11
Scope and Coverage PSNA

• Exports of Services covers services - purchases,
• transactions, etc provided by the country
• to non-residents and include
• a) transportation (freight)
• b) insurance
• c) travel
• d) government
• e) miscellaneous services (includes BPOs)

12
Scope and Coverage PSNA

• 1994 Philippine System of Industrial
• Classification (PSIC) provides
• detailed list of industries classified under
• Information and Communications
• Technology (ICT) wherein
• activities considered as BPOs are listed

13
Data and Data Sources
14
Data Sources

• From censuses, surveys and administrative
• data from government regulatory agencies
• including data from industries various
• associations
• Bulk of information come from survey of
• Establishments by the National Statistics
  Office(NSO)

15
Data Sources

• Other data sources
• a) Bangko Sentral ng Pilipinas (BSP)
• b) Securities and Exchange Commission (SEC)
• c) Commission on Information and
• Communication Technology (CICT)
• d) Contact Center Association of the
  Philippines (CCAP)
• e) Business Process Association of the
  Philippines (BPAP)

16
Data Sources

• National Statistics Office (NSO)
• a) Census of Philippine Business and
• Industry(CPBI)
• b) Annual Survey of Philippine Business
• and Industry (ASPBI)
• c) Quarterly Survey of Philippine Business
• and Industry(QSPBI)
• Latest census/surveys of establishments
• 1999 CPBI, 2005 ASPBI, Q2 2008 QSPBI

17
Data Sources

• CPBI release is two (2) years after reference
  year
• for the preliminary release, and
• three (3) years after reference year for the
  final
• results
• QSPBI covers only large sample establishments.
• Covers all industries except Agriculture
  Industry.
• QSPBI conducted every quarter. Releases are 45
  days,
• 60 days, 90 days after reference quarter

18
Data Sources

• Input-Output Survey of Establishments (IOSE)
• gt conducted irregularly
• gt latest is 2002 IOSE
• gt Detailed information on
• revenue/sales of production,
• cost of materials and supplies and
• cost of fuels purchased

19
Data Sources

• Bangko Sentral ng Pilipinas (BSP)
• gt 2005 Benchmark Survey of IT-enabled
  Services
• gt 2006 Survey of IT and IT-enabled Services
• Surveys provide information on
• revenue, employment, compensation, foreign
• direct investments, and export markets of
• IT-enabled industries

20
Data Sources

• Securities and Exchange Commission (SEC)
• gt Financial statements submitted to the agency
• as mandated by law for purposes of
  registration
• and licensing
• Relevant selected information compiled by SEC are
  
• consolidated and published for top 1,000 top
  2,000 and
• Top 5,000 corporations whose rankings are based
  on Gross
• Revenues.
• For data items not published, data are processed
  directly
• from available financial statements by industry
  for
• top 2,000 corporations

21
Estimation Methodologies
22
Estimation Methodology

• In 2003, information to measure contribution
• of BPOs not yet available
• Use of existing data on revenue projections
• by the industrys key players through BPO
  associations
• mostly from BPAP and CCAP
• As initial estimate, gross output of BPOs was
  based on
• actual revenues and projected revenues

23
2004-2005 refers to actual revenues 2006-2007
refers to updated projected revenues
24
Estimation Methodology
Gross Output (GO) For 2006-2007, GO was
estimated thru
Where GO gross output of BPO industry for year
i i 2006 and 2007 UP updated
projection of BPO revenues for year i and 2005
AR adjustment ratio for 2005
AE actual estimates of BPO revenues for
2005
25
(No Transcript)
26
Estimation Methodology
Gross Valued Added (GVA) gt indirect approach
using GVAR applied to total estimated GO gt
estimates of GO aggregated to represent total
of contact centers and non-contact centers gt
Financial statements of key BPO players (from
SEC) as source of GVAR gt As of March 2007,
latest available data from financial statements
are for 2004
27
Estimation Methodology
Gross Valued Added (GVA)
Where GVA gross value added of BPO industry for
year j j2004, 2005, 2006, 2007 k
1(contact centers), 2(non-contact centers) GO
gross output of BPO industry for year j GVAR
gross value added ratio for 2004 culled from
consolidated FS FGVA gross value added for
2004 from consolidated FS FGO gross output for
2004 from consolidated FS
28
(No Transcript)
29
(No Transcript)
30
Estimation Methodology
Exports of Services gt 2005 Survey of IT and
IT-enabled Services showed that 96.3 of the
total revenues of contact centers and 43.4 of
the total revenues of non-contact centers are
intended for exports gt assumption that informal
or unorganized activities of non-contact
centers are not captured in banking systems gt
60 undercoverage ratio applied to account for
underreporting of export transactions of
non-contact centers
31
Estimation Methodology
Formula to estimate undercoverage of BPO from
Balance of Payments
Where j2004, 2005, 2006, 2007 ECC exports
of contact center services for year j ENC
exports of non-contact center services for year
j GOCC gross output of contact centers industry
for year j GONC gross output of non-contact
centers industry for year j EBPO exports of
BPO services for year j
32
Estimation Methodology
Formula for undercoverage of BPO
i1, 2,12 Where BPOXi exports of BPO services
for month I BPOGOA annual gross output of BPO
industry (from private services sector) 97
and 60 constants CS Computer services for
month i (from BOP) CIS Computer and
Information Services for month i (from BOP) OBS
Other Business Services for month i (from BOP)
33
Issues and Future Direction
34
Limitations of estimates in the PSNA

• Informal activities are not covered particularly
• household-based activities, which use intensive
  
• IT services
• Initial estimates of GVA for 2004-2007 are based
• from available indicator on revenues estimates
  for
• cost not available
• Use of GVARs from 2004 may no longer be
  appropriate
• as industry continues to expand and changes in
• technology likewise occur

35
Future Directions

• Estimate of informal activities of BPOs to be
  done separately as component of BPO industry once
  results of ongoing Informal Sector Survey (by
  NSO) becomes available
• Present estimates to be revisited using benchmark
  information to provide direct estimates of the
  contribution of the BPO industry
• Institutional arrangements with SEC must be done
  to come up with a consolidated data for BPO

36
Thank you! URL http//www.nscb.gov.ph e-mail
info_at_nscb.gov.ph