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MANILA - A merger wave is likely to engulf the Philippine business process outsourcing sector, as companies take advantage of economies of scale and improve their competitiveness, an industry official said on Wednesday.
"Consolidation that is happening in the industry is normal. It's actually good. It's a good sign and that people should not be worried in consolidation because it only means that you end up with a much bigger and stronger company in the end," Rainerio Borja, director of the Business Process Association of the Philippines said during the press launch of the International Contact Center Conference & Expo 2012.
"Its part of a cycle. If you look at the economic cycle of an industry, it starts in the nascent stage, everybody is growing organically. [But] at some point, to be a truly global player and because you want to become more competitive, then you want economies of scale and to get economies of scale the fastest way is to merge or acquire a company. So, company becomes automatically bigger and double size by just merging and then become a more competitive global player," said Borja, who is also president and country head of Expert Global Solutions.
"In our case, we thought there's a good leverage because one company is very strong in ARM [account receivable management] but not very strong in CRM [customer relationship management] and the other company is very strong in CRM. So, by acquiring that, we acquire the capability right away and the critical mass to actually compete globally," he said.
Last April, NCO Group, Inc. merged with APAC Customer Services Inc., creating EGS.
Other BPO companies that consolidated were PeopleSupport and Aegis Ltd. - now called Aegis PeopleSupport - and SPi Technologies Inc. and ePLDT Ventus Inc. - now SPi Global Holdings Inc.
Borja said the industry is on track to meet the $12 billion revenue target this year.
In 2011, the Philippines’ IT-BPO industry generated more than $11 billion in revenue and employed almost 640,000. Under its industry roadmap, BPAP projects the industry to grow to $25 billion and employ 1.3 million by 2016.
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