Download sunshine industry - Willis Towers Watson

A look at total rewards in the Philippines’ sunshine industry
An analysis of the compensation and benefits package in the
BPO sector
The Business Process Outsourcing (BPO) industry
in the Philippines has been booming in the recent
years. Its fast development as one of the pillars
of the economy has earned its nickname as the
country’s “Sunshine Industry”. However, it also faces
major challenges, of which are: attracting qualified
employees and addressing significantly high turnover
rates year on year. Working in one of the leading
human resources consulting firms in the Philippines, I
had the opportunity to interact and investigate more on
these issues, boosting my curiosity for this industry.
In my experience working on the Towers Watson’s Total
Rewards Survey (TRS), an annual compensation and
benefits survey run across different sectors including
but not limited to the BPO sector, I was exposed
to over 80 BPO/Call Center companies’ Human
Resources policies and compensation information.
Upon concluding both a micro and macro-analysis
covering cash and benefits data, the results were
unlike any other industries’ behaviour. I observed three
main differing points.
First, the cash compensation package. Across almost
all employee category levels, we observed an 80-20
compensation mix, with as much as 80% allotted
for basic pay while 20% would comprise fixed cash
allowances (i.e., rice allowance, meal allowance,
etc.) as well as fixed/guaranteed and other variable
bonuses. Looking at it in retrospect, this might be
a good strategy to attract talent but may not be the
most cost beneficial one from an employers’ point
of view. Call Centers and BPO’s are typically known
for being cost-efficient in their operations. Based
on Towers Watson’s 2013 TRS report, this sector’s
salary increase was marked at about 8% and predicts
a slightly lower budget for this year. This would mean
that base pay is increased at an estimate of about 7%
to 8% per year, multiply that to the number of full-time
employees and there goes your Salaries and Wages
expense. So, how then can BPO companies sustain a
business that is supposed to be cost efficient, when
their rewards package is largely cash-based? Why not
offer more cash allowances based on skills such as
language premium to avoid that painful yearly increase
on salaries? In the long run, companies may have to
rethink and consider a different compensation mix and
rewards philosophy that’s more sustainable.
Second, attracting and retaining employees. In 2012,
voluntary attrition for this sector was about a quarter
of their workforce but for the previous year, it went
up to as much as half of the company’s total labour
force. Yet this comes as no surprise for anyone in
this sector. What’s alarming is that we see “health
reasons” climbing up as one of the reasons for leaving
the company. Other industries have ranked this as
the 6th reason, but this sector ranked it at 3rd place considerably high and may possibly reach an alarming
stage. Again, this would mean going back to the
drawing board and assessing current HR programs in
order to include budgeting for programs directed more
towards health and well-being.
Lastly, the seemingly reduced supply of skilled and
qualified talent. Globalisation has brought about a
significant influx of choices not only on the basic
goods but also talents. Talent can now easily be
transferred across countries, which is what the
BPO industry primarily thrives on-offering back- and
front- office services such as technical support and
customer service to clients primarily in the United
States and Australia. The Philippines, in spite of its
abundant supply of labour, still is in need of a number
of experienced managers and professionals. This can
be associated to the growing concern in the country
where most of the available talent are qualified in
performing only outsourced core functions. Unlike
Knowledge Process Outsourcing or KPO services that
are specialized.
The question looms - what will be the fate of the
BPO sector in the future? Will this booming industry
continue to emerge as the top contributor to the
country’s GDP? Will the Philippines transition fully
into KPOs like its neighbouring counterpart- India?
Ultimately, BPOs face tough challenges in a developing
country like the Philippines. However, with the
government’s clear commitment to create tailor-made
training programmes that promise to actively support
the industry’s demands, significant revenue could
potentially be generated, should all the pieces come
together. With its English-speaking and highly trainable
workforce, high hopes are in store for the Philippines’
sunshine industry.
About Towers Watson
Towers Watson is a leading global professional services
company that helps organisations improve performance
With 14,000 associates around the world, we offer
rewards, and risk and capital management.
Copyright © 2013 Towers Watson. All rights reserved.
TW-AP-2014-39007
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Contact Us
For further information, please contact your Towers
Watson consultant, or
Rachel Yap
Global Data Services
[email protected]