Business Process Management (BPM) is the leveraging of technology or specialist process vendors to provide and manage an organization’s critical and/or non-critical enterprise processes and applications. The major components of the Philippine BPM industry are contact/call centers, software development, animation/creative service, data transcription, back office processing and engineering design and other back office activities.
This Special Release on BPM is based on a special tabulation from the final results of the 2013 Annual Survey of Philippine Business and Industry for all employment sizes, specifically the sections on Information and Communication and Administrative and Support Service Activities. BPM activities cut across these two sectors of the economy.
Most of the BPM activities are engaged in computer programming activities
The final results of the 2013 Annual Survey of Philippine Business and Industry conducted nationwide covered a total of 1,420 establishments engaged in BPM activities.
Computer programming activities lead the industry comprising more than a third (35.8%) of the total number of establishments in the country. Customer relationship management activities followed with 263 establishments or 18.5% of the total. Sales and marketing (including telemarketing) activities came in third with 129 (9.1%) establishments. Figure 1 shows the distribution of establishment by industry sub-class in 2013.
Bulk of the jobs is in customer relationship management activities
Employment generated by BPM activities were recorded at 449,964 in 2013. The bulk of the jobs were in customer relationship management activities, which employed 298,485 (66.3%) of the total BPM workforce. Establishments engaged in sales and marketing (including telemarketing) activities followed with 52,940 (11.8%) personnel. Computer programming activities placed third with 36,023 (8.0%) employees. Figure 2 shows the distribution of employment by BPM activivities.
Employees in software publishing receive the highest annual pay
Total compensation paid by BPM activities in 2013 amounted to PHP177.7 billion, equivalent to an annual compensation of PHP395,266 per employee. Customer relationship management activities paid the highest total compensation of about PHP108.7 billion accounting for almost two thirds (61.1%) of the total compensation paid by BPM activities. Computer programming activities placed second with PHP21.5 billion (12.1%). Sales and marketing (including telemarketing) activities ranked third, with PHP17.3 billion (9.7%).
Employees in software publishing received the highest annual compensation per employee of PHP1,277,607. This was followed by workers in finance and accounting activities with PHP1,268,766 and payroll maintenance and other transaction processing activities with PHP 677,000. Document processes activities recorded the lowest annual compensation per employee of PHP 101,480.
Customer relationship management activities top in income and expense
Total income generated by BPM activities in 2013 reached PHP387.9 billion. Customer relationship activities topped in income generation comprising more than half of the total income earned by BPM activities with PHP205.5 billion (53.0%). Computer programming activities came next with PHP65.2 billion (16.8%) and sales and marketing (including telemarketing) activities followed with PHP34.9 billion (9.0%).
Total expense incurred by BPM activities amounted to PHP338.7 billion. Among BPM-based industries, customer relationship management activities spent the highest with PHP175.9 billion (51.9%). Computer programming activities and sales and marketing (including telemarketing) activities followed next with PHP58.0 billion (17.1%) and PHP30.9 billion (9.1%), respectively.
Value added amounts to PHP262.3 billion in 2013
Value added generated by BPM activities in 2013 was estimated at PHP262.3 billion. Customer relationship management activities shared the highest among BPM activities with PHP 157.2 billion (59.9%). Computer programming activities ranked second with PHP36.3 billion (13.8%). Sales and marketing (including telemarketing) activities came in third with PHP23.5 billion (9.0%).
Income per peso expense is PHP1.15
For every peso spent, PHP1.15 was earned by BPM activities. Among the BPM industries, document processes activities registered the highest income per peso expense ratio of PHP2.00. On-line employment placement agencies and application hosting services ranked second and third with PHP1.39 and PHP1.31, respectively.
Labor productivity stands at an annual average of PHP583 thousand
Labor productivity (value added per worker) in BPM activities stood at an annual average of PHP583 thousand in 2013. Software publishing generated the highest labor productivity of PHP3.5 million per worker. Other industries which posted more than a million mark are the following:
- Finance and accounting, PHP1.6 million
- Research and analysis activities, PHP 1.0 million
- Computer programming activities, PHP1.0 million
Gross addition to fixed assets totals to PHP9.2 billion
Gross addition to fixed assets (capital expenditures less sale of fixed assets) acquired by BPM activities totaled to PHP9.2 billion. Customer relationship management activities recorded the highest gross additions to fixed assets among the BPM activities with PHP5.2 billion, accounting for 56.7 percent of the total. Computer programming activities followed with PHP1.7 billion (18.8%). Data processing, ranked third with PHP1.4 billion (14.8%).
Customer relationship management activities posted the highest change in inventories
Change in inventories, defined as the value of ending inventory less the beginning, amounted to negative PHP174.7 million for BPM industries in 2013. Among industries, customer relationship management activities recorded the highest positive change with PHP60.2 million. Other industries which reported positive change in inventories are the following:
- Sales and marketing (including telemarketing) activities
- Medical transcription activities
- Motion picture, video and television program post production activities
- Motion picture, video and television programme activities
- Data processing
- Application hosting services
- Engineering outsourcing activities
Government grants PHP336.8 million subsidies
Subsidies are special grants received from the government in the form of financial assistance or tax exemption or tax privilege to aid and develop an industry. In 2013, the government granted PHP336.8 million subsidies to the BPM industry particularly to customer relationship management activities and sales and marketing (including telemarketing) activities with reported subsidies of PHP215.3 million and PHP121.5 million, respectively.
Most income from transactions outside the country comes from USA
Income from transactions outside the country of BPM establishments amounted to PHP120.4 billion in 2013. USA contributed the highest part of income, sharing two-thirds of the total with PHP80.5 billion (66.8%). This was followed by United Kingdom and Canada contributing PHP14.7 billion (12.2%) and PHP5.5 billion (4.5%) to the total income from transactions outside the country respectively. Figure 5 shows the distribution of Income from transactions outside the country.
Income from transactions outside the country accounts for 31.0 percent of the total income
The ratio of income from transactions outside the country over the total income of BPM establishments is measured at 31.0 percent.
Among industries in relation to income from transactions outside the country, customer relationship management activities recorded the highest transactions outside the country, amounting to PHP 77.5 billion or 64.4 percent of the total. This was followed by sales and marketing (including telemarketing) activities which posted PHP16.0 billion or 13.3 percent. On third spot was computer programming with PHP12.6 billion or 10.5 percent. Figure 6 shows the top five industries in terms of total income and transactions outside the country.
Scope and Coverage
The 2013 Annual Survey of Philippine Business and Industry (ASPBI) was conducted to collect information on the structure and trends of economic activities in the entire country for the year 2013. Covered were establishments engaged in economic activities as defined under the 2009 Philippine Standard Industrial Classification (PSIC).
These establishments were classified into 18 sectors, two of which are Information and Communication (Sector J) and Administrative and Support Service Activities (Sector N) which covered, among others, establishments engaged in Business Process Management (BPM) activities.
A total of 1,594 (92.51%) responded out of the 1,723 samples drawn for all BPM activities establishments. Out of the total receipts, 63 (3.92%) responded on-line.
Concepts and Definition of Terms
Establishment - an economic unit which engages under a single ownership or control, i.e. under a single legal entity, in one or predominantly one kind of economic activity at a single fixed location. It is also defined as the unit that is engaged in the production of the most homogenous group of goods and services, usually at one location, sometimes over a wider area for which separate records are available that can provide data concerning the production of these goods and services and the materials, labor and physical resources used in the production.
Economic activity or business - is the activity of the establishment as classified under the1994 Philippine Standard Industrial Classification (PSIC). The main activity refers to the activity that contributes the biggest or major portion of the gross income or revenue of the establishment.
Computer and related activities establishment - Office or firm engaged in hardware consultancy, software publishing, software development, data processing, database activities and on-line distribution of electronic content, maintenance and repair of office, accounting and computing machinery and others.
Miscellaneous business activities establishment - Office or firm engaged in legal, accounting, bookkeeping and auditing; tax consultancy; market research and public opinion polling; business and management consultancy; architectural and engineering activities; land surveying services; technical and testing analysis; advertising; labor recruitment and provision of personnel; investigation and security services; cleaning of buildings of all types; pest control services; industrial cleaning activities; photographic activities; packaging activities; management and administrative services; bill collecting and credit rating services; business brokerage; stenographic, duplicating and mailing activities; fashion design; interior decoration services; call center activities; medical transcription and others.
Business Process Outsourcing (BPO) - is the leveraging of technology or specialist process vendors to provide and manage an organization’s critical and/or non-critical enterprise processes and applications.
Outsourcing (or contracting out) - is the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including telemessaging and call centers.
Offshore outsourcing - is the practice of hiring an external organization to perform some or all business functions in a country other than the one where the product or service will be sold or consumed.
Computer consultancy and computer facilities management activities - iincludes planning and designing of computer systems that integrate computer hardware, software and communication technologies.
Software Publishing - includes publishing of ready-made (non-customized) software: operating systems, business and other applications, computer games for all platforms
Computer programming activities - includes the activities of writing, modifying, testing, and supporting software, designing the structure and content of, and/or writing the computer code necessary to create and implement: systems software (including updates and patches), software applications (including updates and patches), databases, web pages; customizing of software, i.e.modifying and configuring an existing application so that it is functional within the client's information system environment
Data Processing - includes complete processing of data supplied by the customer, data entry services, scanning of documents , time share computer services etc
Database Activities and On-line Distribution of Electronic Content - some of the activities included in this group are compilation of data from one or more sources, online data base publishing, internet search sites ,,electronic learning are examples of the activities undertaken.
Other Computer Related Activities - includes computer disaster recovery, software installation services
Call centers activities (Voice) - includes inbound call centers, answering calls from clients by using human operators, automatic call distribution, computer telephone integration, interactive voice response systems or similar methods to receive orders, provide product information, deal with customer request for assistance or address customer complaints; outbound call centers using similar methods to sell or market goods or services to potential customers, undertake market research or public opinion polling and similar activities for clients
Motion picture, video and television programme activities and post-production activities - includes production of theatrical and non-theatrical motion pictures whether on film, video tape, DVD or other media, including digital distribution, for direct projection in theatres or for broadcasting on television; supporting activities such as film editing, cutting, dubbing etc.; distribution of motion pictures or other film productions (video tapes, DVD's etc.) to other industries; as well as their projection. Buying and selling of motion picture or any other film production distribution rights is also included. It also includes production of motion pictures, videos, television programmes or television commercials. Post production activities such as: editing, film/tape transfers, titling, subtitling, credits closed captioning, computer-produced graphics, animation and special effects film/tape transfers Activities of motion pictures film laboratories and activities of special laboratories for animated films: developing and processing motion picture film, activities of motion picture film, reproduction of motion picture film for theatrical distribution
Total Employment - is the number of persons who worked in or for the establishment as of November 15, 2012.
Paid employees - are persons working in the establishment receiving regular pay as well as those working away from the establishment when paid by and under the control of the establishment. Included are persons working as full-time or part-time and those employees on sick leave, paid vacation or holiday. Excluded are consultants, home workers and workers receiving commission only.
Unpaid workers - include working owners who do not receive regular pay, apprentices and learners without regular pay, and persons working without regular pay for at least one third of the working time normal to the establishment.
Compensation - the sum of salaries and wages and employer's contribution to SSS, GSIS, etc.
Salaries and wages - are gross payments made by establishments to its employees in cash or in kind, that is, prior to deduction for employee's contribution to SSS/GSIS, withholding tax, etc. Included are total basic pay; vacation, sick and maternity leave pay; overtime pay and other benefits.
Employer's contribution to SSS, GSIS, etc. - includes contribution to Employees Compensation Commission (ECC), Philhealth, PAG-IBIG, etc.
Income - refers to cash received and receivables for goods sold and services rendered.
Expense - refers to cost incurred by the establishment during the year whether paid or payable. This is treated on a consumed basis.
Fixed assets - are physical assets expected to have productive life of more than one year and intended for use and/or being used by the establishment. Included are land, buildings, fixtures, machinery, tool, furniture, office equipment, vehicles, and the like.
Gross additions to fixed assets - refer to the difference between the cost of acquisition of fixed assets acquired in 2012 and the value of sales of fixed assets during the year.
Capital expenditures - refer to the cost of acquisition of fixed assets acquired in 2012 whether or not full payments have been made.
Change in Inventories -is equivalent to the value of inventories at the end of the year less the value of inventories at the beginning of the year.
Inventories - refer to the stock of goods owned by and under the control of the establishment as of a fixed date, regardless of where the stocks are located. Valuation is at current replacement cost in purchaser prices. Replacement cost is the cost of an item in terms of its present price rather than its original cost.
Subsidies - are all special grants in the form of financial assistance or tax exemption or tax privilege given by the government to aid and develop an industry.
Value Added - is gross output less intermediate input. Gross output for information and communication and administrative and support services activities is the sum of the total revenue (less interest income, rent income from land, dividend income, royalty income and franchise income), capital expenditures of fixed assets produced on own account and change in inventories. Intermediate input is equal to the sum of the following cost items: materials and supplies purchased; fuels, lubricants, oils and greases purchased; electricity purchased; water purchased; cost of industrial services done by others; cost of non-industrial services done by others; goods purchased for resale; research and development expense; environmental protection expense; royalty fee; franchise fee; payouts and other cost.