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Manila, Philippines — October 25, 2005

A recent survey suggested that turnover is lower and hiring rates higher in the Philippine IT-enabled services (ITES) industry than generally presumed by the industry and observers.

Conducted by Outsource2Philippines.com (O2P) in cooperation with the Business Processing Association of the Philippines (BPA/P), 37 companies in six ITES sectors — contact centers, software development, business process outsourcing, medical transcription, animation, engineering & design — completed the survey.

O2P CEO Frank Holz said that although “the conventional thinking has been that attrition rates are generally in the range of 40-50% in the ITES industry and hiring rates are generally less than 3%, the survey indicated some very different results.”

Among the 37 companies that responded to the survey, 81% had less than 20% attrition for the year-to-date period (January to September 2005). Perhaps more importantly according to BPA/P chairman Bong Borja, “they indicated that attrition rates have not increased in the past 12 months.” The fact that attrition rates are not increasing may suggest that ITES careers for many Filipinos are more attractive than other alternatives available to them, according to Borja.

When employees do leave, the results also showed that approximately one-quarter of attrition is due to employees switching employers within the outsourcing industry. Another 15% is due to company initiated attrition. “This suggests that even with the high rate of growth of the industry, at present it appears that movement from one company to another within an ITES sector is significant, but not as prevalent as thought,” Holz said.

For hiring rates, the results of the survey showed that 27% of the respondent companies have hiring rates of three percent or less, while 38% have hiring rates in the range of four to six percent. Another 16% have hiring rates in the range of seven percent to 10%. In all, 81% of the companies in the survey had hiring rates of less than 10%. While not high, the results suggest circumstances not quite as dire as commonly believed.

“While these companies are interviewing a remarkable number of people, they are finding that overall more of those interviewed are meeting their requirements for employment than anecdotal evidence suggests,” said Holz.

“However, the rate of acceptance of applicants has declined over the past year, which could be a disturbing trend,” Holz warned.

The survey was conducted online, although two respondents faxed their responses. Each company was called during the period the survey was conducted to encourage firms to respond. A total of 162 companies received the survey. The 37 respondents represent 23% of the companies invited to participate. While the survey was not scientific, O2P and BPA/P said it provides a good sense of industry sentiment.

Press Inquiries

Frank Holz

CEO, Outsource 2Philippines

Mitch Locsin

Executive Director, Business Processing Association of the Philippines

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