Development of Business Process Outsourcing in the Philippines

Abstract

The Philippine BPO industry is considered as a “sunrise industry,” a leading source of economic growth and improvement in the overall standard of living. The BPO industry is often cited for creating jobs and for bringing substantial revenues into the country. It also supports the expansion of economic development in areas outside of the National Capital Region (NCR). At the same time, however, the BPO industry leads to the evolution of a new working class with unique challenges and opportunities. This chapter will present the state of the BPO industry and examine whether the Philippine BPO industry, in its present form, can bring about shared growth. It presents a more micro perspective of this sector. A more macro perspective will be presented in the next chapter.

Annex

Computation of Forward and Backward Linkages (Used for Table 7.8)

To measure forward and backward linkages,¹⁸ the authors used the elements of the 120 × 120 inverse matrix (computed as the inverse of the I-A matrix where I is an identity matrix and A is the matrix of technical coefficients).

Backward linkage is measured by the index of the power of dispersion, u _j , or the sum of the jth column of the inverse matrix divided by the average of the entire system:

$$ {u}_j=\frac{\sum\ {r}_{ij}}{\left(1/n\right)\sum\ \sum\ {r}_{ij}} $$

Forward linkage is measured by the index of sensitivity, u _i , or the sum of the c row of the inverse matrix divided by the average of the entire system:

$$ {u}_j=\frac{\sum\ {r}_{ij}}{\left(1/n\right)\sum\ \sum\ {r}_{ij}} $$

where r _ij are the elements of the inverse matrix.