AUDIT OF BPO INDUSTRY TOP 20 BPO COMPANIES IN THE PHILIPPINES:

1. Accenture
Many multinational organizations are going through 2. JP Morgan Chase & Co.
finance, tax, or IT transformation project to drive 3. IBM
efficiency and reduce costs. 4. Teleperformance
• Automation 5. Cognizant
• Use of Technology 6. Concentrix
• Centralizing Functions 7. Sitel Group
8. Alorica
Four Elements that must work together in harmony to 9. Genpact
Enable Success: (PPDT) 10. (24)7.ai
• People 11. Telus International
• Process 12. Ttec
• Data 13. Sutherland Global Services
• Technology 14. iQor
15. TaskUs
In business process outsourcing or BPO: 16. Conduent
- subcontractors perform essential business 17. Transcom
operations in lieu of using internal staff. 18. Ibex
- while many businesses have used external service 19. Optum
providers, including freelancers, independent 20. WNS
contractors and large-scale third-party
enterprises at some point, the use of BPO has
continued to expand. TWO TYPES OF BPO SERVICES:
1. Back Office
2. Front Office
NEED FOR AGILITY, CONNECTIVITY, & COST-
CONTAINMENT FRONT OFFICE
- refers to the section of a company that manages
AGILITY customer interactions.
- because businesses of all sizes, even smaller - i.e., Customer Service Representatives
local businesses, now operate in a global
environment, agility is a top priority. BACK OFFICE
- refers to the section of a company that doesn’t
CONNECTIVITY interact with customers.
- the advancement and integration of technology - Back-Office employees perform tasks that are
platforms has changed the way businesses essential to a company's operations in other ways.
interact and fulfill service obligations. - i.e., Accounting, Procurement, Admin

COST-CONTAINMENT
- the reduction of logistical and geographical CATEGORIES:
barriers has also helped reduce the cost of 1. Offshore Vendors
outsourcing business processes. 2. Nearshore Vendors
3. Onshore Vendors

BUSINESS PROCESS OUTSOURCING (BPO): OFFSHORE VENDORS

- the practice of contracting a specific work process
or processes to an external service provider.
- can be an alternative to labor migration, allowing
the labor force to remain in their home country
while contributing their skills abroad.
- located outside of the Company’s own country.
NEARSHORE VENDORS
- located in countries that neighbor the contracting
company’s country.
ONSHORE VENDORS
- operate within the same country as the contractor,
although they may be located in a different city or
state.
SPECIALIZATION:
1. Customer Interaction Service
2. Back-Office Transactions
3. IT & Software Operations
4. Finance & Accounting Services
5. Human Resource Services
6. Knowledge Services
CUSTOMER INTERACTION SERVICE
- BPO company would cover a business’s voicemail
services, appointment schedules, email services,
marketing programs, telemarketing, surveys,
payment processing, order processing, quality
assurance, customer support, warranty
administration, and other customer feedback.
- e.g., CSRs, Virtual Assistants, Sales
BACK-OFFICE TRANSACTIONS
- includes check, credit, and debit card processing;
collection; receivable; direct and indirect
procurement; transportation administration;
logistics and dispatch; and warehouse
management.
- e.g., Admin Support, Managers, Accountants
IT & SOFTWARE OPERATIONS
- technical support functions that include
application development and testing,
implementation services, and IT helpdesk.
- e.g., manual data entry can be replaced with
automated data capture, increasing data intake
and reducing cycle time.
FINANCE & ACCOUNTING SERVICES
- functions include billing services, accounts
payable, receivable, general accounting, auditing,
and regulatory compliance.
HUMAN RESOURCE SERVICES
- BPOs can help address workforce challenges.
They can also cover payroll services, healthcare
administration, hiring and recruitment, workforce
training, insurance processing, and retirement
benefits.
KNOWLEDGE SERVICES
- these higher-level processes may include data
analytics, data mining, data and knowledge
management, and internet and web research, as
well as developing an information governance
program and providing the voice of customer
feedback.
HOW DOES BPO WORK?
STARTUP COMPANIES
- often need to outsource back-office and front-
office functions because they do not have the
resources to build the staff and supporting
functions to perform them in-house.
ESTABLISHED COMPANY
- may opt to outsource a task that it had been
performing all along after an analysis determined
that an outsourced provider could do the job
better and at a lower cost.
Management experts advise enterprise executives to
identify functions that can be outsourced and then
evaluate that function against the pros and cons of
outsourcing to determine if shifting that task to an
outsourced provider makes strategic sense for the
organization.
This requires a significant amount of change
management, as the move to an outsourced provider
generally impacts staff, established processes, and
existing workflows.
The shift also impacts the organization’s finances but
often also in terms of taxes and reporting
requirements.
The organization may also have to invest in a
technology solution to enable the smooth flow of work
from the organization itself to the outsource provider.
SCOPE OF WORK
1. the organization must identify the scope of the
work shifting from in-house staff to the external
partner.
2. executives should identify the workflows and
processes impacted by this shift and adjust, if
necessary
3. executives should also identify the key objectives
for outsourcing a function
a. Cost Savings
 b. Increased Quality 2017
c. Quicker Turnaround - DOF assures that the foreign investments in SEZ’s
will remain exempted from VAT and those
registered under BOI will retain their zero-rated
BPO INDUSTRY IN THE PHILIPPINES status despite implementation of TRAIN

1992
- first contact center for call center services is setup
in the Philippines by Accenture
1995
- the Special Economic Zone Act (RA 7916) is
passed by the Philippine Congress, promising tax
incentives to foreign investors
1997
- Sykes Asia becomes the first multinational
corporation to set up a BPO center in the
Philippines
2018
- Philippines ranks second in the Top 50 Digital
Nations, while Manila reclaimed the second spot
in the Top 100 Super Cities ranking for
outsourcing, based on Tholon’s Services
Globalization Index, an international ranking of IT-
BPO cities and countries
- Philippines takes 16 to 18 percent of the total
outsourced services globally
UPDATES, STATISTICS OF THE SPECIALIZED
INDUSTRY IN THE PHILIPPINES

1999
- eTelecare, the first call center in the country is
found and set up

2000
- the BPO industry accounted for 0.075% of the
country’s GDP

2003
- Convergys Corp. opens two call centers in the
Philippines along with their expansion in India

2005
- Philippines is able to account for 3% of the global
BPO market

2006
- ePLDT Ventus, a subsidiary of PLDT, hires more
than 11,000 people

2010
- 525,000 BPO employees and $8.9B in revenues,
the Philippines surpasses India as the world
leader in BPO industry
2013
- total revenues climbs up to $15.5B with 900,000
full time employees
2016
- at an annual growth rate of 17%, the BPO industry
is projected to generate 1.3 million new jobs
- PEZA investment pledges accounted for P8.14B
this year, lower compared to the P25.38B during
the first quarter of 2021.
- By 2022, 15 percent of the entire global
outsourcing market would be served by Philippine
outsourcing services.
- From April to June 2022, the demand for office
space accounted for 107,000 sqm or 43 percent
by the IT-BPM firms.
- The IT-BPM sector, which employs over 1.4 million
Filipinos, continued to exhibit a significant
 multiplier effect and generated an additional 4.6
million indirect jobs in support industries like
retail, transportation, food, logistics, and others.
- As businesses take advantage of cost, technology,
and talent, more BPO companies are relocating to
the provinces, which now account for 29 percent
of the total 1.44 million workforce.
- In spite of ongoing lockdowns, working from home
has helped the sector grow. WFH adds 23,000 new
jobs in 2020, right when the crisis caused the
unemployment rate to reach its highest level in 15
years.
- By the end of 2021, about 60 percent of employees
in the IT-BPO sector worked from home.
- 80 percent of Filipino IT-BPO workers have stated
that they prefer a hybrid work model over going
back on-site.
CAUSE OF RESIGNATION AMONG BPO STAFF
MEMBERS:
1. Prefer WFH Set-Up than going back On-Site
2. Mismatched Jobs & Skill Set
3. Lack of Collaboration
4. Lack of Proper Training
5. Lack of Recognition
6. Piled Up Workload
7. Team Management Issues
8. Night Shift Work
9. Poor Working Conditions
10. Golden Opportunities Arise
BPO INDUSTRY IN THE PHILIPPINES
- In an article by Forbes, the Philippines ranked sixth
among the fastest-growing markets for
freelancers in 2019, with a 35% growth from the
previous year.
- Ever since the pandemic happened, the so-called
“gig economy” has grown significantly in the
country, opening up far more opportunities for
lower-skilled workers.
- According to the IT Business Process Association
of the Philippines (IBP AP), the industry could
generate $35.9B revenues and have a total full-
time workers of 1.7 million in 2023.
WHY PHILIPPINES EXCELS AT BPO?
1. High Level of English Language Proficiency
2. A Hospitable & Courteous Culture
3. A World-Recognized Education System
- In 2001, the Philippine government put measures
in place to support BPO companies to reduce
unemployment.
- In 2021, that government support has grown
exponentially to curb the COVID economic
collapse.
HOW COVID-19 AFFECTED THE BPO INDUSTRY IN
THE PHILIPPINES
- The BPO industry has fared better than most
through the COVID-19 pandemic.
- Outsourcing saw an unprecedented growth rate
on the back of the pandemic.
- In a study conducted by Sprout Solutions, it was
found that the BPO industry (31%), information
and communication (9.79%), and healthcare
(8.51%) sectors were the biggest industries that
let employees work from home during the
Enhanced Community Quarantine implemented
last March.
IMPACTS & OPPORTUNITIES FOR THE PHILIPPINE’S
BPOS
- It opened the doors for more remote workers to
provide services to businesses based overseas.
- It has also highlighted the areas of business that
can be automated to improve the bottom line.
- Automation
- Freelancers (lower to no overhead costs)
2021 MARKET ANALYSIS: BPO IN FOCUS
- 85% of outsourcing work comes from US
companies.
- Large proportion of the remainder is from
businesses located in the UK and Australia.
CHALLENGES
- Job vacancies are hard to fill because of the lack
of candidates with the required skill set.
- The problematic skill-shortage relates to specific
skills for specific industries.
- 31% of companies that are affected by a skills
shortage look to contracting with an outsourcing
business.
hidden costs include vendor selection, currency
fluctuations, hardware and software upgrades,
internal transitions, layoffs, and the potential
decrease in individual worker productivity.
OVERDEPENDENCE ON SERVICE PROVIDERS
- Once a company designates a vendor for specific
processes, the vendor becomes a part of the
workflow. The company can incur extraneous
costs and decreased productivity when the
vendor encounters problems or lapses in its work
– for example, when the cost of hiring workers
increases. Vendors often replace veteran
employees with less experienced workers to keep
costs down, and quality suffers as a result.
COMMUNICATION ISSUES
- Language barriers can limit activities when your
company hires individual service providers spread
across the globe. This can result in delays in new
processes and curbs on feedback from different
departments, and it can potentially magnify
current problems in your business operations.
Further, customer-facing services may present
language barriers to third-party vendors.

AUDIT CONSIDERATIONS

SECURITY
- In outsourcing, especially when information
systems (IS) are involved, companies face
communication and privacy risks. Security is
more difficult to maintain when the business
taking care of your information systems is not in
the same country, especially one with different
security requirements. Potential data privacy
breaches and vulnerability disclosures are a real
threat, particularly with the current prevalence of
hacking. The internet, which makes BPO for IT
feasible, also may offer a portal through which
hackers enter.

UNDERESTIMATING THE COSTS OF SERVICES

- Companies that employ BPO vendors often
underestimate the running costs, especially in
upgrades and contract renegotiation. Other
AUDIT OF CONSTRUCTION & REAL ESTATE
INDUSTRY
IMPACT OF COVID-19 IN CONSTRUCTION
INDUSTRY:
1. Suspension & Project Delayed of Infrastructure
Project
2. Financial Difficulties
3. Compliance with Health & Safety Protocols
SUSPENSION & PROJECT DELAYED OF
INFRASTRUCTURE PROJECT
- Government have suspended construction
operation and project delayed in the safety
measures that contractors must strictly follow
specific guidelines for the implementation of
allowed infrastructure projects.
FINANCIAL DIFFICULTIES
- Construction projects often center on disputes
over who will pay for safety measures at job sites,
such as testing, the establishment of quarantine
areas, and disinfection facilities.
COMPLIANCE WITH HEALTH & SAFETY
PROTOCOLS
- The construction safety official maintains that
health protocols ensure project compliance with
DOLE Interim Guidelines on Workplace
Prevention and Control of COVID-19.
THE CONSTRUCTION INDUSTRY RECOVERS FROM
THE IMPACTS OF THE COVID-19 PANDEMIC
- The Philippines construction industry is expected
to continue its growth recovery as the pandemic-
related restrictions are eased. Filipino government
prioritizing the implementation of the Build-Build-
Build Program to stimulate the economy and
provide employment opportunities.
CONSTRUCTION
- The process or method of building or making
something, especially roads, buildings, bridges,
etc.
PHILIPPINES CONSTRUCTION MARKET SEGMENT:
1. Residential Construction
2. Infrastructure Construction
3. Energy & Utilities Construction
RESIDENTIAL CONSTRUCTION
- The project types in this sector include multi-
family housing projects, and single-family housing
projects.
INFRASTRUCTURE CONSTRUCTION
- The project types in this sector include rail
infrastructure, road infrastructure, and other
infrastructure projects.
ENERGY & UTILITIES CONSTRUCTION
- The project types in this sector include electricity
and power, oil and gas, telecommunications,
sewage infrastructure, and water infrastructure.
REAL ESTATE
- These are properties related to and used in
developing, manufacturing, distributing, storing,
researching, or producing goods and products.
FOUR TYPES OF REAL ESTATE:
1. Residential
2. Commercial
3. Land
4. Industrial
RESIDENTIAL
- property (both land and buildings) used for
housing.
COMMERCIAL
- property used exclusively for business-related
purposes or to provide a workspace rather than a
living space, which would instead constitute
residential real estate.
LAND
- the baseline for all types of real property.
- land typically refers to undeveloped property and
vacant land.
INDUSTRIAL
- refers to land and buildings that are used by
industrial businesses for activities such as
factories, mechanical productions, research and
development, construction, transportation,
logistics, and warehousing.
HOW THE REAL ESTATE INDUSTRY WORKS?
1. Development
2. Sales & Marketing
3. Brokerage
4. Real Estate Lending
5. Property Management
6. Professional Services
DEVELOPMENT
- Is a process that involves the purchase of raw
land, rezoning, construction and renovation of
buildings, and sale or lease of the finished product
to end users.
SALES & MARKETING
- Firms work with developers to sell the buildings
and units they create. These firms earn a
commission for creating all marketing material
and using their sales agents to sell the inventory of
completed units. These firms typically focus on
new units.
BROKERAGE
- Is a firm that employs a team of real estate agents
(realtors) who help facilitate a transaction
between the buyers and sellers of property.
REAL ESTATE LENDING
- Lenders include banks, private lenders, credit
unions, and government institutions.
PROPERTY MANAGEMENT
- Firms play a role in helping real estate owners rent
out the units in their buildings.
PROFESSIONAL SERVICES
- There are a variety of real estate professionals who
work in the industry and help make it function.
OVERVIEW, UPDATES, & STATISTICS OF THE
SPECIALIZED INDUSTRY IN THE PHILIPPINES
- The construction sector is one of the important
industries that the government has been focusing
on since 2016.
- The majority of these developments would be
enforced by the Department of Public Works and
Highways and the Department of Transportation.
- Of the many projects in the government’s
infrastructure development plan, one of the big
tickets is the Metro Manila Subway Project,
managed by the DOTr and costing roughly 357
billion Philippine pesos.
THE BIGGEST REAL ESTATE COMPANY IN THE
PHILIPPINES
AYALA LAND INC.
- Is the largest property developer in the
Philippines, with core business in strategic
landbank management, residential,
development, shopping centers, corporate
business and hotels.
AUDIT CONSIDERATIONS
- The construction and real estate industry differs in
many ways from other types of business.
- Both can be quite cyclical and require a strong
understanding of project accounting, revenue
recognition, and valuation issues.
GOING CONCERN CONSIDERATIONS
- While going concern is always an audit
consideration, consider the pandemic and, at a
minimum, discuss with the audit team.
TECHNICAL ACCOUNTING CONSIDERATIONS
- There are considerations for entities reporting on
either the income tax basis (“ITB”) of accounting
or generally accepted accounting principles
(“GAAP”).
BEST PRACTICES:
1. Management’s responsibilities
2. Designate an audit point person from your team
3. Verify the listing of accounts to be confirmed,
including cash, debt, and investment accounts
4. If the business has hard-to-value investments,
prepare detailed supporting schedules and
documentation
5. Discuss with your auditors if there are schedules
or documentation you can provide in advance for
possible interim testing
MAIN INDUSTRY ISSUES:
1. Distressed assets, in particular residential and
commercial properties are in need of restructuring
2. Careful planning can optimize the tax position for
real estate projects
3. Cost control and strong project management are
essential to maximize pot
REPUBLIC ACT 6552
- The Realty Installment Buyer Act, more commonly
known as the Maceda Law, provides remedies
should the buyer default from payment based on
the payment schedule initially agreed with the
developer.

WHAT IS CAPITAL?
- Capital is a fundamental financial concept.

3 TYPES OF CAPITAL FOR CONSTRUCTION:

1. Working Capital
2. Debt Capital
3. Equity Capital

WORKING CAPITAL
- Measures the difference between a construction
company’s current assets and current liabilities.

DEBT CAPITAL
- Funding that a construction business acquires by
borrowing, typically from banks or other lending
institutions.
- Can be vital for managing cash flow in
construction.

EQUITY CAPITAL
- Comes from private or public investors who
typically purchase shares in the company.