MANILA - About 94% of Philippine-based firms providing knowledge process outsourcing (KPO) services expect their business to continue growing, with 60% of them indicating they will increase their employee base by up to 200% this year, a survey of the Business Processing Association of the Philippine said.

The providers of higher-value back-office solutions in the country are even more at ease with their business conditions here than in India, with 43% saying the Philippines is “less risky” and another 13% believing it is “much less risky” to operate here than in India.

India is the world’s top outsourcing destination, with the Philippines generally considered as the second.

The KPO services providers here said growth prospects were good (37%), very good (44%) and excellent (13%).

With this, almost 60% said their firms will increase their employee base between 11% and 200% this year, and 29% will expand from less than 5% to 10%.

The survey was done from August 6 to 24 with the help of Outsource2Philippines involving companies engaged in advertising and Web 2.0 services, animation, back-office KPO such as procurement and supply-chain management, business intelligence, and financial and legal KPO.

The questionnaires were sent to 438 industry executives, with 131 of them responding.

KPO is defined as “an extension of BPO [business-process outsourcing] involving greater business complexity and focusing on knowledge-intense business processes that require significant domain expertise.

Knowledge workers delivering these services are highly educated and trained, and trusted to make important decisions on behalf of their clients.”

North America remains as the largest market for KPO, with 59% of the respondents saying they service firms based in that region, followed by Asia with 46% and the European Union with 37%.

Industry players still consider the tight labor market as the biggest threat to the growth of their business at 53%, followed by worker retention 45%, and complex training requirements at 33%.

Out of 100 applicants, 80% of the respondents said they only manage to hire 10 or fewer employees. Attrition, meanwhile, ranges between zero and 20% for 80% of all respondents.

About 86% of the respondents said providing educational and training programs is the top priority in mitigating risk. Some 74% of them said investing in other countries is an option.

The KPO industry is part of the BPO sector that raked in over $6.1 billion in revenues last year, and is on track of growing by 20% this year.