Philippines - Outsourcing Destination


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Philippines - Outsourcing Destination

  1. 1. Advertorial Interview of Country Representative We need to continue to invest in human capital development programsHow is the Philippines economy growing locations. Telecommunications companiespresently, and what are the projections for continue to upgrade and expand theirthe immediate future? networks to ensure reliability, redundancy, and to provide more location options toThe Philippine economy is faring better than operators.The government (national andmost in the ongoing global financial crisis. local) continues to upgrade and expandRemittances from overseas Filipino workers transport infrastructure.contribute to this resiliency.The continuedgrowth of the IT-BPO industry also helpssustain economic activity and makes up for People are a key asset in this growth in other major export sectors, What measures are the industry and thesuch as semiconductors and electronics. A government taking to ensure quality ofstrong and prudent banking sector, following talent?reforms after the Asian financial crisis of thelate 1990s, with minimal exposure to failed The industry and government work togetherglobal financial institutions also kept the to spread awareness of the benefits of abusiness environment stable in the face of career in the IT-BPO sector.The governmentglobal uncertainty. provides subsidies for short-term training which industry distributes and monitors.The World Bank has projected a GDP growth Minimum employment rates after trainingof 1.9 percent in 2009 and 2.8 percent in 2010. ~ Oscar Sanez by training companies or industry playersBusiness Monitor International projections for CEO, BPAP are tracked and only those who maintainPhilippine GDP are 1.5 percent for 2009 and hiring rates of 60 percent or more are given2.6 percent for 2010. additional subsidies.This $8.4 million can take to gauge their readiness to apply program has resulted in 43,000 trainees for a job in the industry.This test is aimed at being hired in the industry in 2008 and 2009.Do you observe scaling up of BPO streamlining the recruitment process.operations in the country?There are over 600 IT-BPO companies in the What about talent building at the What measures do you think the sectorPhilippines. Some of the notable new entrants university level? needs to adopt to stay competitive in(within the last year) are Startek, Stream Industry works with universities and colleges the global market today?(recently merged with eTelecare), and to incorporate short-term training programsCognizant. Surveys show that most We need to continue to invest in human in the curriculum. This program, called thecompanies expect to expand within the year capital development programs and Advanced pre-Employment Trainingby about 10-15 percent. Some smaller increase investment in campaigns to Program, makes tertiary graduatescompanies are planning growth of up to 200 address negative perceptions of doing immediately employable on graduation.percent within the year. Among the large business in the Philippines. We need to From a pilot program involving five schoolscompanies that have announced expansion urge and support the telecommunications last year, the program is scaling up to reachplans are Convergys, TeleTech, industry in its efforts to upgrade and 50 tertiary institutions by next year. IndustryTeleperformance, Sitel, and StarTek. expand its networks. We need to educate is also working with top-tier universities to legislators and other government officials promote post-graduate courses in BPO on regulatory requirements for the management to address the demand forIn what areas is the country improving the industry to remain globally competitive. We mid-level managers.existing infrastructure? need to advocate for reforms that would Industry and government are also working strengthen the business environment forReal estate developers have either completed to roll out a national competency the industry and reduce risks for operatorsor are building world-class BPO structures, assessment test that prospective employees and investors.providing adequate office space in major Global Services /
  2. 2. The Republic of the Philippines, an Advertorial The Philippines Factfilearchipelago of over 7,000 islands, is areservoir of natural resources.The fertile lands and rainforests have been a source of revenue for the Philippines.In the 1980s, the country realized that away from the verdant countryside, therelies another big resource - the city-based large pool of English-educated people.With this talent base, the IT-BPO sector was born in the ’80s.The Philippines has all the ingredients that go into making a country an outsourcing destination ofchoice.The demographic profile is the country’s main competitive advantage with a literacy rate of92.6 percent (The CIA World Factbook 2007). It is one of the highest among competing countriesin the IT-BPO space.The Social Weather Stations (SWS) , a highly credible research company,reported in 2008 that 60 percent of Filipino college graduates think in English, 72 percent speak inEnglish and 83 percent write in English. However, in terms of graduates of science and technologyinstitutes for IT-related work, the Philippines has some catching up to do with India and China.Theservice orientation, work ethics, and cultural adaptability in this multi-ethnic country have gone along way in building the outsourcing industry.Besides people, the Philippines offers investors an enabling business environment with world-classinfrastructure in terms of office space, telecom network, power, connectivity, and transportation.The cost competitiveness that the country offers global clients makes the Philippines a compellingoutsourcing destination. The Philippines is the most competitive in English-language customerservice; for non-voice services, the industry is currently seeing rapid growth.The back-office andKPO sector more than doubled in 2008, from US$ 400 million to US$ 830 million, and is continuingto expand especially in F&AO, HRO, and LPO. IT, animation, transcription, engineering, gamedevelopment, publishing, creative, and other niche services are attracting attention from bothestablished and new a glanceCurrency: Philippine Peso Countries that outsource business to the Philippines: North America, Europe, Australia and New Zealand, Japan, the MiddleMain industries: Agriculture, food processing, East, Korea, and other countriestextiles and garments, manufacturing of electronicsand automobile parts, mining, tourism, IT-BPO and fishing Key verticals: Healthcare, energy, telecommunications and entertainmentLiteracy rate: 92.6% Some big players: TeleTech, Accenture, Convergys, SPi, Sitel,Languages spoken: Filipino, English and eight Stream/eTelecare, Sykes Asia, Aegis PeopleSupport,major dialects Teleperformance, TELUS, IBM Daksh, IBM Business Services, HSBC, Hinduja TMT, Infosys, Wipro, Deutsche Knowledge ServicesInternational airport: Metro Manila Key competitive advantages: Large pool of English-speakingGDP growth (World Bank): 1.9 % in 2009 and graduates, domain expertise, service orientation, work ethic,2.8 % in 2010 cultural adaptability and fit, infrastructure and connectivity, cost competitiveness, and supportive environmentQuick look at the IT-BPO sectorGrowth: One customer service contact center Main cities: Metro Manila, comprising 16 cities, plus over 30 citiesin 1997 to 600+ companies in 2008 and towns outside Metro Manila.Total number of employees: 400,000 Emerging locations: Next Wave Cities™ outside Metro Manila Global Services /
  3. 3. Advertorial Opportunities and Future Potentials a bright futureThe foundation that was built in the ’80s has begun to offer rich dividends. The contribution of the IT-BPO sectorto the country’s GDP is growing. The knowledge industry is creating jobs for thousands of Filipinos and hasstimulated growth in many other sectors, leading to the overall development of the country. The buoyancy inthe Philippines IT-BPO sector is slated to continue in the years ahead.By end-2008, the IT-BPO export industry in into non-voice, complex, and higher-value training to increase employability of thethe Philippines had contributed US$ 6.061 outsourced services. In the medium and existing talent, supporting the marketing ofbillion in revenues, which accounted for four long-term, the Philippines will provide a the IT-BPO sector, or running investor-percent of GDP.The number of people whole range of IT-BPO services. In the next 5- assistance programs.To channelize theemployed in this sector was 372,000. Every 10 years, non-voice services may overtake efforts, the government has created thedirect job in this sector has helped create an voice services in terms of market share. Commission of Information andestimated 2-3 indirect jobs.There are over 600 Communications Technology (CICT) as thecompanies exporting services to lead agency to ensure government support So far, Metro Manila, which comprises 16organizations around the world.The industry for the IT-BPO sector. cities, has been the hub of IT-BPO activitieshas helped in the development of other in the Philippines. Outside Metro Manila, thesectors such as telecomm-unications, real sector has significant presence in over 30 The future of the sector looks bright.Theestate, consumer services and retail, food, cities and towns. The government, working industry hopes to grow in all fields—voicetransportation, training and education, closely with the private sector, is developing customer service, IT, animation,insurance, banking, and industry-support what it call the Next Wave Cities™ as ideal transcription, engineering, and gamesectors. locations for IT-BPO companies outside development. Back-office and KPO are Metro Manila. Government and other likely to lead in terms of growth rates andIn the short term, the Business Processing stakeholders are working on building the will eventually become as large as theAssociation of the Philippines (BPAP) has set human resource and infrastructure current voice-BPO field—with the potentialtargets of 20 percent growth by end-2009, capabilities of these cities. to eventually surpass the voice sub-sector.followed by 26 percent growth in 2010, and27 percent in 2011. Growth targets are both in The government has declared IT-BPO a Oscar R. Sanezterms of revenue and employment, though priority industry and has brought in President and CEOrevenues will grow faster as the sector shifts Business Processing Association of the Philippines programs and policies to boost investment, The umbrella association of the IT-BPO industryto higher-value services.The Philippines will like income-tax holidays and formation of in the Philippinessustain its position as a preferred offshore economic zones.The government is helping Contact: info@bpap.orglocation for English-language services, industry build and sustain its keyparticularly in customer service. Companies competitive advantages, whether it’s inwill use this leading global position to expand expanding the telecom network, subsidizing Global Services /
  4. 4. B&M Global Services Manila, Inc. Advertorial Client TestimonialsBaker & McKenzie has been a pioneer in the connected to the rest of our firm through The creation of the captive service center inuse of offshoring to reduce the overall cost of technology, firm culture and reporting lines. Manila has been highly successful becauseservice delivery to clients and to maintain of the nature of the Manila labor market. Not only are services delivered typicallyoperational efficiency. In 2000, the firm Young and skilled employees are available associated with a BPO setting (IT support,established the first law firm captive BPO in abundance. Moreover, the level of finance support, document support), but thecenter in the Philippines, Global Services English proficiency is extremely high. We center is seen as an ideal location to sourceManila (GSM), to initially provide document are able to source other language skills specialized staff (law graduates, financialmanagement and administrative support to (currently five languages supported). managers, and project managers) whothe firm’s 68 offices. University trained employees are eager to become individual contributors to the build a career with a professional services worldwide organization. firm that offers a global perspective andToday, around 500 GSM employees are an career opportunities. Invariably our localintegral and growing part of our firm. The As a law firm, it is important that our service offices are impressed with the dedicationteam provides a broad range of back office center staff are Baker & McKenzie and energy brought to the table by ourand front line services, with many such employees, not independent contractors Manila service center operating on a 24/7 basis.This is by and/or employees of third-party vendors.far the largest captive offshore service center This was we are able to maintainof any global law firm. Our GSM staff work confidentiality and the highest standards of Joeri J. Timpfrom attractive offices in the heart of Manila’s Executive Director quality control.main business district, and they are directly B&M Global Services Manila, Inc.StarTek, Inc.StarTek, Inc. is a New York Stock Exchange- 78,000 square-foot facility in Makati City in flexibility of a new quality delivery channellisted BPO firm that selected the Philippines September 2008.The delivery center has a for customer management solutions andas the first operations site in Asia. StarTek capacity of 1,100 customer care back office support. Our Philippine facilityspecializes in high value customer care representatives.We selected the Philippines has been highly successful and is held insolutions for the communications and for the state-of-the-art delivery center high regard by our sectors. Headquartered in Denver, because of the country’s highly educatedColorado (US), the company provides these talent pool, world-class telecom Larry Jonesservices from 19 operational facilities. We infrastructure, and competitive labor rates. President and CEOwere impressed with the level of government StarTek, Inc. By opening a facility in the Philippines, wesupport for investors in the Philippines.StarTek completed the construction of a are able to provide our clients with theWipro BPO, PhilippinesThe Philippines has emerged as a top incentive package offered through the transparency and high standards ofoutsourcing destination due largely to its Philippine Economic Zone Authority (PEZA) professional ethics, not to mention, thestrong higher education system.The are significant investment magnets. Most efficiency and responsiveness, I encounteruniversities supply the industry with high importantly, the one-stop facilitation for all in my everyday dealings with all ourquality human resource whose education is in regulatory issues through the PEZA is external stakeholders make doing businessline with industry needs, spoken English skills extremely helpful for new entrants. here truly a pleasure.and customer service orientation issignificantly better than other Asian Romit Gupta The presence of internationally competitiveoutsourcing hotspots. Additionally, the Country Head real estate, telecom and professionalPhilippines has a cultural affinity to US clients. Wipro BPO, Philippines education sectors has been another keyThe strategic direction of government is catalyst for the emergence of Philippines asanother key factor.The priority and focus an outsourcing hotspot.The well-structured,accorded to this industry nationally and the Global Services /