Philippine News: BPO industry in RP continues to attract US firms

NEW YORK — Malcolm Elvey, board member of the Secaucus, New Jersey-based The Children’s Place listened intently as speakers from the Philippine Uniglobal Services Outsourcing talked about the merits of outsourcing finance, accounting and state-of-the art animation in Manila. If the company’s blueprint would be realized, The Children’s Place is looking to outsource 140 accounting staff and another 140 IT staff in Manila. “We want to have a very powerful resource that can truly use the brainpower of a back office overseas," said Elvey who also said his company reaped the benefits of having manufacturing facilities in China, and India. Asia’s burgeoning outsourcing industry has raised red flags from the US Congress as well as unions for transferring jobs outside of the country, but major companies continue to look offshore to improve profit margins and stay globally competitive. Elvey said his decision to outsource was based on the experience of AIG Worldwide Life Insurance, which hires accounting staff in Manila and has reduced operational cost by 70 percent. Gary Reddick, senior vice president of AIG Worldwide, enumerated the compelling advantages of having a back office in Manila: lower labor costs, use of American English in business transactions; cultural and social affinity with the US; access to specialized skills based on US professional standards, and government incentives. “My company chose to run a business processing operation in the Philippines because it is able to leverage AIG’s strong local presence in an environment that is highly conducive to US-focused outsourcing operations," Reddick said in a statement. Dr. Mina Gabor, chairman and CEO of the Philippines’ one-stop shop for buyers and sellers of IT-enabled services, said the Washington-based World Information Technology and Services Alliance, ranks the Philippines second or third in terms of competitiveness. Her group Uniglobal Services Outsources aims to promote the talents of Philippines’ BPO workers, as well as their “integrity, innovation and imagination." She said that to train customer service agents of call centers, they had asked UK-based Tele Tech to train agents to imitate British accent tone when they talk to clients. Private businesses, too have partnered with universities in Manila to train graduates to be more competitive and upgrade their technical skills. With health care workers in shortage in America as they serve a graying population, demand for medical transcription is growing in the Philippines. The idea works well: While American medical transcribers are asleep, Filipino workers do their shift in Manila. The following morning in America, transcriptions of medical records are ready for physicians and health workers. The same cycle is repeated on legal transcription for lawyers and law firms. Quick delivery of service is assured within 24 hours, Katherine Yarte of Vinzons-Chato law office said. “IT services are the next big thing in outsourcing, and has not reached its potential for the Philippines. Current estimates show a pool of over 79,000 IT professionals, which may contribute to 2 percent global outsourcing share for the Philippines," said Trade Representative Josephine Romero. The future for BPO services in Manila remains: With an annual growth rate of 35 percent, BPOs earned $2.54 billion in 2006. Philippine BPO ranks third after India and China. Facing the realities of soaring labor costs in India, Manila is enticing more companies to set up call centers. The call center industry is expected to attain revenue of $3.5 billion annually by 2008, potentially overtaking India in share of the global outsourcing market for call center services. In 2001, there were only 2,000 employees working in BPO companies in the Philippines. It is expected that a million jobs will be created by the BPO sector alone in 2010. The drawback is the Philippines has limited marketing resources, infrastructures such as power and electricity are still deficient, although telephone services by Philippine Long Distance and Telephone Company are efficient. Giant global companies such as Citibank, P&G, IBM, Flour, SPI and eTelecare, have shared BPO services in Manila. “We are very optimistic on our BPO office in Manila. We do software services and consulting, next year, our staff in Manila will be increased to 300 people," said John Orrock, president and CEO of Okere client management solutions with offices in UK, New York and Manila. As for USO’s vision, Gabor said the mission not only targets American firms and businesses, but also potential resellers: Filipino Americans who may be able to provide leads to USO, for which a decent commission is paid. “USO is also exploring China as a market to benefit American businesses operating there that need Chinese-speaking customer care or product support representatives who can translate into English," she said while visiting San Francisco. USO’s last stop was San Francisco after it made a sweep of Los Angeles, Florida, Washington D.C. area, Philadelphia, New York, New Jersey and Dallas. “New opportunities have opened up for the industry in the Philippines as a result of the mission," said Gabor. In Dallas, for instance, a group of doctors suggested to the team the inclusion of other back-office offshore services to doctors, besides medical transcribing. This way, they may have more time to actually attend to patient care and treatment, she explained. The industry strictly observes confidentiality and security of private information. Call centers that handle private data, e.g. social security number, credit card information, are certified by global audit agencies, such as Ernst & Young. In addition, private data are not stored in any way, shape, and form in the Philippines; computers in the call centers have no hard drives, flash drives, or any other data storage media. Gabor said companies outsourcing to the Philippines can save as much as 30 to 40 percent in operating and overhead costs. Their operational efficiency and profit margins increase as outsourcing translates to time gained for the firms to concentrate on the core business. Interestingly enough, Cendrillon Restaurant, a prominent Filipino restaurant in New York, has outsourced its back office work, including management of its raw materials inventory. Various government incentives are available to BPO and IT-enabled service firms. One of them is the ‘preferred pioneer business’ incentives package from the Board of Investments, in which firms get a six-year tax holiday and tax-free importation of capital equipment among others. The industry hopes to stem the tide of Filipino labor migration or the brain drain phenomenon. Fresh graduates, and more so professionals who might feel they are not earning enough, could be hired by these firms at handsome rates along with a package of benefits and performance bonuses. Call centers, for instance, hire at the starting rate of anywhere between PhP 18,000 and PhP 20,000 a month. - Philippine News