Nestlé forms outsourcing firm

REPORT FROM BUSINESSWORLD Switzerland-Based food company Nestlé S.A. has chosen the Philippines as its site for its shared service center for financial and employee services. In a statement, Nestlé Philippines Chairman and Chief Executive Nandu Nandkishore said that the company opted to establish Nestlé Business Services AOA (NBS) in the country because of talent availability and cost efficiency. A separate entity from Nestlé Philippines, NBS will serve the financial and employee service requirements of Nestlé companies in Zone AOA (Asia, Oceania and Africa). The zone includes the Philippines, Malaysia/Singapore, Indonesia, Indochina, Australia and New Zealand. Financial services include account payables and receivables and accounting operations while employee services cover payroll, human resource administration, time management and benefits administration. "We are happy that through the NBS, we are able to help spur economic growth in the country," Mr. Nandkishore said. "The shared service center is another significant demonstration of the Nestlé group’s continuing confidence and commitment to support the long-term economic growth of the country," he added. Sources said the location of the business process outsourcing firm as well as the number of workers to be hired is yet to be determined. Investments Nestlé Philippines earlier announced plans to invest P1.3 billion this year to enhance its capabilities to serve domestic and export demands. The local unit has been designated by the Nestlé group as the ASEAN supply center for breakfast cereals, filled-milk powder, and infant nutrition. In the last five years, Nestlé’s investments in the country have hit P10 billion. In 2006, Nestlé Philippines’s sales hit P67.2 billion with exports amounting to P6.4 billion or nearly 10% of sales. The Nestlé group has implemented the shared service model in Europe and the Americas, resulting in maximized cost effectiveness, efficiency, and improved quality in financial and employee service transactions. Mr. Nandkishore said NBS is designed to deliver office support at competitive service levels and costs to Nestlé companies in the region. Moving the financial and employee services transactions to the NBS will be done progressively, starting with Nestlé Philippines, which is expected to complete the transition of its financial services by end of 2007, and its employee services by the end of the first quarter of 2008. Separation package "Employees who will be affected by this development will be provided with a separation package which is over and above what the law requires, and will also be considered in the new NBS organization," the statement said. "Safety net programs such as change and care workshops, livelihood seminars and outplacement services will likewise be made available to them," it added. The statement did not say how many employees would be laid off as a result of the establishment of NBS. Nestlé officials also could not be reached for comment as of Thursday. "A complete transition by the other Nestlé companies in the zone is expected by end of 2008," the statement read. Nestlé Philippines had earlier streamlined local operations, selling its bottled water unit to the Gokongwei group and some of its milk brands to competitor Alaska. The company also granted Alaska the license to import, manufacture, distribute and sell liquid milk products under the Carnation and Milkmaid brands in the Philippines. — Ruby Anne M. Rubio/BusinessWorld