BUSINESS ... NEWS !
OUTSOURCING BUSINESS IN THE PHILIPPINES !
CALL CENTRES
t's three o'clock in the morning and Jaycee Solis is taking a call from a client who wants to book a flight from Detroit to New York.
Jaycee's American accent is so convincing that the US caller is almost certainly unaware that he's actually on the other the side of the world, in the Philippines.
He's even got a special American-sounding phone name - Kevin.
It's this accent, coupled with the high number of fluent English speakers, that is making the Philippines the new destination of choice for international companies wanting to outsource their call centres - especially for the lucrative US market.
"In voice-based business, we really excel," says Bong Borja, the Philippine president of the Aegis People Support, a call centre company.
"To an American, the Philippine accent appears clear and neutral."
In fact, to American ears, Filipinos often sound clearer than agents in India - the erstwhile king of the call centre industry.
[The Philippines] is very much attuned to the US culture”
Bong Borja
Aegis People Support
"We have definitely shown an edge over India," Mr Borja says.
"I think even companies in India would admit to that, and that's the reason some of them are moving to the Philippines. The big name players are all here now."
Talking American
Recent research conducted by IBM shows there are now more call centre agents in the Philippines than there are in India.
The Contact Center Association of the Philippines estimates that 350,000 Filipinos work in call centres, compared to 330,000 Indians.
It's not just the clarity of speech that is in the Philippines' favour. According to Mr Borja, the Philippines "is very much attuned to the US culture. There's a very strong affinity with everything American."
Jaycee Solis says he enjoys speaking to people on the other side of the world
The Philippines was once an American colony, and it has not lost this part of its identity.
The national sporting obsession is basketball not football, the school system and legal framework are American, and Filipinos are the second largest immigrant group to the United States after Mexicans.
In fact former first lady Imelda Marcos even referred to the Philippines as 'America junior'.
So it's not surprising that the country is winning fans among US companies that need to hire phone operators to sell products or answer complaints.
The situation is more complex than the Philippines simply taking over from India though.
Many of the call centre operations moving to the Philippines are actually offshoots of companies that already have a presence in India.
Some are even run by Indians, and many - Aegis People Support included - employ a high number of Indian expatriates on their management staff.
Right now it's 60% voice, 40% non-voice... but in a few years, it will be the other way round”
Christino Panlilio
Philippine Department of Trade and Industry
People with these management skills "can only really be found in India - they have the expertise and they were there a couple of years ahead of us," says Mr Borja.
Many company executives have discovered that it makes business sense to move voice-based services to the Philippines while keeping the non-voice-based parts of the industry - such as HR, accounting and paralegal work- in Mumbai or Bangalore.
In other words, the Indians have started outsourcing some of their outsourcing.
The statistics show this clearly. While there are more voice-based operations in the Philippines, the number of non-voice based services here is still dwarfed by what's on offer in India.
Last year India's overall business process outsourcing (BPO) revenue was $70bn, compared to the Philippines' $9bn.
Doubling revenue
Expanding non-voiced-based services is something the Philippine Department of Trade and Industry (DTI) sees as the next step for the country's BPO sector.
"Right now it's 60% voice, 40% non-voice," says Undersecretary Christino Panlilio. "But in a few years, it will be the other way round."
The DTI and industry leaders are confident that, by doing this, BPOs will continue their rapid expansion here.
Jaycee Solis with his friends in the bar after work - at 7 in the morning
Mr Panlilio projects that there will be more than a million jobs in the sector within two years, and that the revenue generated will double by at least 2016.
The government has put a series of measures into place to encourage international companies to look to the Philippines: no income tax for the first four years, then 5% of gross income earned and no customs duties on equipment brought into the country.
But it knows that, ultimately, the most important requirement these companies are looking for is skilled manpower.
In demand
Working in a call centre is already seen as a graduate job - very few agents are accepted without a degree - but now the government is planning to work with universities to incorporate hands-on call centre training into the curricula, to ensure that there are enough skilled applicants entering the job market.
There's certainly no shortage of people wanting the work, despite the fact that most of it is overnight.
An agent's salary is usually about 1000 pesos (about $20) a shift - more than twice the minimum wage - and with more than 12 million Filipinos unemployed at the moment, there are few other options.
Almost every day, queues of people wait in the reception area of Aegis People Support for their turn to be interviewed.
Bong Borja of Aegis People Support explains why the Philippines is taking so much of the world's outsourcing business.
Not all of them are fresh graduates: some have years of experience in other careers. On the day we visited, we met three nurses who had just been made redundant, and an engineer who said he would make more money answering calls than doing his current job.
There was also a man who had just come back from Iraq - one of more than nine million Filipinos who work overseas. He said he missed his wife and son, and wanted a job back at home.
As for Jaycee, he's already spent four years working in call centres, and so far he has no plans to do anything else.
He says he enjoys speaking to people on the other side of the world, and he's even got used to working overnight.
In the years to come more and more Filipinos look set to join him.
GLOBAL OUTSOURCING BUSINESS
The global outsourcing business, which includes offshore and in-shore services, is estimated to be worth $464 billion by the end of 2011, with the Philippines as the third most preferred destination behind India and China.
A report by industry analyst XMG Global predicted an increase of around nine percent from $425 billion in 2010. The Philippines will keep a 7.4 percent market share and generate around $10.7 billion in revenues for 2011, the report said.
India will remain the top destination for outsourcing services, capturing 42.5 percent or about $61.5 billion. Meanwhile, China would be at second place with 31.5 percent market share, which would be equivalent to $45.7 billion.
The XMG Global predicted that the relatively slower growth in 2011 is mainly caused by the fact that the US market, which remains to be the biggest client for outsource services, is still on “recovery mode” after a major financial crisis in previous years.
The US gross domestic product or GDP growth for 2011 is estimated to be 2.6 percent, which is slightly slower than the 2.9 percent growth rate pegged in 2009.
This also explains the lower growth rate of outsourcing demand of 2011 compared to 2010, which experienced a growth rate of 13.9 percent over 2009's $374 billion.
XMG Global Chief Analyst Lauro Vives said that India and the Philippines have felt the effects of this slight slowdown in the US since both depend largely on the US for clients.
Still, the Philippines is aiming for none-English speaking countries as in an effort to expand its client base.
Vives said that this is indicated by the plans of the Department of Trade and Industry-Board of Investments (DTI-BoI) to partner with technology firm IBM Philippines to have joint research programs in building multi-lingual manpower for outsourcing work.
“Given the continued growth of competition and increasing demand from other countries besides the US and Europe, XMG Global expects a sustained displacement and redistribution of market share not only between India and China but in other emerging outsourcing destinations such as Brazil, Mexico and Malaysia,” Vives said.
Vives likened the plans to that of China, which has a strong East Asian client base like South Korea and Japan, that helped it dampen the effects of the US slowdown.
Even the effects of the recent disaster has opened more opportunities for China as Japan, still reeling from the triple-disaster of an earthquake, tsunami, and nuclear plant meltdown, could be looking to move out some of its none-core operations to ensure business continuity.
CALL CENTRES
t's three o'clock in the morning and Jaycee Solis is taking a call from a client who wants to book a flight from Detroit to New York.
Jaycee's American accent is so convincing that the US caller is almost certainly unaware that he's actually on the other the side of the world, in the Philippines.
It's this accent, coupled with the high number of fluent English speakers, that is making the Philippines the new destination of choice for international companies wanting to outsource their call centres - especially for the lucrative US market.
"In voice-based business, we really excel," says Bong Borja, the Philippine president of the Aegis People Support, a call centre company.
"To an American, the Philippine accent appears clear and neutral."
In fact, to American ears, Filipinos often sound clearer than agents in India - the erstwhile king of the call centre industry.
[The Philippines] is very much attuned to the US culture”
Bong Borja
Aegis People Support
"We have definitely shown an edge over India," Mr Borja says.
"I think even companies in India would admit to that, and that's the reason some of them are moving to the Philippines. The big name players are all here now."
Talking American
Recent research conducted by IBM shows there are now more call centre agents in the Philippines than there are in India.
The Contact Center Association of the Philippines estimates that 350,000 Filipinos work in call centres, compared to 330,000 Indians.
It's not just the clarity of speech that is in the Philippines' favour. According to Mr Borja, the Philippines "is very much attuned to the US culture. There's a very strong affinity with everything American."
Jaycee Solis says he enjoys speaking to people on the other side of the world
The Philippines was once an American colony, and it has not lost this part of its identity.
The national sporting obsession is basketball not football, the school system and legal framework are American, and Filipinos are the second largest immigrant group to the United States after Mexicans.
In fact former first lady Imelda Marcos even referred to the Philippines as 'America junior'.
So it's not surprising that the country is winning fans among US companies that need to hire phone operators to sell products or answer complaints.
The situation is more complex than the Philippines simply taking over from India though.
Many of the call centre operations moving to the Philippines are actually offshoots of companies that already have a presence in India.
Some are even run by Indians, and many - Aegis People Support included - employ a high number of Indian expatriates on their management staff.
Right now it's 60% voice, 40% non-voice... but in a few years, it will be the other way round”
Christino Panlilio
Philippine Department of Trade and Industry
People with these management skills "can only really be found in India - they have the expertise and they were there a couple of years ahead of us," says Mr Borja.
Many company executives have discovered that it makes business sense to move voice-based services to the Philippines while keeping the non-voice-based parts of the industry - such as HR, accounting and paralegal work- in Mumbai or Bangalore.
In other words, the Indians have started outsourcing some of their outsourcing.
The statistics show this clearly. While there are more voice-based operations in the Philippines, the number of non-voice based services here is still dwarfed by what's on offer in India.
Last year India's overall business process outsourcing (BPO) revenue was $70bn, compared to the Philippines' $9bn.
Doubling revenue
Expanding non-voiced-based services is something the Philippine Department of Trade and Industry (DTI) sees as the next step for the country's BPO sector.
"Right now it's 60% voice, 40% non-voice," says Undersecretary Christino Panlilio. "But in a few years, it will be the other way round."
The DTI and industry leaders are confident that, by doing this, BPOs will continue their rapid expansion here.
Jaycee Solis with his friends in the bar after work - at 7 in the morning
Mr Panlilio projects that there will be more than a million jobs in the sector within two years, and that the revenue generated will double by at least 2016.
The government has put a series of measures into place to encourage international companies to look to the Philippines: no income tax for the first four years, then 5% of gross income earned and no customs duties on equipment brought into the country.
But it knows that, ultimately, the most important requirement these companies are looking for is skilled manpower.
In demand
Working in a call centre is already seen as a graduate job - very few agents are accepted without a degree - but now the government is planning to work with universities to incorporate hands-on call centre training into the curricula, to ensure that there are enough skilled applicants entering the job market.
There's certainly no shortage of people wanting the work, despite the fact that most of it is overnight.
An agent's salary is usually about 1000 pesos (about $20) a shift - more than twice the minimum wage - and with more than 12 million Filipinos unemployed at the moment, there are few other options.
Almost every day, queues of people wait in the reception area of Aegis People Support for their turn to be interviewed.
Bong Borja of Aegis People Support explains why the Philippines is taking so much of the world's outsourcing business.
Not all of them are fresh graduates: some have years of experience in other careers. On the day we visited, we met three nurses who had just been made redundant, and an engineer who said he would make more money answering calls than doing his current job.
There was also a man who had just come back from Iraq - one of more than nine million Filipinos who work overseas. He said he missed his wife and son, and wanted a job back at home.
As for Jaycee, he's already spent four years working in call centres, and so far he has no plans to do anything else.
He says he enjoys speaking to people on the other side of the world, and he's even got used to working overnight.
In the years to come more and more Filipinos look set to join him.
GLOBAL OUTSOURCING BUSINESS
The global outsourcing business, which includes offshore and in-shore services, is estimated to be worth $464 billion by the end of 2011, with the Philippines as the third most preferred destination behind India and China.
A report by industry analyst XMG Global predicted an increase of around nine percent from $425 billion in 2010. The Philippines will keep a 7.4 percent market share and generate around $10.7 billion in revenues for 2011, the report said.
India will remain the top destination for outsourcing services, capturing 42.5 percent or about $61.5 billion. Meanwhile, China would be at second place with 31.5 percent market share, which would be equivalent to $45.7 billion.
The XMG Global predicted that the relatively slower growth in 2011 is mainly caused by the fact that the US market, which remains to be the biggest client for outsource services, is still on “recovery mode” after a major financial crisis in previous years.
The US gross domestic product or GDP growth for 2011 is estimated to be 2.6 percent, which is slightly slower than the 2.9 percent growth rate pegged in 2009.
This also explains the lower growth rate of outsourcing demand of 2011 compared to 2010, which experienced a growth rate of 13.9 percent over 2009's $374 billion.
XMG Global Chief Analyst Lauro Vives said that India and the Philippines have felt the effects of this slight slowdown in the US since both depend largely on the US for clients.
Still, the Philippines is aiming for none-English speaking countries as in an effort to expand its client base.
Vives said that this is indicated by the plans of the Department of Trade and Industry-Board of Investments (DTI-BoI) to partner with technology firm IBM Philippines to have joint research programs in building multi-lingual manpower for outsourcing work.
“Given the continued growth of competition and increasing demand from other countries besides the US and Europe, XMG Global expects a sustained displacement and redistribution of market share not only between India and China but in other emerging outsourcing destinations such as Brazil, Mexico and Malaysia,” Vives said.
Vives likened the plans to that of China, which has a strong East Asian client base like South Korea and Japan, that helped it dampen the effects of the US slowdown.
Even the effects of the recent disaster has opened more opportunities for China as Japan, still reeling from the triple-disaster of an earthquake, tsunami, and nuclear plant meltdown, could be looking to move out some of its none-core operations to ensure business continuity.
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