Register for the GSC 3S Boot Camp©, the Executive Training Program for Sustainable and Socially Responsible Sourcing (3S)

Customers demand it; shareholders request it; and talented people make employment decisions evaluating it.

Yet, executives frequently are confused by how to approach it. “It” being Sustainability and Social Responsibility or SSR, which has become one of the central concepts in any business strategy these days.

The GSC 3S Boot Camp©,  the Executive Training Program for Sustainable and Socially Responsible Sourcing (3S), clarifies confusion and offers actionable solutions for executives.

This year’s GSC 3S Boot Camp© will take place in NYC May 28th to June 3rd, 2014.  Participants will review the latest developments in theory and practice of sustainable development, and will sharpen their executive skills to facilitate and scale-up their own sustainability projects. They will also receive GSC 3S Certification.

An integral part of the GSC 3S Boot Camp© is participation in The World BPO/ITO Forum being held on June 2-3rd, in New York City. Considered by many to be the Davos of Global Sourcing, this year’s event is themed Re-inventing Global Sourcing – Cloud, Mobile and Social. The participants of the GSC 3S Boot Camp© will network with sourcing executives from all over the world, practice their newly acquired skills and explore different perspectives on SSR in the BPO/ITO sector, connecting cloud, mobile and social.

“I am honored to be a part of GSC 3S Boot Camp as the Leadership Development Facilitator” says Julie Ellis, Executive Coach and Former Global Director of Pfizer’s Leadership Education and Development.  “It will be my privilege to engage with the participants in uniquely interactive-based workshops that will flush out executive leadership for sustainability.”

Among the many GSC 3S Boot Camp© workshops, Influencing Others, Communication, Networking and Team Building will provide actionable learning skills to enhance your effectiveness in the challenges of your current project role.  The skills, tools and techniques acquired at the GSC 3S Boot Camp© can readily be applied to support your key project outcomes.

The dynamic Tigers & Teamwork simulation, a GSC 3S Boot Camp© event will transform you from the heart of NYC into the Indian jungle to experience how to survive in the tiger’s territory!  The team experiences will integrate the skills honed in the simulation into the New York City Sustainability Treasure Hunt – a different kind of a jungle experience, which is going to be as much educational as entertaining.

Learning, sharing and fun – these are the underlining principles for GSC 3S Boot Camp©. You or your colleagues can still be a part of this adventure into sustainability!

To find how you can take advantage of this unique experience by participating in the GSC 3S Boot Camp©, reach out to GSC 3S Boot Camp© Director, Dr. S. Jimmy Gandhi at jimmy.gandhi@gscouncil.org or Dr. Wanda Lopuch, Chair of the GSC at wanda.lopuch@gscouncil.org.

Editor’s Note: The Tigers

By: JoDeen Urban, Editor In Chief, The Source

The 10 countries that comprise Southeast Asia represent a remarkable constellation of diversity and economic opportunity. Home to over 630 million people speaking hundreds of languages the region has been experiencing explosive growth in the sourcing sector. The ASEAN 10 are: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. In Tholon’s 2014 edition of the Top 100 Outsourcing Destinations 39 locations are within Southeast Asia, with the Philippines leading the pack with eight and Manila NCR holding 2nd Place overall.

Over the past 20 years, outsourcing sector investment has been attracted to the region because of low labor costs, a high percentage of an English-speaking workforce in several of the countries, a youthful population base with an average age range of 23-35 years that lends to a sustainable labor pool, and an improving technology infrastructure. Many ICT/ ITO-BPO, KPO, and Outsourced Semiconductor Assembly Test (OSAT) buyers and providers are drawn to the region for these reasons and remain loyal because of its proven service delivery capabilities.

As many of the countries’ economies have developed so too has the need for a more highly skilled labor force to sustain investment. According to a report published in Forbes magazine this month with the exception of Singapore, education standards are largely below what is required for skilled roles within multinational companies. This is due in part to the shorter length of schooling when compared to Western standards ranging from 5.5 years to 9.5 years.

Adding developmental pressure is the further opening of the region’s trade borders when the next phase of the ASEAN Free Trade Agreement reduces tariffs in 2015. The original trade agreement, ASEAN Free Trade Area (AFTA), signed in 1992 and appended in 1995 and 1999 sought to eliminate tariff and non-tariff barriers while attracting more foreign investment. The AFTA, unlike the European Community, has not applied a common external tariff on imported goods from non-ASEAN countries.

Beginning on January 1, 2015 ASEAN members will commence a phased reduction and eventual removal (by 2018) of all tariff barriers to trade in goods and services. Most nations are now beginning to ready their governance systems. An ADB 2013 study cautions, however, that a single market may not be fully reached until 2020 or 2025.

Asean 2013 Brunei Summit

Photo Courtesy of Agence France-Presse. Leaders of the 10-member ASEAN countries at Brunei Summit.

In addition, ASEAN and six of its major trading partners (China, Japan, South Korea, India, Australia and New Zealand) have agreed to finalize the Regional Comprehensive Economic Partnership in 2015 resulting in the world’s largest free-trade agreement.

These initiatives have stimulated vigorous debate in the region about impending impacts. Many constituents are concerned about increased competition from more efficient countries like Taiwan, or cheaper countries like Indonesia and Vietnam. Not surprisingly, some local providers are imploring their governments to implement protectionist measures to reduce, what they are calling the impact of the “onslaught of multinationals” especially from India in the services sector and China in the mass-production of products. The impact on services is considered a prominent issue. One consequence being the effect trade liberalization will have on greater labor mobility of skilled workers between countries – this is expected to alter the competitive landscape especially for sourcing revenue.

Against this backdrop, several countries are aggressively addressing talent development and retention, educational reforms, investment incentives and marketing their political environments as being more conducive to sustaining stable sourcing industries in comparison to some of their neighbors. While not devoid of certain ecosystem concerns, positive enablers such as cost, scalability, output-quality and business environments are a few of the reasons The Source profiles two of the leading tiger economies in this issue: the Philippines and Vietnam.

We welcome contributors to this publication. Please share your insight and opinions at contactGSC@gscouncil.org, or contact me directly at jodeen@gscouncil.org.

JoDeen Urban
Editor In Chief

JoDeen is an independent management consultant working with established companies as well as start-ups on strategy, organizational capability and business model innovation.

 

Ethical Outsourcing & South East Asia

By: Martin Conboy: Publisher of The Sauce, a bi-weekly online publication for executives in the BPO and Shared Services space, and Editorial Advisory Board Member of The-Outsourcing.com.

For the man in the street, the term Outsourcing is often synonymous with corporate irresponsibility. The media loves to focus on the horror stories such as the garment workers in Bangladesh, the Nike workers in SE Asia or the Apple workers in China. For organisations caught up in these scandals, significant damage can be done to their reputation and brand. But there is a positive side to the story.

Map courtesy of ASEAN. Association of Southeast Asian Nations

Map courtesy of ASEAN (Association of Southeast Asian Nations)

It is now fairly well accepted that outsourcing is not just an inexpensive labour arbitrage tactic, but also a strategic business decision. It’s about growth, global expansion and adding values. However, ethics and outsourcing continue to be burning issues for many businesses, government and the general public in western economies.

In April 2013 Time magazine quoted, “the horror of Rana Plaza (Bangladesh) finally made global consumers wonder about the true cost of a T-shirt manufactured halfway around the world that sold for a retail price of $5”. Also in April CBC News ran a story about the Royal Bank of Canada (RBC) who were trying to save money by hiring foreign workers when its own employees were capable of performing the same service.

The public backlash from this coverage caused the company to issue a public apology and implement a new policy that its suppliers must “not hire foreign workers from outside of Canada, when performing services on behalf of RBC, where a worker eligible to work in Canada is available and able to perform the service”.

More recently, we have seen how call centre workers in the down stream supply chain in the Philippines have been treated by unscrupulous operators, whose clients have included charities and church groups back in the USA. It’s important for organisations that are concerned about their reputation and brand to engage with decent service providers and outsourcing partners, who are competent, provide a quality service and are professional and ethical in the way they conduct their business.

In countries like Australia, US, and the UK, organisations must comply with a range of stringent legislation and guidelines when conducting business. The organisation outsourcing its business processes will face the consequences of the inappropriate, illegal or unethical behaviour on the part of a third-party it has commissioned to handle the work.

As countries like Indonesia, Malaysia, The Philippines, Thailand and Vietnam move more into the front of mind of western executives who are thinking about outsourcing, so it follows that the way in which business will be carried out by the BPO service providers on their behalf will be scrutinised.

To meet compliance requirements organisations will need to develop standard processes and procedures to ensure the way they conduct their business complies with existing laws and regulations. Different countries not only have different laws but also have different ways of doing things.

Before planning any outsourcing activity, an organisation must identify and document its own standards and procedures regarding how it operates in relation to the processes and activities that are being outsourced. These standards can be integrated into the contract and form part of the requirement the external supplier must follow.

One of the major causes of failed outsourcing relationships is not being able to
Identify the right provider for the organisation’s outsourcing requirements.

It is important to follow up and ensure that the staff and all those involved in the project from the provider side are trained and understand what the standards are and why they need to be adhered to.

Jose Mercado, the President of BPAP (Business Processing Association of the Philippines) commented: “As an association we try to encourage our members to be as ethical as possible. We work very closely with various government departments such the Department of Labour and Employment and with the Department of Health, as well as with our members in building that ethical element into the industry.”

He went on to say, “We have formed the HR Champions Council within our association, where the focus is on compliance to labour laws. The challenge we always have, regardless of the industry, is that there are companies out there that are not part of the association. They are rogue companies and it doesn’t matter what you try to do they will always be there in every industry.”

Don’t Be Cheap

One of the major causes of failed outsourcing relationships is not being able to identify the right provider for the organisation’s outsourcing requirements. It stands to reason that providers who charge bottom of the barrel prices are likely to be running sweatshops that are exploiting desperate and underpaid workers.

As well as the likely damage to the client’s reputation if reported in the media, the quality of the work will be low, and there may be other issues around security, mismanagement of resources, environmental impactsetc.

Good Service Costs Money!

Customers anticipate a certain level of service from an organisation and when the actual experience doesn’t match their expectations they become unhappy with the organisation. For example, if you were going to a five star restaurant for an expensive meal to celebrate a special occasion, the level of service you would expect would be very high compared to going to a fast food outlet for lunch, where your service expectations would be very low.

The challenge with BPO service centres is that customers expect a certain level of customer service commensurate with the brand and if you have skimped by using “cheap as chips” service providers then don’t come crying when it all goes wrong and you start losing customers.

This will most certainly impact on the quality of products and services being delivered to the client’s customers. Reduced quality of products and services means less sales and ultimately reduced profitability and we all know how that ends.

Social Responsibility

When evaluating a prospective provider you need to look at what they do to help the local communities they operate in. Are they involved with projects that address basics like housing, education and clean water? You will find that successful BPOs with quality reputations will also be socially and environmentally responsible organisations.

BPOs are shifting the social landscape in
Developing countries around the world.

According to a recent white paper and research from Telus International, (www.telusinternational.com) by responsibly and ethically employing hundreds of thousands of people, BPOs are shifting the social landscape in developing countries around the world, while the industry is recognising that success can no longer be defined by bottom-line concerns alone. (Read: http://thesauce.net.au/outsourcing-makes-the-world-a-better-place/)

Focus on Quality

Quality, control and cultural differences are issues that will never go away when one talks about the risks of outsourcing. Cultural differences between the West and Asian countries are huge, and are often a cause for worry in an outsourcing relationship.

But better understanding the cultural sensitivities and how they can affect the outsourcing relationship can bridge these differences. This needs to be done early in the relationship to avert any issues that can crop up later. Ensure your provider has strong programs for cross cultural training and soft skills coaching in place. Check out www.facct.com.au

Work Environment and Security

Poor working environments and unfair HR practices are often cited as a consequence of meeting the West’s outsourcing demands. In some cases this may be true but all quality BPO service providers adopt ‘best practice’ when it comes to HR management and provide their staff with comfortable and modern working environments.

Organisations will continue to outsource many of their functions to stay competitive in a fast paced economy. They will hire specialised companies with domain expertise drawing on local and international expertise to handle tasks better and more cost effectively than they could themselves. Hopefully, outsourcing will finally be viewed in a more balanced perspective and still make the significant contribution it has on reducing poverty and raising the standard of living in a number of developing countries.

About the Author: Martin Conboy is well recognized as one of the leading voices and knowledge leaders of the outsourcing industry and its role in facilitating BPO success throughout the Asia Pacific. Martin has over 16 years’ experience at a senior level in the market research industry and has spent the last 21 years analyzing and publicly commenting on the Call Centre and Outsourcing sectors across the Asia Pacific. He is a strong advocate for the BPO-ICT / Shared Services sector.

Martin is a Director of www.theoutsourcing-guide.com and coauthor of the first eBook about outsourcing “What is this thing called Outsourcing?”

Vietnam: A BPO, IT & Software Perspective

By: Wanda Lopuch, Chair, The Global Sourcing Council

Vietnam has one of the highest economic growth rates in the region and with ongoing reforms the country is expected to play an ever-increasing role in the expansion of the sourcing market. The Tholon’s 2014 Top 100 Outsourcing Destinations listed two of its cities – Ho Chi Minh City (ranked 17) and Hanoi (ranked 22). Although regionally and globally competitive, the technological infrastructure needs further development and the cost of labor is being driven up by the scarcity of skilled resources to meet growing demand. Local commentators, however, note that you don’t have to be the cheapest to get business. It’s about providing options especially while those weaknesses are addressed.

Vietnam has one of the highest growth rates in outsourcing and has established its presence in the sector as an alternative destination for low-cost offshoring services with especially strong growth in the call center industry. The government has put in place policies to promote the country as an outsourcing destination, with the services segment expected to expand rapidly.

Vietnam has one of the highest growth rates in outsourcing.

Vietnam is home to 1,000 software companies employing over 80,000 people according to the Vietnam Association for Information Processing. It is also now one of the world’s ten largest software exporters and has outplayed India to become the second-largest software outsourcer in Japan behind China. The United States is its second largest customer.

The software sector increased value from US$ 680 million in 2008 to US $1.2 Bn in 2012. The total revenue of the IT sector in 2012 was US$25.5 billion, reflecting a tremendous growth rate. In 2012, Ho Chi Minh City in particular had more than 12,000 IT companies, generating US$1.9 Bn, almost 8% of the country’s total IT revenue.

This growth was underpinned by investments from some of the world’s largest companies including Accenture, Alcatel-Lucent, Bayer, BMG, Cisco, Nokia, Sony, Oracle and IBM. The companies either outsource BPO directly from their local branches, or use third-party suppliers.

Data Digitalization Photo Courtesy of VietNamNet Online Newspaper

Data Digitalization
Photo Courtesy of VietNamNet Online

Vietnam’s IT market is set to maintain its position as a regional outperformer over the medium term. In their 2Q 2014 IT report Business Monitor International forecast IT spending will grow at a compound annual growth rate (CAGR) of 12.6% between 2014 and 2018, with expansion underpinned by rising incomes and enterprise modernization.

While perhaps not the cheapest outsourcing destination, Vietnam is very competitive against other countries. Research firm Frost & Sullivan note that the cost of hiring IT experts in Vietnam is 30% to 50% less expensive when compared to other global leaders in the outsourcing industry such as the Philippines and India, and employment costs in the IT and software development segments are 90% lower than in the U.S. According to a 2012 report by the Japan External Trade Organization (JETRO), monthly pay in Vietnam was roughly 32% of that in China, 43% in Malaysia and Thailand, and 62% in Indonesia.

Vietnam‘s IT market is set to maintain its position as a
Regional outperformer over the medium term.

There is also increasing momentum towards Vietnam becoming a global center for electronics production as wages rise in China and manufacturers look to protect margins by moving to Vietnam.

Vietnam also has a lot of talent. Each year, around 1-1.5 million people enter the labor market. The median age in the country is 28.7 years. Significant investments are being made in education and training. According to the World Bank’s 2014 Vietnam Development Report, over the past two decades, literacy and calculation skills have helped Vietnamese workers move from low productivity agriculture into higher productivity non-farm jobs. Moreover, the continuing support from the Government has enhanced and promoted employee’s skills and professional development.

One main advantage is that English and Vietnamese languages both use the Latin alphabet. It is easier for the Vietnamese to study and speak English. Schools in the country also teach French and Russian. In recent years, German and Japanese languages have also become popular among young people.

Building Credibility

Vietnam has been working to improve its outsourcing sector customer relationships, brand awareness and loyalty. Application tools have also enabled Vietnam contact centers to play an active role globally while building a track record. These tools include Computer Telephony Integration (CTI), Call Monitoring (CM), Interactive Voice Response (IVR), and Automatic Call Distributor (ACD). The ACD tool is estimated to account for about 40% of the applications used in Vietnam’s outsourcing sector.

At the same time, recognition for the BPO industry in Vietnam has come in the form of the award given to SPi Global for their work in the country’s outsourcing sector. This company, which is a leading global player in the BPO industry, has received the distinction of providing the best outsourcing service in Vietnam for the third year in a row. The award has been conferred by the Vietnam Software Association (Vinasa) and has been a motivating factor for the Vietnam BPO industry overall.

The Ho Chi Minh City unit of FPT Software, the country’s leading software outsourcing company, with local 2013 revenues topping $100 million was recognized in early 2014 by the IAOP as one of the Top 100 Global Outsourcing Leaders. FPT Software is the first Vietnamese-based company to have ever been selected. The award recognizes excellent performance across four categories: size and growth, customer satisfaction, organizational competencies and management capabilities. The IAOP also recognized FPT in 2013 as being one of the Top 10 leaders in SouthEast Asia.

In March 2013 British, Japanese and Vietnamese businesses formed an alliance to create the largest call center, BPO and technology business in Vietnam. The partnership between Harvey Nash Vietnam and MOCAP Vietnam will build an in-bound and out-bound call center to promote software and business process outsourcing to the Japanese markets. (MOCAP is owned by Mitsui & Co (Asia Pacific) Pte. Ltd.)

Photo Courtesy of Harvey Nash Group plc

Under the partnership Harvey Nash Vietnam will take a 15% stake in MOCAP Vietnam and transfer its call center business to MOCAP Vietnam. Harvey Nash brings 12 years of expertise in software and business process outsourcing. MOCAP Vietnam’s access to Japanese markets will enable the partnership to win new contracts and significantly grow the Vietnam based businesses.

Another development was reported by The Saigon Times in early 2014 whereby Swiss Post Solutions (SPS) will be expanding BPO services in the financial sector, particularly for banks and insurance companies. SPS has been operating in Vietnam for over 10 years and employs more than 1,000 people. The company is operational from Ho Chi Minh City to Can Tho City, providing its services 24/7, 365 days a year.

With government commitments to support the high-tech industry with investments in human resource development, granting tax incentives to software companies, reducing telecom costs and setting-up software parks such as Saigon Software Park and Quang Trung Software City amongst others, Vietnam is well positioned for continued future growth.

Philippines Sourcing Industry Reshapes Communities

By: JoDeen Urban, Editor In Chief, The Source

Sourcing is an important pillar of the Philippines’ economy and recently several sector developments are shape-shifting the economy, infrastructure investment, education and community living models. Impressive growth has been achieved in IT-BPO (contact service centers, back offices, medical, legal and other data transcription, animation, software development, engineering design and digital content) and the Global-in-House Center segment. For example, ten times growth in the BPO sector from US$1.5 Bn in revenues in 2004 to an estimated US$16 Bn in 2014 has been achieved.

In April, the Manila Standard Today newspaper reported that IT-BPO revenues for 2016 could reach as much as US$27 Bn. Within the last year the contact center market grew by 19% which is evolving to meet the desire of customers who prefer to email, chat online or use social media, and is expanding beyond its traditional USA client-base and more actively engaging UK and Australian clients. Call center related industries now account for roughly 5% of the national GDP. According to the IT and Business Processing Association of the Philippines, this industry sector alone is expected to add 372,000 new jobs from 2014-2016.

Providing an enduring supply of high quality labor and service innovation should be
Possible given positive economic conditions and inwards investment indications.

The government’s challenge is to ensure that an enduring supply of high quality labor and service innovation is created to support these industries. This should be possible as positive economic conditions exist providing a solid financial foundation to create favorable education and training environments, and business investment opportunities.

Overall growth rates in 2013 were 7.2%, second only to China’s 7.7% among Asian countries, and the country enjoys investment grade ratings from all three major rating agencies. This means not only lower borrowing costs but also makes the Philippines and attractive proposition for investment. These factors lend themselves to jobs creation and economic growth. Moreover, for the period between 2004 and end-2013 the Philippine Stock Exchange Index has grown fourfold. The country enviably boasts reserves of US$83 Bn and debt levels of US$59 Bn. Earnings forecasts for the next year are anticipated to grow 16-18%.

The Philippines has also garnered several outsourcing rating honors which enhance its appeal. The 2014 Tholon’s Top 100 Outsourcing Destinations Report ranked Metro Manila (2) and Cebu (8) in the Top 10 beating other high profile locations. Of note, a large supply of college-educated, fluent English speaking professionals is a key growth driver of its BPO sector. Employee accents are an important tipping point. D.S. Rawat, India’s General Secretary of the Associated Chambers of Commerce, recently stated that “neutral sounding accents” are largely to blame for India losing 70% of its call center industry to the Philippines and $30 Bn in lost foreign exchange earnings this decade.

The government is also taking steps to diversify the nation’s service offerings and develop deeper bench-strengths as illustrated by the founding of Analitika, a public-private consortium designed to build the Philippines as a global analytics center. Formed in April 2014, Analitika is spearheaded by IBM with participation by the government, academia and another eight of the country’s biggest companies. Expected to account for 10% (US$ 212 million) of the US$ 2.12 Bn global analytics industry, Analitika believes it can create 200,000 jobs in the next five years and could expand by another 200,000 jobs beyond that.

Transformations

The boon is transforming the way some Filipinos live. In a 24/7 work cycle environment travelling call center executives can find hotels that will not vacuum hallways and rooms during certain daytime hours to enable sleep and will serve breakfast in the late afternoon. Call center agents can easily find 7 a.m. “happy hour” cocktails at the end of their shift.

Community planning has also been reshaped. To cement its reputation as a world class outsourcing location civil infrastructure planners green-lighted the building of the Mactan-Newtown information-technology park to complement Cebu’s other 25 fully functional IT parks.

The new P20 Bn 28.8 hectare economic zone is being developed by Megaworld Corporation (headquartered in Makati City, Philippines) as a “live-work-play” planned community in Cebu’s Lapu-Lapu City. It is in fact a mini-city complete with offices, shops, hotels, entertainment and leisure venues, homes, a school supervised by LASSO, and its own beach. It is expected to engage 45,000 knowledge workers in addition to the 100,000 full-time workers already employed in Central Visayas (mostly in Cebu and partly in Negros Oriental). The first tower of Mactan-Newton has been fully leased to Diamond Bar, California-based Enfrasoft Inc. and Florida-based The Results Companies.

Megaworld, who is investing US$ 5 Bn in 10 planned communities in the Philippines, is following a model established in Eastwood, a 40 acre site eight miles from the center of Manila which draws 100,000 people every day. Eastwood is the country’s first-ever integrated township project covering 17 hectrares. Also known as Philippines’ first cyberpark, Eastwood City has 19 completed luxury condominium towers, 10 first-class corporate office buildings, seven ongoing residential projects, 500 commercial and retail shops, three malls, and a modern IT Park. The community is also home to more than 22,000 residents and 55,000 workers to date.

Eastwood City                                      Photo Courtesy of Megaworld Corporation

Eastwood City
Photo Courtesy of Megaworld Corporation

The 10 Megaworld communities will represent 16 million new square feet of office space over the next ten years.

In 2013, Teleperformance, the world’s leading provider of outsourced customer experience management services, opened in its 11th site in the country at City Davao, Mindanao.

Photo Courtesy of Teleperformance

Photo Courtesy of Teleperformance

The site, celebrating its first anniversary this month, operates 24/7 and covers an area of 11,200 square meters. Features include over 1,500 employee workstations, a fitness gym, spacious cafeteria, service clinic, sleeping quarters, game and recreation area. Teleperformance Davao employs about 2,000 people.

Segment Sustainability Efforts

One sustainability challenge is manpower retention. Turnover in the BPO sector currently runs at 40-60% in the Philippines. This requires non-stop replenishment of employee ranks, drives human resource training costs skywards and reduces productivity.

With respect to education and professional development, the government is engaged with local and international companies doing business in the Philippines to develop Filipino skills in project management, administrative skills, and knowledge development of healthcare, health and safety, and the legal industries to meet the growing needs of knowledge-based sectors. Attention is also being focused on creating an understanding of cross-cultural differences to improve workers’ adaptability and ability to develop appropriate empathetic approaches to customer service. The acquisition of these differentiated soft-skills will be very important as the region’s 2015 open borders initiative begins to take effect with its knock-on consequences of increased competition.

The Philippines has an extremely high literacy rate of 93.4%. While the country is the 3rd largest English-speaking nation in the world there are continuing efforts to ensure that English remains one of the core languages. House Assistant Majority Leader and Cebu Representative Gerald Gullas Jr. is author of a bill seeking to reinforce the use of English in all school levels in a bid to make and sustain the Philippines as a leader in the global labor markets.

Also, with regard to the country’s push into data analytics, Trade Secretary Gregory Domingo stated in at the launch of Analitika that analytic courses are embedded in the curriculum of some schools. A total of 12 universities in the country have developed curricula for business analytics, and the consortium plans to offer courses beginning in elementary school with a heavier emphasis at Grades 11 and 12.

Governance

The country’s competitive position is also reliant on continued improvement of its governance quotient. The 2014 Bertelsmann Stiftung Transformation Index (BTI) ranked the Philippines in 49th place among 129 world economies, an improvement from 2013’s 68th position. The BTI evaluates the progress in consolidating democracy, economic development and political management for economies that are either developing or in transition. By way of comparison, Taiwan topped the list and Eritrea was at the bottom next to Syria and North Korea.

The report findings noted several areas of challenge for the government to address including the slow reform process, corruption levels, coordination between state, private enterprises and research institutions, ethnic violence (particularly in rural areas and Mindanao) and a widening gap between the rich and poor.

Where Does It Lead?

With a national population of 100 million, 900,000 of whom are full employed in the services exports segment (ITO, KPO and BPO) the government’s continued, concerted development of this sector presents ample opportunities to engage more Filipinos in its quest to distinguish itself as the leading sourcing destination. According to the IT & Business Process Association Philippines (IBPAP) this task should not be viewed lightly. India is the world’s dominant global supplier of ITO & BPM services, employing over 2.8 million people and grossing US$ 75.8 Bn. While some Indian contact center business has been recently lost to the Philippine’s it is facing the Philippine’s challenge head-on to create even more formidable and innovative service delivery platforms.

Better utilization and development of Tier II and III locations is critical.

Currently, industry is principally concentrated around only two hubs: Manila NCR (National Capital Region) and Cebu. It is estimated that 70% of service providers are located in Manila NCR putting saturation levels at the top of minds. Better utilization and development of the country’s Tier II (Davao City, Santa Rosa and Iloilo City) and Tier III locations (Mandaluyong, Matalpa, Pasig) is critical to retain the talent pools in those areas – Finance & Accounting agents in Sta. Rosa, Laguna, engineers in Angeles (Clark), Pampanga, and nurses across the Visayas and Negro provinces who could serve the HIMO segment.

The Philippines’ near and mid-term challenges include widening the geographic spread of service delivery locations, improving the retention ratios of its contact centers employee base, transitioning talent pools into non IT-BPO higher value services, improving education and professional development, continually updating and improving the telecommunications infrastructure, and supporting industry-policy frameworks.

About the Author: JoDeen Urban is an independent management consultant working with established companies as well as start-ups on strategy, organizational capability and business model innovation.