By: Lauro Vives
NASA Chief Information Officer (CIO) recently said to an open forum of NASA Center CIOs, “Why are we talking so much about ‘right-now’ technology instead of envisioning future technologies?” Such a forward-looking position bodes well for all of us to consider; no matter what our purpose, in government or business.
This is exactly the position the government of the Philippines has chosen for its positioning with regard to outsourcing, captive or shared services operations,(or what is generally called BPO operations) relocating to the Philippines. Note, however, to use the term “BPO” to represent all the services above is a major misnomer – BPO is but one of several services described above. It is like asking a buddy to buy you a tube of Colgate, but make sure the brand is Crest, or asking for “Kleenex” instead of tissue paper. You get the picture. So in the spirit of our quirks and traits defining us as Filipinos, we’ll refer to everything from animation to call center to IT as BPO.
Our Government may not have NASA’s resources; however, its resolve is no less passionate. Here at XMG Global, we take predictions about the future very seriously; hence, we are providing whatever guidance we can, to aide in the development of well-informed government policy and direction decisions.
The beauty, of dealing with these issues, is we have the opportunity to discuss a very serious government strategy with relation to business applications, and how that strategy was positioned. But we’re not afraid to have a little fun, as we try to help you realize where we are; how we got here; and where we are headed. With the light-hearted style of a late-night talk show host, we take a serious subject, and will now provide, our Top Ten Reasons!
1. It’s More Fun to Outsource in The Philippines Because It Has Young and Bright Talents
The Philippine workforce is highly-skilled and competent; possessing a world-class education in IT and competitive infrastructure backed by several multinational IT companies. Country estimations project 440,000 graduates (2012-2013); of those, an impressive 50,000 IT graduates are expected. Compared to other highly-populated countries, the Philippines might lack the overall numbers; however, our offsets will make potential employers smile. With the Philippines’ literacy rate of 92.6%,resources are readily at hand, and the base of potential employees is here for the taking.
Most western countries have seen a median age creep; however, in the Philippines, it remains at 22.9. Translation: This country has a huge pool of young individuals; highly trainable, and largely untapped. This young generation, with their lack of work experience, allows business to have higher employee retention and continued growth, compared to their offshore counterparts. It is interesting to note, this younger generation still abides by parental house rules, even if they are over 18.
2. It’s More Fun In The Philippines Because Of Education
In 1901 the Thomasites first established the first “normal” university in South East Asia. The location selected for that teaching university was the Philippines. The obvious advantage was that the education system was structured using a western model. The government has displayed its commitment to improve the quality of education, by taking initiatives like the new K+12 policy from Department of Education and Roadmaps. Once again, these initiatives align it more with western education models. A western model does not preclude some experiences, which are totally Filipino. Where else but the Philippines would you find the ability to convey or communicate over 30 messages thru facial expressions? From the most famous, “pointing with the lips” to the more common, “scratching your head when you don’t know the answer”, the experience is pure Filipino.
3. It’s More Fun To Outsource In The Philippines Because Of The English Accent
The English accent of the workforce may not be the biggest factor in outsourcing jobs, but without a doubt, it is a differentiator. Other countries, like India, are known for having a much more pronounced accent (although this is not as much of a factor in younger generations). The accent of the Filipinos is more in line with that of an ethnic American; in part to the country’s strong historical background with the Americans. The country has maintained a strong relationship the United States since 1898, after the 400 years of Spanish colonization.
The Global English Corporation, based in Brisbane, California, posited some very interesting results with regard to English proficiency scores. Their results showed only one country, the Philippines, as scoring above a 7.0 BEI level; as compared with others in the top five with scores ranging from Slovenia’s 6.19 to Norway’s 6.54. A score of above 7.0 is described as possessing a high proficiency that indicates an ability to take an active role in business discussions and perform relatively complex tasks. This is particularly interesting because the Philippines, a country with one-tenth of the population of India, recently overtook India as a hub for call centers.
These factors combine translate to call centers having employees far better suited to dealing with customer concerns. This is the result of Filipinos having a better understanding of the intricacies of western culture. That difference, in turn, translates to the need for less cultural training, and reduced employee acquisition costs. Filipinos are ‘naturals’ when it comes to providing services.
In 2005, XMG Global pronounced the Philippines would surpass India in the global call center industry by 2010. At the time, this left some gasping in disbelief and doubt, and wondering what meds we were on (and rationally so, due to the huge population differential). An old adage says, the best payback to those who doubted you, is success. Our predictions were right on the money. To our delight (and perhaps their dismay) the Philippines topped India in late 2009, and continues to be the top destination for voice services. This is not to say we don’t have our own quirks with our brand of English. We say “shades” instead of “sun glasses” (never mind using them as hair bands), or refer to power interruptions as “brown outs”; but these prove to be of little matter, on the job.
4. It’s More Fun to Outsource in The Philippines Because Of Lower Costs
Lower business costs translate directly into higher business profits; let’s face it! The Philippines remains a less expensive choice. The typical operating costs of a BPO company in the Philippines results in an average savings of 15,000 to 22,000 US dollars per annum. The daily minimum wage is set to approximately$10 per day, making it far cheaper to outsource in the Philippines. As such, Filipino salaries are but a fraction of their western counterpart’s. Based on an XMG Global study, Indian professionals are, on average, paid 37% higher than their Filipino counterparts. Another cost-reduction factor is the fewer number of legal holidays. The Philippines only has 18 holidays per year, compared to India’s 33, for example (though one might think Christmas begins in September and ends in January).
5. It’s more fun the Philippines because Health is Wealth
Labor cost in the Philippines is undeniably low. Despite these lower base salaries, employees view their compensation and benefit packages as a benchmark. Many professionals give importance to what a company offers to them in terms of benefits. According to XMG Global research, about 41.7% of the time, employees give value to medical privileges. Moreover 45.2% of employees would like those benefits to be extended to their families. About 70 to 80% of fresh graduates and experienced professionals are willing to work in shifting schedules; however, for Filipinos, work life balance is also a factor. About 6.5% of experienced professionals would take a new job, in order to work for a company that offers a good environment. Take note that Filipinos can sing and dance at the drop of a hat.
6. The Recognition of the Need to be Multilingual to Service the World
At present, the country is still experiencing scarcity in the supply of multilingual talent. An estimate of over than 6,000 multi-lingual’s in 2011 far exceeds labor market projections. Last year, with insights and help from XMG Global, a tie up between the Board of Investment and IBM was formed to implement programs to enhance the capabilities of multilingual talent in general, but more particularly in the BPO sector in languages other than English. This effort will play a crucial role to hit the industry’s goal of generating $25 billion in revenue by year 2016. This is yet another example of government and business working in concert to achieve a common goal.
What is noteworthy is that nearly 70% of the working multi-lingual speakers have never travelled to the country for which they speak the foreign language. Perhaps these are the Filipinos that like to bear foreign license plates on their cars– especially European plates.
7. Social Mind-Trend To Be In a BPO Company As Hip Employment
It is in the social mind trend of the Filipinos to work for a BPO company. This is because BPO companies are known for competitive compensation and benefits, which attract many highly skilled workers. Depending on the educational background, many fresh graduates and experienced professionals prefer to work for a BPO company (yes, this means IT, Call Center, BPO, Medical Transcription and the lot). In an XMG Global survey, about 12.4% Business graduates would prefer to work for a BPO companies, compared to 6.7% for Technical skilled graduates. Moreover, about 23.6% of technical fresh graduates and experience professionals stated their preference to work for High Tech (IT/Telecom) Companies in 2011. Today about 41.6% of experienced professionals prefer to work for this industry, and the trend is growing. Working for a BPO is becoming hip, just like anything imported.
8. Building a Nation – BPO Outsourcing is a Certainty in the Philippines; Ensuring GDP Growth
The BPO industry helps build the nation by providing more jobs for Filipinos, encouraging investments, and contributing to revenue of the country. Because of the rise of this industry, an XMG Global study identified it as currently the largest in the private sector providing about 610,000 direct BPO jobs in 2011 alone.
The Philippine government is open to foreign investment and facilitates globalization. The country takes the initiative, and recognizes the potential of the BPO industry growth as it helps the economy of the country. Thus, because of this initiative, the Government is currently developing a roadmap to further improve the industry by 2016.
If you notice, no matter how rich or poor Filipinos are, they manage to smile even for no reason at all. These results and future plans will put more smiles on any Filipino’s face.
9. Best Place To Be Located In The Philippines
The Philippines has many economics zones housing BPO companies. There are about 248 locations established by Philippine Economic Zone Authority, which give opportunities for investments, and locating business operations. Locations are strategically and widely-situated across the country; chosen for a combination of location (individual local governments have gotten involved, each touting the benefits of its respective location); labor and transportation availability; and costs. Current successes will ensure more of these economic zones will be developed. The government has responded to the changing needs of these economic zones, with a full range of infrastructure development. As required, airports, transportation links, and support has been modified or created from scratch. The involvement of local governments has bolstered the recognition that everyone benefits when these zones thrive.
However, note to investors and travelers. I think this is the only country in the world where nobody – family or friends – can enter an airport to say goodbye – unless they are also passengers. Perhaps it is to make room for the eight boxes one takes whenever Filipinos travel.
10. Being Close To Nature – A 7,000 Island Paradise
Aside from the advantage that companies can locate their business activities pretty much anywhere in the country, these locations give access to some of the most desired tourist sites in the world. Employees have the best of both worlds; work opportunities far greater than those of the past (which far too often, involved leaving home and family to work abroad), and locations which each offer a wide variety of activities for leisure activity. The Philippines is a vacation destination all year round. Companies, which elect to establish their offices in these favorable locations are, in-effect, living in paradise.
Imagine, over 7000 islands of tropical climate that keeps your skin ageless while you increase the value quotient of your company. And one more – and this is important because life is about happiness and sharing – where else would you find a country where anyone who is eating greets you with the words “Let’s eat!”