IT-enabled services to ease Philippines’ fiscal woes

Information technology-enabled services may well save the Philippines from floundering ala Argentina as call centres and business process outsourcing (BPO) operations continue to generate employment and keep the local job market humming.

Since most BPO operators in the country are on an expansion mode this year, fresh opportunities for job seekers, particularly new college graduates, will abound, Business Process Association of the Philippines (BPAP) president Karen Batungbacal said. The call centre sector alone currently employs about 35,000 call centre agents. This number is expected to reach 80,000 by 2005.

“Through the job opportunities that we’re actually bringing in, we hope to assist positively in easing the fiscal crisis,” she said.

“In our company’s case — the ICT Group Inc. — for instance, we are inaugurating our second call centre facility, and our plan is to have our third and fourth centres up and running by next year,” disclosed Batungbacal, who concurrently sits as president of the ICT Group in the Asia-Pacific.

With the opening of its second site at the Ortigas Center in Pasig, ICT currently employs about 1,400 customer sales and service representatives. The company’s Makati City facility houses over 1,000 call centre agents and 600 workstations; while the Ortigas facility has some 350 call centre representatives and 375 workstations.

Despite President Gloria Macapagal-Arroyo’s recent declaration of a fiscal crisis, the lady executive and BPO advocate stressed that BPO investors in the country are not about to pack up and back out. In fact, ICT Group president and chief executive officer for global operations John Brennan himself, in a recent visit to the country, assured the local press that the fiscal crisis will not deter his company from pursuing its expansion program in the Philippines.

“(The fiscal crisis) will not effect our growth and investment plans in the Philippines. As a matter of fact, we hope to be able to assist the Philippines by expanding (our operations) and, thus, creating more employment opportunities,” Brennan told Computerworld Philippines.

“We’re not coming into the Philippines to really focus (on getting business) in the local market, instead what we have here is some sort of a production operations. And since it is more cost-affective for us to have our operations here, we will be committed to growing our operations in this country,” he noted.

According to Brennan, processing a customer call in a Philippine-based facility costs US$1.50 cheaper per hour than in a similar call centre in India. This cost differential is even higher in Mexico, where call servicing costs US$4.50 more per hour, he said. The same is true for the U.S. and the U.K. where services are more expensive by US$10 and US$20 per hour, respectively.

Since the ICT Group is investing in the Philippines to support operations outside the country, the company is, in effect, bringing in jobs that could help ease the country’s fiscal difficulty, he said.

Not even the increasing clamor against offshore outsourcing — particularly in the U.S. — will prevent companies like the ICT Group from continuing to invest in the country, Brennan insisted. During the same interview, the ICT CEO dismissed U.S. presidential candidate John Kerry’s campaign against outsourcing as mere “political maneuvering.”

“It is really (a) political (issue); there may be packets of low employment in the United States but the migration of textile mills and manufacturing jobs has been happening for decades so I don’t think it’s going to change now,” he said. “They cannot ban the outsourcing of manufacturing jobs, in the same way that they cannot ban the outsourcing of services-oriented jobs. It is pretty obvious that this is just a political maneuvering on Mr. Kerry’s part,” he opined.

Speaking of ICT, Brennan said the company expects to leverage its Philippine facilities to provide additional outsourced customer management and back-office support services and benefit from improved agent utilization rates, increased operating efficiencies, and additional “cross-sell” and “upsell” for its existing and prospective clients.

He disclosed that ICT is grooming its Philippine subsidiary to become the hub of the company’s global IT operations.

Rather than just supporting its operations in the Philippines, ICT’s local IT centre will be servicing the IT requirement of its global headquarters in the U.S.. At the moment, the ICT Group’s IT operations are being run by a US-based team.

“We’re starting to build up part of our IT infrastructure in the Philippines this month to support our U.S. operations,” Brennan said. “We are looking at building our operations from 35 people by the end of the year.”

Brennan expects cost-savings of as much as 50 per cent by internally outsourcing the company’s IT processes to a Philippine-based centre.

Ultimately, ICT’s plan is to offer managed IT services as part of its services portfolio. “We want to build this up for our internal requirements. We will then resell these services to our clients beyond the call centre,” the CEO said. “We’re not going to be an Accenture, but we definitely see opportunities in providing IT services to our existing customers,” he concluded.

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Jim Love, Chief Content Officer, IT World Canada

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