In BPO, Business, IT, KPO, Technology, UncategorizedNovember 25th, 2013

Philippines as ‘Silicon Islands’ – The World’s Next Silicon Valley

Posted by on November 25th, 2013 | No Comments »

Today, the Philippines has entrenched itself firmly as a major player in the outsourcing and BPO industry. Thousands of Filipinos are now employed in call centers and outsourcing firms located all over the country, servicing millions of clients based in the United States, Canada, United Kingdom, and Australia to mention a few. Whether it’s retail, outbound sales, customer service, technical support, and online marketing, the Philippines has become a popular outsourcing destination for companies that provide the aforementioned services.

It has been argued that business process outsourcing found its way to the Philippines back in 1992, when international technology that focuses on management consulting, technology, and outsourcing, started its operations in the first Global Resource Center in Manila. The company’s main office was anchored at the Robinson’s Cybergate 2 Tower in Mandaluyong City, which provided work for more than 5,000 employees. The bulk of which were mostly IT professionals who delved in system design and software application development.

The success of Accenture’s enterprise in the Philippines is flaunted by a number of highlights. For one, it proved that country is home to a wide pool of talented individuals who were capable of servicing offshore clients and providing employers with excellent output topped with both client and customer satisfaction. Two, the Accenture venture introduced the country as a potential and highly talented workforce the outsourcing industry can tap into. Three, Philippines could rival or even best another outsourcing giant India in terms of quality of service and customer preference.

Today, many international business organizations, most of which have ranked in the highly touted Forbes 500, have set up shop in the Philippines for their outsourcing needs. Convergys, Sykes, Aegis, IBM, JPMorgan, and a long line of big corporations from all over the world now brandish a strong hold on the Philippines’ BPO industry, bringing the bulk of their non-core business areas to the country. In turn, they provide vast employment opportunities to Filipinos and bolstering the Philippine economy.

Since the advent of business process outsourcing in the Philippine islands, the industry has seen more ups than downs. While there are a few companies that were forced to shut down their operations due to economic reasons, the number of entities enjoying success in the business process outsourcing landscape has exponentially skyrocketed as well. In fact, the BPO industry has been a driving factor why the Philippine economy is still booming despite the plagues and meltdowns that rocked the world in previous years.

In a THOLONS survey released this year, Manila and Cebu was named 3rd and 8th most popular outsourcing destinations for international corporations among the world’s top 10 cities. India has a hold on six spots while only to European nations made it to the list. This result says a lot. Approximately there are 770,000 Filipinos currently employed in the business process outsourcing sector. In contrast, India has a huge workforce dedicated to BPO – a whopping 38 million. But despite its big advantage in numbers, India is struggling to keep up with the Philippines, especially when it comes to BPO services that have voice requirements.

It was mentioned earlier that the BPO industry has been an instrumental force in driving the Philippine economy forward. In fact, the said sector has already raked in $20 billion in revenue in a matter of three years since 2010. Another indication why the BPO business is still growing is the number of foreign investments coming in to the country, particularly in the internet and communication technologies. One of the most recent developments in the said industry is the South-East Asia Japan Cable (SJC) system project, which is said to be worth $400 million. The SJC initiative is basically a massive undertaking that involves linking Brunei Darussalam, China, Hong Kong, Thailand, Singapore, Japan and the Philippines via an 8,900-kilometer cable system.

Another positive development in the Philippine BPO industry is the entry of two US corporate entities in the country. New York-based American International Group, Inc. (AIG) and Virginia-based Capital One Financial Corp. are now in the Philippines to set up their back offices in the country. As of October 2013, both companies are still in recruitment mode, generating vast employment opportunities for the Filipino workforce.

By the looks of it, it seems like the Philippines will remain to be a top player in the business process outsourcing game at a global scale and for a long time too.

Spearheading The Philippine BPO Culture: Call Centers

outsourcing to the philippines

While many say that the BPO industry in the country traces its roots in the early 1990s, it wasn’t until the early 2000s did its popularity started to surge and became one of the most heavily employed sector in the Philippines. Many believe and concur that call centers are what brought BPO to the country’s consciousness and melded the BPO industry to the nation’s fabric and being. In the Philippines, the presence of call centers is so felt in multiple aspects and is seen from several viewpoints, ranging from economic, social, cultural, and, to a great extent, political.

There is no debate as to how call centers supported the Philippine economy. For one, investments from foreign companies equate to taxes and revenues for the Philippine government. Two, the call center boom in the country provides many Filipinos employment options that entail better salary rates, medical and insurance benefits, and the chance to better their lives and that of their loved ones. Three, other professional sectors in the Philippines benefit greatly to the proliferation and continuing expansion of call centers in the country.

Call center professionals generate bigger income compared to other occupations. This means they have better spending capacities than most people, allowing them to save up and/or invest in material properties, real estate, and business endeavors among others. And such actions always spell well for the economy overall.

The explosion of call centers in the Philippines also led to a social change in the Filipino society. Because jobs at call centers offer higher pay and multiple benefits, many Filipinos have joined the industry. The attractive rates provided by the call centers have coaxed people to join the industry even if their academic backgrounds are not aligned to nature of the call center profession. Many call center employees, even successful ones, have degrees in engineering, nursing, education, and accounting.

Politics have also found the call center industry as instrumental in shaping the Philippine landscape. For instance, the Philippine government has issued legal acts designed to uphold and protect the interests and gains of Philippine-based BPO companies. The Technical Education and Skills Development Authority (TESDA) has launched various initiatives to help people to gain skills and knowledge they can use to better their chances of getting employment with information communication and technology (ICT) employers, including the BPO sector.

Another visible evidence of the government’s huge support for call centers (and the whole BPO industry as well) is the zoning policies dedicated to call centers. Perhaps the best example is the IT Park, located in Cebu City. Several BPO companies are located in IT Park, including Aegis (formerly People Support) SPI Global, Stream, and Convergys. Financial consultation and management firm JPMorgan also has a huge office in IT Park.

It can’t be denied that the call center appeal lies on the high payment rates and medical benefits. That said, many Filipinos join the call center industry because the job requirements are not as strict compared to other professional sectors. Many call centers in the Philippines only require two years of college education and above-average fluency in English from their applicants. Such qualifications are very enticing to the younger generation, those who age 18 to 24.

However, there is a downside that comes with joining the call center industry; employees working graveyard shifts for most their careers. Most call centers operate on a US-based schedule. That means working in synch with US standard business hours. Many employers balance it out by providing incentives and bonuses to top performers.

But even with its popularity with the masses and them being a great boost to the Philippine economy, call centers are not the only players in the BPO industry in the Philippines. But no doubt, they are now a part of the Philippine modern culture and consciousness.

Non-Voice BPO Players in the Silicon Islands

filipino outsourcing

When you say “BPO” and “Philippines” in one breath, mental images of call centers and call center professionals come to mind. There is no doubt that Philippines is now a preferred destination for companies who outsource the bulk of their voice support and other customer service roles. But that said, there are other non-call center players in the Philippines BPO scene. But perhaps the biggest names that come to mind are Toshiba and Lexmark.

Toshiba is well represented in the Philippines, from marketing to customer support. It has multiple offices in the National Capital Region (NCR). But its manufacturing facility in Techno Park, Binan, Laguna, is where a significant bulk of Toshiba products are made. Most of the products manufactured in this facility comprised of information storage devices and are shipped and sold to end consumers located in the Asia-Pacific region.

Lexmark is a highly renowned developer and maker of topnotch printers as well as provider of high end business solutions. In the Philippines, Lexmark’s main office is based in Ayala Business Park in Cebu City. The company’s operations in the Philippines composed of customer support for their product users located from all over the world. But more than just focusing and improving on their customer relations, the company’s Philippine office is also dedicated to research and development. More than half of Lexmark’s employees in the Philippines are assigned to three different non-voice sections – hardware development (tools development and automation), firmware development, and software development.

Toshiba and Lexmark may operate in different fields and have their aims on different markets. But their existence in the Philippines proves that Filipinos are not just talented in providing voice support for customers, but also are capable in developing software and manufacturing ICT products that meet global standards.

Home-based Virtual Employees: A New Breed

To trace the roots of how home-based virtual workers started in the Philippines seems to be a herculean, if not impossible, a task. But there is no use denying it; the advances in information and communication technology contributed much to the birth of a new trend that connects entrepreneurs and executives directly with contractors who have the skills and knowledge yet are thousands of miles away.

In the Philippines, home-based online workers are growing in numbers. But the term not only includes virtual assistants, who comprise the majority of online workers in the country. Home-based workers in this modern age now refer to a diverse set of professionals from varying fields of expertise. Accountants, lawyers, legal assistants, real estate agents, writers, teachers, programmers and website designers are just some of the professionals who have taken their talents and expertise to clients and employers located in the other side of the world.

Most of these virtual workers have their respective careers prior to working online, usually from a private office from their homes. The exodus from the typical 9 to 5 office job to working within the confines of their homes is laced with many reasons and influenced by many factors. Most virtual employees are mothers, like most virtual employees in other countries, who just want to be productive while staying at home.

However, for many professionals, shifting to a home-based work and working with an employer several time zones away present a lot of things: a change in pace as far as lifestyle is concerned, higher salary and a more challenging position that can further improve their skills and enable them to gain more knowledge.

For employers, hiring virtual staff, particularly from the Philippines, presents a number of advantages as well. Aside from not dealing with the need for office space and equipment (as many online workers have their own private offices and their own office tools like laptops), getting a virtual employee is itself a cost-effective solution. This is a great move for entrepreneurs who are still struggling to get their business started and require help with the setting up of their enterprise.

But more than just menial office work, many Filipino professionals who went to work online, particularly those who boast of extensive experience, excellent qualifications, and top credentials, have proven to be great with what they do. Most of them have become essential figures to the organizations they work with and provided critical expertise and drive.

The Philippines is now considered a top-tier provider of virtual employees. It is very unlikely that the world will ever find out who was the first Filipino virtual employee. But the future of home-based online work in the Philippines is looking bright and great.

To learn more about the top IT-BPO destinations in the Silicon Islands, check out this report from THOLONS.

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