ICT, BPO sectors to benefit from new submarine cable
MANILA, Philippines - Globe Telecom Inc. said it expects the country’s information and communication technology (ICT)...
MANILA, Philippines - Globe Telecom Inc. said it expects the country’s information and communication technology (ICT) and business process outsourcing (BPO) industries to benefit from the newly launched $400 million Pan-Asian submarine cable system.
Globe Telecom chairman Jaime Augusto Zobel de Ayala said the South-East Asia Japan Cable (SJC) would improve the competitiveness of the Philippines.
“Globe’s participation in the SJC system will help with the overall competitiveness of the Philippines helping achieve goals of economic stability and position it at par with the most technology advanced countries in the world,” Zobel stressed.
The country’s domestic output, as measured by the gross domestic product (GDP), expanded 7.5 percent in the second quarter of the year, bringing to 7.6 percent the economic growth in the first half.
“Today’s inauguration of Globe SJC system could not have come at a better time as the Philippines is currently basking in an economic renaissance,” Zobel added.
Apart of the 36.1 million subscribers of Globe, Zobel pointed out that the IT and BPO sectors would benefit from the new cable system.
“One of the main beneficiaries of this system will be the IT and business process outsourcing industry which employs more than 700,000 Filipinos and contributing more than $25 billion in revenues,” he said.
No less than President Aquino attended the launching of the SJC system in the new P8-billion Globe Tower in Bonifacio Global City Friday evening.
Gil Genio, head of international and business markets at Globe, told reporters that the link-up of Globe with SJC marks a high point in the advancement of telecommunications in the Philippines and in South East Asia.
“The addition of SJC to the existing network of international submarine cable systems will address the increasing requirements for much higher bandwidth in the continent and the rest of the digitally-connected world. Its high-capacity systems also bolster the capabilities of Globe Telecom, particularly in telecommunications and Internet, making it the foremost telco provider in the Philippines,” Genio stressed.
Genio said the interconnection reinforces the dominance of Globe in the local telecommunications industry as it significantly bolsters the competitiveness of the Philippines as a prime destination for business investment.
“One of the main beneficiaries of Globe having SJC will be our local business process outsourcing and the outsourcing-offshoring sectors, currently regarded as the ‘sunshine industries’ of the Philippines,” he added.
He explained that the SJC system is a fitting complement to the telco’s landmark network modernization, with the rollout of fiber optic cables enabling a richer digital experience for its 36-million plus subscribers:
“The Philippines ranks high in Internet usage worldwide, propelled by the onslaught of smartphones, the rise of social media, and general Internet usage, with Globe as a key purveyor in this phenomenon,” he said.
He pointed out that the huge bandwidth of the SJC system would be able to meet the capacity needs of future applications and innovative solutions and at the same time spur the further development of information and communications technology in the region.
Spanning almost 9,000 kilometers, the submarine cable has one of the highest capacities in the world addressing bandwidth-intensive applications such as Internet TV, online games and enterprise data exchange. It could support simultaneous streaming of up to three million high-definition (HD) videos.
Genio said Globe Telecom chipped in $65 million to the submarine cable system together with other proponents including Brunei International Gateway Sendirian Berhad, China Mobile International Ltd., China Telecommunications Corp., China Telecom Global Limited, Donghwa Telecom Co. Ltd., Google, KDDI Corp., SingTel, PT Telekomunikasi Indonesia International, and TOT Public Co. Ltd.
24/7 BPO operations spawn growth across related sectors
“The city that never sleeps” is no longer an adage monopolized by New York City, as numerous metropolitan centers have sprouted in countries...
“The city that never sleeps” is no longer an adage monopolized by New York City, as numerous metropolitan centers have sprouted in countries such as the Philippines that have attuned themselves to a round-the-clock business, commercial and social lifestyle.
Manila, about 14,000 kilometers east of North America, is one of the emergent cities with a booming call center or business process outsourcing (BPO) industry, which has spawned attendant changes in the way people live, work and recreate, according to leading real estate consultancy CBRE Philippines.
The local BPO industry has been identified as one of the main drivers of the Philippine property market in recent years.
The office market is dominated by BPO demand, composing as much as 80 percent of yearly take-up.
According to data from CBRE Philippines’ Metro Manila Marketview report for the second quarter of 2013, brisk expansions among global firms during the period caused overall office vacancy rate in Metro Manila to drop to 2.51 percent from the previous quarter’s 3.21 percent, amid supply pressures.
Take up from multinational and BPO companies was likewise observed from new tenants in Prime and Grade A offices during the second quarter.
“Outlook for the office market remains optimistic for the rest of the year, and increasing office space demand from multinational and BPO companies shall sustain the office market,” says Rick Santos, chair and founder of CBRE Philippines.
The BPO boom has led to the popularization of the term “night shift,” which was previously associated mainly with security or law enforcement jobs.
“Philippine society, particularly the young professionals, has indeed experienced a radical lifestyle change,” explains Santos.
The retail sector is one of the main benefactors of this change, as stores that used to operate only until late at night now operate a full 24 hours a day, and even on local holidays.
Commercial convenience stores and coffee shops that cater to customers round-the-clock have become staple tenants in commercial spaces of office buildings, with global chain 7-Eleven and Ministop among the top players in the market.
Family Mart, a Japanese convenience store chain brought into the Philippines by the Rustan’s Group and Itochu, is one of the new establishments with 24/7 services catering to BPO employees, as well as a market segment of middle-class office workers.
The consumer lifestyle shift and increased income of the labor force in business centers, especially those in the BPO sector, sustained the expansion of convenience stores near offices while concurrently strengthening ground floor retail trend. Low vacancy rating was sustained in the second quarter this year at around the 5 percent level.
This year, the expected completion of approximately 432,000 square meters of additional gross leasable area will ease supply pressure.
Retail market businesses will remain profitable for the remainder of the year due to a strengthening Philippine economy driven by the growing BPO industry, remittances from Overseas Filipino Workers, and strengthening middle market that can sustain the operations of retail establishments, according to Santos.
Shifting work schedules have also proved to be a benefit to the residential property market near business centers. “Employees under such schedules find it more safe and convenient to rent or purchase condominiums or apartments near their workplace,” says Santos.
“It is clear that this lifestyle change brought by the growth of the BPO sector is enlivening the economy and the property market in more ways than one,” he says.
RAIN WAS pouring. People took shelter under the extended glass awnings of the sprawling commercial atria there, nestled in a Zen garden looking up at ancient acacias and tall palms.
A few more meters of covered interconnected walks, and many could have crossed over to the little round chapel at Greenbelt Park -- to hear the Saturday afternoon anticipated Mass.
But they heard Mass, anyway, away from the rain and the chapel, in the shaded outdoor foyer of the high-end shops, and straining to listen to the gospel and sermon on a badly garbled intercom system. It was a fiesta ambience, people greeting acquaintances and chatting above the insistent mumblings of the priest saying Mass at the chapel. Many could not restrain themselves from walking over to the nearby Volkswagen pre-launch booth, and making a hasty sign of the Cross maybe as token participation in the Mass over the intercom -- or maybe at the quoted indicative price of P1.5 million for the tiny 1.2-liter Volkswagen Classic.
We are happy, irreverently happy; even at funerals and visiting sickbeds, we smile incongruously, if only to sincerely convey our empathy. We concoct jokes, even at ourselves, and paint caricatures of every situation. But we have reason to be happy. Life is good, or so we evaluate it to be, by our own standards of happiness.
Technically, we’re good. The Philippine economy, as measured by the gross domestic product or GDP, grew by 7.5% year-on-year in the second quarter of 2013, according to the National Statistical Coordination Board (NSCB). We are the fastest growing economy among emerging economies in the ASEAN region, with our growth rate the same as that of China, and surpassing the growth rates of our Asian neighbors. “The second quarter growth is the fourth consecutive GDP growth of more than 7% under the Aquino Administration,” the NSCB said.
And we are happy with President Benigno Simeon Aquino III -- at least about 78% trust him, according to the latest survey of Pulse Asia. The population has reportedly reached 97.2 million, accelerating per capita GDP to 5.8%. The National Economic and Development Authority (NEDA) said the latest Labor Force Survey in April 2013 shows that the quality of jobs among the employed is improving. “More people have regular wages and salaries, indicating that those employed have more remunerative and stable jobs. Also, the number of full-time employment posted a double-digit growth from a year ago, increasing its share to 64% in the same period. While unemployment remains a challenge, the strong performances of the investment and industry sectors are positive indications that the Philippines is on its way towards generating more and better-quality jobs.”
Some construction workers going home from work at the many condos rising in Makati take a shortcut through Greenbelt Park to take jeepneys on Ayala Avenue to transit to somewhere farther. A few peeked through the glass windows of the Volkswagens on display at the Park -- and an observer may think, they have no limits to their dreams; they are happy, if they can dream. Why not, when any industrious worker can someday, somehow be an OFW (overseas Filipino worker) and earn the lowest equivalent of about $500 a month (P20,000++) versus local minimum wage of about P9,000 per month? (Skilled OFWs can earn as much as $10,000 per month).
About 9.5 million Filipinos, 10% of the population, worked or resided abroad, according to the National Statistics Office. The Philippines is the fourth largest recipient of official remittances after China, India and Mexico, from which about 13.5% of the country’s GDP comes. This is the largest contribution in proportion to the domestic economy among the four countries. In 2012, the Bangko Sentral ng Pilipinas (BSP) reported official remittances coursed through banks and agents at $21 billion, not including unofficial or illegal channels estimated by the Asian Bankers Association to be 30 to 40% higher than the official BSP figure. That would be close to $30 billion per year supporting some two million families who have dramatically upgraded their status and quality of life, and their access to health services and education.
But the OFW diaspora does not necessarily tell of a lack of opportunities in the country. Both the service and industry sectors continue to grow fast, with the industry sector growing by more than 10% in the last two quarters, according to NEDA. The latter sector was strongly supported by the manufacturing subsector, which grew by 10.3% in the second quarter. Manufacturing now employs upgraded skilled labor in food processing, furniture and household appliances like radio and TV, basic metals, and machinery.
The NEDA sees a 9.5% growth in the service sector, which includes real estate, renting and business activities, and the continued expansion of the business process outsourcing (BPO) industry. Among countries into BPOs, the Philippines has had the highest number of employees at call centers, with about 400,000 in 2011, surpassing India to become the top call center BPO destination in the world. From the IT-BPO business, the country generated more than $13 billion in revenues last year, projected to hit $16 billion in 2013 with some 926,000 full-time employees (entry salary P25,000 per month). The Philippine government has offered fiscal and non-fiscal incentives to attract foreign direct investment in these industries as part of the Investment Priorities Plan (IPP) detailed in the 2007 Medium-Term Philippine Development Plan.
The construction boom has contributed much to productivity and gainful employment, especially in the past five years. In a report, construction market research firm BCI Asia projected P1.18 trillion worth of projects projected to start in 2013, a 264% growth compared to the previous year, primarily “because of government measures to push the growth of the economy by increasing government expenditure, the growing electricity demand, and the 2013 elections.” NEDA tempers this exuberant report with actual data of 31.1% and 9.0%, respectively for public and private construction in the second quarter of this year alone.
Construction labor might perhaps come from some 624,000 displaced agricultural workers from a year ago, reported in the Labor Force Survey, which also reported about 224,000 and 380,000 additional employment generated in the industry and service sectors, respectively. NEDA worries about the contraction of the agriculture sector, as land gives way to infrastructure, industry and homes amid the growing population. Nevertheless, agriculture still makes up 12% of the GDP and employs 33% of the workforce. Activity includes small subsistence farming and fishing to large local producers and exporters, and multinationals such as Dole Food Co. and Del Monte Foods.
Economists and business analysts agree that the fundamentals are there, and the Philippines has become the top economic leader in Southeast Asia. Standard & Poor’s recently upgraded the country to investment grade, declaring it to have taken over the ASEAN growth leadership role from Indonesia. Government planners, policy makers and implementers thump chests at what they claim to be their accomplishments for the economy. Okay, we let them think it was their brilliant minds that turned the country around, although we know it was the confluence of world events, and the mistakes of other countries in managing their wealth and power that did it, giving us welcome opportunities to be wealthy as well.
But as for the power that comes with wealth: perhaps we are too easily happy within our small individual circles to worry about the few in our midst who are taking advantage of position and influence to steal and plunder the country’s wealth. According to corruption watchdog Transparency International, the Philippines is No. 70 of the 174 most corrupt countries in the world, and third in Southeast Asia. Have we become number one, with the raging P10-billion pork barrel scam, seeming to point to the machinations of a group of legislators in collusion with malevolent private individuals supposedly close to priests and religious?
What the heck, we are a happy people. In the pouring rain in Greenbelt that Saturday, the collection basket was passed around by a drenched chapel volunteer to those sheltered “remote” mass-goers under the glass awnings around the plush shops. But the lay ministers giving Holy Communion did not likewise dash under the rain to deliver the Host to the marooned churchgoers away from the chapel. We shrug our shoulders and understand; basta happy (enough for everybody to be happy).
“Gusto ko happy ka (I want you to be happy),” that is one veteran legislator’s famous motto. Everybody happy in plunder and corruption?
PSEi seen to hit 7,000 by yearend
THE PHILIPPINE Stock Exchange index (PSEi) could hit 7,000 by the end of the year, a top official from Bank of the Philippine Islands (BPI) Securities Corp. said.
“[The Philippine Stock Exchange index] could hit 7,000 by year-end ... [because] over the last eight years, the Philippine stock market has an average up of 4% from Oct. 1 to year-end,” BPI Securities Chief Executive Officer and Managing Director Michaelangelo R. Oyson said, during the company’s investors’ conference on Saturday.
The PSEi closed at 6,379.81 on Friday, falling by 27.65 points or 0.43%, while the broader all-share index inched up by 0.77 of a point or 0.02% to finish at 3,841.25.
Mr. Oyson said that the market boom is also riding the Philippines’ being in the middle of an “economic supercycle” as well as the growth in business process outsourcing (BPO) and overseas Filipino workers’ (OFWs) remittances.
The Philippine economy expanded by 7.6% in the first semester, higher than the 6.4% growth recorded in the same period last year and exceeding the government’s 6-7% target this year.
“The reason why there is positivity in the economy and why this country will see growth at 7% is that consumption is here to stay,” Mr. Oyson said.
“The Filipinos are working hard abroad. The BPOs are growing, and more and more BPOs are being established in the Philippines.”
On average, BPOs bring in about $20 million revenues daily, while OFW remittances bring about $60 million daily, Mr. Oyson said.
Data from the Information Technology and Business Processing Association of the Philippines showed that the BPO industry’s work force grew by 21% to 776,794 in 2012 while the National Statistics Office Survey on Overseas Filipinos showed that OFWs increased to 2.22 million last year from 2.16 million the year before.
The US Federal Reserve’s decision to continue its $85-billion monthly bond-buying program also enabled the PSEi to break its 6,400 resistance, Ron Acoba, Chartered Market Technician and Chief Investment Strategist for Trading Edge consultancy, said.
“[Because of] the decision of the Fed to defer the quantitative easing in the US, the PSEi actually jumped over the major resistance of 6,400,” said Mr. Acoba.
The market can even attain new records in the coming year, Mr. Oyson said.
“For 2014, I’m not going to be surprised if we hit 8,000 hit and potentially 9,000 [because] the Philippines’ market has not been fully re-rated. Meaning, the investors are willing to pay much more higher multiple for the Philippine market,” he said, adding that the Philippine market is comparatively cheaper than China and Indonesia were at the height of their bull market.
The Philippines, according to Mr. Oyson, is just trading at 19 times price-to-earnings ratio while China, during its bull market peak, traded at 31x P/E and Indonesia at 35x P/E. -- D.J.B. Evite
IT-BPO industry drawing more 'balikbayans' to work in PH
MANILA - As the Philippine economy expands, more Filipinos are returning to the country and finding employment in the growing information technology and business process outsourcing (IT-BPO) industry, executives of the Information Technology and Business Process Association of the Philippines (IBPAP) said.
With a relatively higher pay, IT-BPO jobs have become appealing not only to Filipinos who do not want to leave the country but also those who have returned amid rosier opportunities here, Joey Gurango, president of IBPAP member-organization Philippine Software Industry Association (PSIA), told reporters last week.
Gurango's software firm, for instance, now employs four Filipinos who had previously worked in Australia and Singapore. Gurango left the country in the 1970s to work in the US and landed jobs in top IT companies such as Apple and Microsoft, but returned to the Philippines to help jumpstart local software startups.
"All we have to do is educate Filipinos in developing countries what is there for them to come back," Gurango said, noting a wide array of opportunities being offered by the fast-rising IT-BPO sector.
IBPAP president Jose Mari P. Mercado said every IT-BPO firm in the country has at least one employee who previously worked abroad but has come back and gained employment in the industry, which has been growing leaps and bounds.
IBPAP senior executive director Gillian Joyce G. Virata said the Philippines is next only to India in providing IT-BPO services, with about a tenth of the global pie being supported here.
As for voice services, which comprises two-thirds of the domestic industry, the Philippines is number one, with a 38-percent share of the global market, Virata said, citing the latest global market size report of research firm Everest Group. She said the country could easily account for two-fifths of the voice sector by 2016.
IBPAP's roadmap projects industry revenues to hit $25 billion and employment to reach 1.3 million by 2016.
To attain the roadmap's targets, making IT-BPO services available throughout the country is a key strategy, Mercado said.
At present, 72 percent of IT-BPO operations in the country are based in Metro Manila, but the industry is working to expand the share of provinces to 40 percent by 2016, in line with the commitment made by the Department of Science and Technology's Information and Communications Technology Office (DOST-ICTO) to President Benigno Aquino III.
"Our value proposition is 'you need not go out of the country to get a job,' and will extend it to 'you need not go out of your own city or province," Mercado said.
Virata noted that three-fifths of college graduates come from outside Metro Manila, and many of them can be trained to work in the IT-BPO sector.
Mercado said the right matching of skills coupled with local government units' (LGU) commitment to put in place IT infrastructure would result in increased competitiveness and attractiveness of sites outside Metro Manila for investors.
In line with the public-private "Next Wave Cities" initiative, IBPAP is embarking on a 10-city road show that will cover the cities of Antipolo, Baguio, Butuan. Cagayan de Oro, Iloilo, Laoag, Naga, Puerto Princesa, Tacloban and Tarlac, in a bid to promote ICT in these localities.
Fast-growing IT-BPO hubs such as Bacolod, Cebu and Davao show that more employment can be generated and firms can flourish even outside Metro Manila, Mercado said.
To showcase what the Philippine IT-BPO industry can offer, IBPAP is hosting the 5th International Outsourcing Summit (IOS) with the theme "Unlocking Possibilities, Creating New Vistas" on October 6-8 at the Makati Shangri-La Hotel.
Local BPO industry is 'crisis-proof'
The local business process outsourcing (BPO) sector's growth is not expected to decelerate despite the slow but steady recovery of developed markets like the United States and Europe.
Although BPO companies help companies in developed markets cut on costs amid the prolonged economic crises, the outsourcing of non-core services also help firms become more competitive when times are good, a top economic manager said.
"The BPO sector is both pro-cyclical and anti-cyclical," Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo said, noting that BPOs have the tendency to grow regardless of economic conditions.
"If companies are doing well, they need to outsource to remain competitive. But when their economies are doing bad, they have to resort to outsourcing because they need to cut on costs," Guinigundo said in a recent interview.
Over the past decade, the BPO industry, dominated by call centers that provide customer support for US-based companies, has grown to be one of brightest spots of the Philippine economy. In 2010, the country became the leading supplier of voice-based BPO services in the world after overtaking India.
Guinigundo described the BPO industry as a "conflict-proof" sector that would continue to contribute significantly to the Philippine economy, which grew by 7.6 percent in the first half of the year.
The BPO sector is expected to bring in $16 billion in gross revenues to the country this year, up from $13 billion the year before. The industry is second only to remittances from overseas Filipino workers (OFWs) as the main source of dollar income for the country.
Remittances sent home by some 10 million Filipinos abroad are expected to grow by 5 percent by the end of 2013 from year-ago levels. Both remittances and BPO revenues, Guinigundo said, were main drivers of domestic consumption, which made up 70 percent of gross domestic product (GDP).
By 2016, the IT and Business Process Association of the Philippines (IBPAP) goal is to increase country's revenues from BPOs to $25 billion by 2016. The industry is also expected to employ 1.3 million Filipinos in three years' time. The BPO sector has been branded as the country's "sunshine industry." Also referred to as the outsourcing and offshoring industry, it accounted for about 800,000 jobs as of December last year, with the number of employees expected to continue growing.
Strong external position helps boost sustained PHL growth
Workers' remittances and foreign currency earnings derived from the business-process outsourcing (BPO) sector helped sustain the country's continued growth no matter the external headwinds, the British-owned lender Standard Chartered Bank said on Wednesday.
This also helped cement Manila's reputation as an island of resilience in a region beset by volatilities as wide swings in currency values and interest rate pressures, the lender whose Manila unit is one of four original foreign banks and the oldest in the country, said.
"The Philippines is a positive outlier, thanks to overseas workers' remittances and BPO-related foreign currency earnings. This has led to strong domestic consumption, supporting growth and a healthy external position," the lender said in a research noted filed by a three-man team of analysts.
According to the lender, the team went on a three-country sovereign-focused trip that took them from Jakarta to Manila and finally to Hanoi and came away convinced that Manila's strong external sector helped underwrite its continued expansion averaging 7.5 percent in the second quarter in terms of local output measured as the gross domestic product (GDP).
The team took note that Vietnam's export growth proved soft due to weak external demand and lower commodity prices, developments that took its toll on GDP and on its current account balance.
In the Philippines the economic managers said on Tuesday the country's exports have since diversified as indicated by the diminution of electronic exports as percent of total merchandise exports to only 40 percent at present from 70 percent for many years.
The diminution proves that Manila's export base has expanded beyond the traditional export of electronics and has diversified to include more goods in the value chain.
As for Manila's external sector, its current account balance had been in surplus state since 2005, enabling the economy to transform from net borrower for many decades in the past to net creditor country for a few years now.
This means Manila has been able to export a portion of its foreign-currency savings to help less developed economies under the purview of the International Monetary Fund.
On the fiscal sector, Indonesia and Vietnam were seen cutting back on capital spending to keep their budgetary shortfalls in check, which is in sharp contrast to developments in the Philippines whose economic managers should be able to limit the budgetary shortfall to within 2.5 percent of GDP or half the amount posted last year.
"While significant fiscal slippages is unlikely in any of the countries, Indonesia and Vietnam may scale back capital spending to keep deficits in check, instead of curbing expenditure. Progress on increasing the tax base and reigning in large subsidy bills is likely to remain low," the Standard Chartered Bank team of analysts said.
Philippines clocks up biggest improvement in business dynamism - Grant Thornton survey
MANILA - The Philippines catapulted to the 21st spot among 60 countries ranked for the dynamism of their business climates.In its Global Dynamism Index (GDI) 2013, Grant Thornton said the Philippines jumped 25 notches to land on the 21st place in the annual ranking.
According to Grant Thornton, dynamism refers to the changes in an economy over the past 12 months that are likely to lead to a fast rate of future growth. The GDI is based on the assessment of five key areas: business operating environment, science and technology, labor and human capital, economics and growth, as well as financing environment.
"The fast-paced growth of the Philippine economy certainly underlined our substantial rise in this year's GDI," said Marivic Españo, chief executive officer of Punongbayan & Araullo (P&A), the Philippine member-firm in the Grant Thornton Group.
"This means our business growth environment improved quicker than any other country in 2012," Españo said.
In the area of economics and growth, the Philippines moved up 11 places to rank fourth overall. The country's economic growth last year was the third highest among the 60 economies surveyed, with private consumption growth of 9.8 percent being the 10th highest globally.
The country registered its biggest improvement in the area of labor and human capital, rising 40 places to join the world's top five behind China, Australia, Thailand and Indonesia.
This means the Philippines' labor force is the fifth best in the world for growing businesses. The boost was driven by labor productivity growth of 5.4 percent, next only to the 7.4 percent increase in China.
"I think the key point here is that the Philippines is starting to realize its potential domestically," said Españo.
"Aside from remittances, which have recovered well since the global financial crisis, private construction and government spending on infrastructure contributed to our above-target expansion. Domestic demand in the form of private investment and consumer growth has also helped the country outpace its Southeast Asian neighbors, which are showing signs of slowing down," she said.
The Philippines however didn't fare as well as in the area of science and technology, where it ranked 51st. This, as IT spending increased 9.5 percent last year, to 0.1 percent of GDP, or the fourth lowest among the 60 countries polled.
"The government recognizes that local infrastructure needs to be improved," Españo said.
"Eighty public-private partnerships with around $17.6 billion of capital to boost the investment environment were supposed to be launched between 2011 and 2016, but progress is well behind schedule. Add to this a rank of 44 for business operating environment, which looks at how easy and risky it is to operate in an economy, and you can clearly see there is some room for improvement," she said.
"The good news is that both total and worker output is expanding rapidly. The key now is to combine this growth with infrastructure and operating environment improvements. With the right mix of policies in place, our economy could offer even more opportunities for dynamic businesses," Españo added.
Grant Thornton is an international tax and auditing firm.
BPO operations spawn growth across related industries
THE Philippine business-process outsourcing (BPO) industry has long been identified as one of the main drivers of the Philippine property market in recent years.
The office market is dominated by BPO demand, composing as much as 80 percent of yearly take-up.
According to data from CBRE Philippines's Metro Manila Marketview report for the second quarter of 2013, brisk expansions among global firms during the period caused overall office vacancy rate in Metro Manila to drop to 2.51 percent from the previous quarter's 3.21 percent, amid supply pressures.
Take up from multinational and BPO companies was likewise observed from new tenants in Prime and Grade A offices during the second quarter. "Outlook for the office market remains optimistic for the rest of the year, and increasing office space demand from multinational and BPO companies shall sustain the office market," said Rick Santos, chairman and founder of CBRE Philippines.
The BPO boom has led to the popularization of the term "night shift," which was previously only usually associated with security or law-enforcement jobs. "Philippine society, particularly the young professionals, has indeed experienced a radical lifestyle change," said Santos. The retail sector is one of the main benefactors of this change, as stores that used to operate only until late at night now operate a full 24 hours a day, and even on local holidays.
Commercial convenience stores and coffee shops that cater to customers round-the-clock have become staple tenants in commercial spaces of office buildings, with 7-Eleven and Ministop chains as some of the top players in the market.
Family Mart, a Japanese convenience store chain brought into the Philippines by the Rustan's Group and Itochu, is one of the new establishments with 24/7 services catering to BPO employees, as well as a market segment of middle-class office workers.
The consumer lifestyle shift and increased income of the labor force in business centers, especially those in the BPO sector, sustained the expansion of convenience stores near offices while concurrently strengthening ground floor retail trend. Low vacancy rating was sustained in the second quarter at around the 5 percent level. This year, the expected completion of approximately 432,000 square meters of additional gross leasable area will ease supply pressure. Retail market businesses will remain profitable for the remainder of the year due to a strengthening Philippine economy driven by the growing BPO industry, overseas workers' remittances, and strengthening middle market that can sustain the operations of retail establishments, said Santos.
Shifting work schedules have also proved to be a benefit to the residential property market near business centers.
"Employees under such schedules find it more safe and convenient to rent or purchase condominiums or apartments near their workplace," Santos pointed out. "It is clear that this lifestyle change brought by the growth of the BPO sector is enlivening the economy and the property market in more ways than one," he said.
Workers find ways: The BPO worker
CEBU CITY, Philippines - When Direct Access Corp. (DAC), the Cebu-based call center where Sylvio worked, closed unexpectedly last December, he felt sick. Literally.
"I was hospitalized due to a severe ulcer, which also effected my colon," said Sylvio, who received neither separation pay nor his last month's salary.
Sylvio, who supports his family in Negros, had no savings. Stressed from the company closure and unable to purchase food, his body broke down.
"It is not only [that] we are sick [due to] financial issues, but also due to psychological and emotional stress. We don't know what will happen next. We are running out of money," said Sylvio.
DAC supposedly filed for temporary closure citing high cost of operations, a claim Sylvio said is not true due to the company's reported remaining assets.
The 600 agents, who earned P11,000 to P13,000 a month, were terminated without notice. The Labor Code requires that companies provide 30-day notice to their employees before closing shop.
"I do believe that there are lots of call centers right now [that] are not stable. They are the fly-by-night call centers, scams, right? Most likely the outbound centers," said Sylvio.
"The management told us that it was just a temporary suspension — for 4 to 6 months — but there is no assurance that they will pay us," said Sylvio.
Revocalized, a Utah-based call center that owns DAC, did not attend a teleconference with the workers, resulting in a failure to resolve the dispute.
Sylvio and his co-workers decided to take action to claim separation pay, proceeds from pension fund SSS, and withheld salary estimated at P6.4 million. They formed the first-ever call center association, called Inter-Call Center Association of Workers (ICCAW).
Sylvio's former colleague and ICCAW spokesperson Ruben Josel claimed that DAC "closed down, ran away from its obligations then easily opened up a new company of the same nature and with its former clients. Some employers have been held accountable but the majority are running scott-free."
Revocalized did not respond to Rappler's requests for comments.
According to Department of Labor and Employment (DOLE) Secretary Rosalinda Dimapilis-Baldoz, "The Philippines is moving inexorably towards the development of a culture of voluntary compliance with labor standards and occupational health and safety that will raise the bar of competitiveness of the Philippine economy."
According to claims posted on the DOLE website, "the voluntary codes of good practices adopted by various regional industries have minimized government intervention and fostered harmonious labor-management relations in the affairs of private sector businesses."
However, the Ecumenical Institute for Labor Education and Research (Eiler) said Labor Secretary Rosalinda Baldoz's promotion of self-regulation in BPOs essentially puts BPO workers closer to abuse of their employers as the government abrogates its role to protect and uphold labor rights in BPOs.
"We are seriously alarmed with Secretary's Baldoz's pronouncement since such move emboldens foreign outsourcing firms in preserving dismal working conditions in BPO hubs and in implementing worse forms of labor exploitation," said Eiler executive director Anna Leah-Escresa Colina.
"If the government itself cannot protect BPO workers from dismal labor conditions and uphold workers' rights in BPOs, how can we expect foreign firms to do so under self-regulation," she added.
Why no labor unions in BPOs?
The BPO companies reportedly did not take well efforts by the government to encourage the sector to form trade unions, according to a recent International Labor Organization (ILO) industry study.
Although the BPO industry employs more than 600,000 workers and earns nearly P11 billion, no DOLE-registered union or workers organization had existed prior to ICCAW. Recently, the BPO Workers Asscociation of the Philippines (BPOWAP), a nationwide BPO industry, joined ICCAW, foreshadowing what could become a trend.
According to a report by the Manila Times, labor unions are no longer needed due to high wages, regular promotions, benefits, and the ease of transferring to new companies.
These perks lead young graduates to frequently change companies, further reducing the need for conventional unions.
Some companies form internal workers associations to discourage workers from joining leftist and militant labor unions.
BPO workers associations
Yet the closing of DAC and subsequent BPO labor issues highlight the need for workers to organize.
"One reason why most of the BPOs aren't organized [is because] agents or individuals like me are really afraid. [Our] bread and butter is in the call center. If they have complaints they will keep their mouths shut because they are afraid," said Sylvio.
They bank on public attention to keep their cause alive. "The important factor that puts pressure [to effect change] is media mileage," explained Sylvio.
After months of protests and lobbying, the ICCAW members received the money DAC owed them. Sylvio said labor group Partido ng Manggagawa, which helped establish ICCAW, assisted them in presenting their case to DOLE.
"The organization really helped me out, in the sense that it gives me the courage and confidence," said Sylvio. "After the closure of Direct Access Corp, I now have the full idea that I need to fight and survive, and fight for right not only myself, but for everyone." - Rappler.com
Future of the Philippines CRM outsourcing market
MELBOURNE, AUSTRALIA: The Philippines continues to be one of the most attractive destinations for outsourcing, fuelled largely by competitive price points and significant pools of labour with English language skills, according to Ovum.
New research focused on CRM suppliers in the Philippines found potential within the industry as a non-voice and non-English-speaking delivery center. Furthermore, as the country's economy continues to expand, outsourcers will see greater opportunities to serve the increasingly sophisticated domestic market.
"Following our visit to the country and our on-the-ground research, it is clear to us that the Philippines will remain one of the powerhouses among offshore front-office outsourcing destinations," says Margaret Goldberg, associate analyst, IT Services at Ovum and co-author of the report.
"The combination of a significant cultural disposition towards customer service and affinity to Western cultures, strong English language capabilities and competitive price points will ensure that the outsourcing industry in the country will continue to see strong growth for years to come."
The outsourced contact center market in the Philippines is among the most robust in the world. "Specifically, we anticipate an increase from just over 117,000 agent positions (APs) to nearly 173,000 APs by the end of 2017. We also anticipate annual growth in agent positions will be roughly 10 percent through this period, which is significantly higher than the global growth of approximately 5 percent year-on-year during this period," comments Goldberg.
The report also reveals that the largest vertical markets serviced by contact center outsourcers in the Philippines are financial services and communications, a trend anticipated to continue for the next five years. Smaller vertical markets are forecast to have marginal increases in APs dedicated to sectors such as retail and travel & tourism, which are driven by growth in consumer spending as Western economies improve. Healthcare will also see growth, notably from transactional work from the US as "Obama-care" is implemented.
"From an outsourced contact center perspective, the Philippines is heavily weighted toward offshore delivery. approximately 10 percent of outsourced capacity is currently devoted to domestic work. This is not anticipated to shift significantly over the next five years. However, should the Philippines consumer space experience growth in volumes and sophistication, these proportions could change markedly, and outsourcers need to watch this space closely to prepare for such an eventuality," concludes Goldberg.
The report also addresses the growing interest among many vendors and enterprises in the Philippines as a potential delivery location for Spanish-speaking services into the United States' Hispanic community. However, Peter Ryan, practice leader for Ovum's IT services team and co-author of the report, remains unconvinced.
He said: "While there is certainly some historic confluence between the Philippines and the Spanish language/culture, the jury remains out on the extent to which large volumes of that language can be supported by Philippine agents. Estimates on the number of fluent Spanish speakers in the Philippines varies, and from a price standpoint many countries in Central America remain very competitive, notwithstanding their closer geographic proximity.
PH up 6 places in global competitiveness
MANILA, Philippines—Given significant improvements in governance, innovation and drive against corruption, the Philippines has moved up six notches in the global competitiveness ranking to the 59th place this year, out of 148 economies.
Although the climb this year was slower than 2012 when the country jumped 10 notches to the 65th spot, the Philippines was still regarded among "the most dynamic and rapidly improving economies in terms of competitiveness," said the Global Competitiveness Report 2013-2014. The World Economic Forum (WEF) released the report on Wednesday.
The Philippines has also overtaken India, which took the 60th spot.
Singapore remained the highest ranking among Asian countries and has taken the second spot, next to Switzerland, which the WEF again named as the most competitive country in the world. Taking the third to fifth spots are Finland, Germany and the United States.
Presidential spokesperson Edwin Lacierda hailed the report, saying that it noted the country's "impressive performance" despite what administration critics describe as a jobless growth.
"The sustained improvement was credited heavily to the Aquino administration's battle against corruption, which is seen in the significant improvements in the benchmarking scores of the 'institutions' pillar that covers such governance challenges such as corruption and public sector competence," Lacierda said.
In the ethics and corruption category, the Philippines now ranks 87th compared with 135th in 2010, while government efficiency and other public sector variables have also steadily advanced, he said.
Man in street
While the ranking looked promising, the "man in the street will not appreciate these numbers until we see the impact, which is never immediate," said Guillermo M. Luz, National Competitiveness Council cochair for the private sector.
Unfortunately, it takes time for these things to happen, Luz said in a phone interview yesterday.
Over time however, ranking high in competitiveness surveys will help improve the country's ability to attract and stimulate investments, which in turn will generate more value-added job opportunities for Filipinos.
Luz said this was the only way to fight poverty, which remained prevalent in the country.
Without its improved performance in these rankings, the Philippines may have had lower job creation numbers over the past years, he said.
In a text message, Peter Angelo V. Perfecto, executive director of the Makati Business Club (MBC), shared the sentiment of Luz, saying that global competitiveness rankings are a gauge of how a government is performing.
"Improved rankings mean that government is doing its job better. Also, global competitiveness rankings are monitored by potential investors. Improved rankings can mean more investments and more investments mean more jobs," Perfecto said.
The WEF's Global Competitiveness Report is an annual publication that measures productivity and competitiveness by gathering data on 119 factors that are grouped into 12 pillars or categories.
The 12 pillars are institutions (governance); infrastructure; macroeconomic environment; health and primary education; higher education and training; goods market efficiency; labor market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation.
Based on these pillars, the Philippines recorded an overall score of 4.3, up from last year's 4.2.
"The trends are positive across most dimensions.... The current government, which came into power in 2010, has made the fight against corruption an absolute priority; corruption had historically been one of the country's biggest drags on competitiveness," the WEF said in the report.
It noted that the "recent successes of the government in tackling some of the most pressing structural issues are encouraging and proof that bold reforms and measures can yield positive results."
The WEF, however, cautioned that "improvements are coming from such a low base that the country cannot afford to be complacent."
In a briefing, Luz said the country was able to boost its rankings in nine out of the 12 pillars, identifying these as innovation, which rose 25 notches to 69th from 94th; institutions, which include governance, up 15 places to 79th; and financial market development, up 10 spots to 48th place.
The rest of the pillars where the country posted improvements were goods market efficiency (up four notches to 82); labor market efficiency (100th from 103rd); infrastructure (96th from 98th); health and primary education (96th from 98th); technological readiness (77th from 79th); and, market size (33rd from 35th).
"Over the years, the biggest contributors include the institutions pillar, which has really improved every year for the past three years. Actually, macroeconomic environment has been a driver except for this year when it slid back a little bit. But if you take a look at the macroeconomic performance of the country, it is well within the top third," Luz said.
The country's ranking in macroeconomic environment eased back to No. 40 this year from last year's No. 36.
High education fell
The National Competitiveness Council attributed this to the fact that improvements such as the country's credit rating upgrades occurred after the data collection period. The high education and training pillar fell three spots to 67th place, while the country's ranking in terms of business sophistication remained the same in 49th place.
Dragging the country's competitiveness over the past year used to be infrastructure and education, but according to Luz, the country has managed to "reverse" this given the gains in the nine pillars.
In the same briefing, MBC chair Ramon del Rosario reported that of the 119 indicators listed in the Global Competitiveness Report, the Philippines ranked among the top 50 countries in 33 areas.
These included financing through local equity market, domestic market size index, affordability of financial services, GDP in purchasing power parity dollars, reliance on professional management, cooperation in labor-employer relations, soundness of banks and ease of access to loans.
The Philippines, according to del Rosario will need to improve in certain areas where it ranked No. 100 or even worse.
These include the number of procedures to start a business, burden of customs procedures, business costs of terrorism, number of days to start a business, hiring and firing practices, quality of port infrastructure, quality of air transport infrastructure, flexibility of wage determination, strength of investor protection, total tax rate, irregular payments and bribes, and business costs of crime and violence.
Primary education worst
"As chair of the Philippine Business for Education, let me express my particular concern over the low primary education enrollment rate in our country, which remains the only indicator where the Philippines rated the worst in Asean. It must be noted, however, that figures used to rank the Philippines in this indicator were derived by the WEF from Unesco," Del Rosario said.
Luz, however, expressed confidence that the Philippines would further improve its competitiveness ranking and be included in the top third quartile within the next two to three years.
"We want to [rank] 48th or higher and we're getting close. We used to be at the 85th place in 2010 when this administration took over and now we're at 59th. The 48th rank is well within our target within the next two years," Luz added.
Among the 10 member states of the Asean, the Philippines ranked sixth, but Luz was quick to note that the country was "closing the gap" with its neighbors.
"[The other countries] have had such a big lead on us like Singapore, Malaysia, Thailand and Brunei. We've been closing the gap as we've overtaken Vietnam, and increased the gap with Cambodia. We've also narrowed the gap with Thailand, while Singapore has been remarkably consistent and it's a tough competitor to go against," Luz said.
"If you take the broader Asian region, across say 15 economies including India and China, we're holding our own. But we can't be complacent so we need to move faster, more aggressively. But remember, over a three-year span, we are still one of the fastest moving economies.
"When this administration came in 2010, we're at 85th place and today were 59th and that's a whole different neighborhood, a tougher neighborhood. We need to rise up to the challenge," Luz added.
Finance Secretary Cesar Purisima has expressed confidence that the country's remarkable performance would be sustained over the next years.
"As we make progress in further solidifying the gains of good governance, I fully expect to see the Philippine business environment become even more vibrant, more dynamic, and, most importantly, more open and welcoming of opportunity," he said. With a report from Michael Lim Ubac and Michelle V. Remo
BPO workers push retail consumption
Business process outsourcing (BPO) workers, who usually earn more than many employees in other industries, are now supporting the growth of retail consumption in the country, a recent Nielsen study has found out.
Nielsen said that the unique lifestyle and habits of Filipino BPO employees are influencing retail consumption and thus, stimulating consumer spending in the country.
"Being well paid than most Filipinos, BPO employees are formidable members of the growing middle class population of the country. The spending habits of BPO employees reflect an affluence that is more than the general population, spurring consumer spending," said Stuart Jamieson, Nielsen Philippines managing director.
According to the Nielsen report, BPO employees tend to change their purchase and consumption habits as they change their lifestyles to fit the demands of their job. In the Philippines, a BPO employee has a typical work schedule starting at 10 p.m. until 6 a.m.
When it comes to technology adoption, BPO consumers are more likely to own gadgets than the general market which is indicative of their improving socio-economic class, the study noted.
The study showed that more BPO employees also own postpaid cellular phone subscriptions and have significantly higher monthly spending compared to the rest of employed labor.
"By being constantly on their mobile phones and staying online through their high connectivity and multiple connection points, BPO consumers are more accessible via the Internet," Jamieson said.
"BPO consumers live multi-screen lives. They watch TV while they have a tablet or mobile phone on hand. This gives advertisers and marketers huge opportunities to drive innovation and interest to various categories such as consumer goods, pharmaceutical products, telecommunications, and financial services," he added.
The study revealed that in food products Filipino BPO respondents showed high consumption of breakfast cereals, hard candies, gum, biscuits and chocolates.
It further showed that BPO employees consumed more processed and pre-packed food during breakfast and breaks while for dinner, their diet included other alternatives such as pre-packed food, or dining out.
Nielsen said that majority of the respondents also indicated their preference for instant breakfast cereals because it can be eaten quickly at home or elsewhere.
It was also revealed that BPO employees rely on biscuits to keep them full in between main meals while consuming candies and gum help them to be alert and awake in night shifts.
Nielsen also reported that BPO employees drink beverages such as iced tea, energy drinks, ready-to-drink juices and milk more frequently than the total market.
"It was learned in the interviews with BPO employees that consuming these drinks are their little daily indulgences as these satisfy one or more of their consumer needs," Nielsen added.
The study also indicated high consumption of alcoholic beverages among BPO employees, with 76 percent of respondents admitting that they consumed more alcoholic drinks in 2012 as compared to 40 percent of the general population who did.
"According to BPO employees who participated in the in-depth interviews, alcohol serves as a facilitator in establishing teamwork. They claimed that for spontaneous or after-shift drinking, they buy alcoholic drinks from convenience stores and places which are open 24 hours," the report stated.
Given the result of its recent study, Jamieson is advising companies to form retailer collaborations around BPO offices, specifically convenience stores, fast food and coffee shops that are frequented by call center employees to take advantage of the spending habits of BPO employees.
Nielsen's latest report called Outcall aims to provide a 360 view of BPO employees as it covers the product consumption, technology device or gadget ownership, and financial habits of BPO employees.
Opportunities seen in BPO workers' distinct lifestyles
CALL CENTER WORK has led to changing lifestyles and preferences that offer unique opportunities for retailers and marketers, global research firm Nielsen yesterday said.
"Being well paid than most Filipinos, BPO employees are formidable members of the growing middle class population of the country," Nielsen Philippines Managing Director Stuart Jamieson was quoted as saying in a statement announcing the release of the Outcall report.
'The spending habits of BPO employees reflect an affluence that is more than the general population, spurring consumer spending," he added.
Face-to-face interviews with call center workers, said Nielsen, found that they prefer food and beverages that are quick and easy to prepare given the typical 10:00 p.m. to 6:00 a.m. work schedule.
Breakfast cereals, hard candy, gum, biscuits and chocolates were highly preferred, with respondents noting quick preparation times and the energy boosts provided.
Consumption of iced tea, energy drinks, ready-to-drink juices and milk was also higher than the average Filipino consumer, with Nielsen noting that BPO workers consider these "their little daily indulgence".
Alcohol consumption was also high, with 76% of the BPO respondents admitting to this compared to 40% for the general population. Alcohol, the call center workers said, facilitated the establishment of teamwork and is normally bought for convenience stores and other outlets that are open 24 hours.
BPO workers are also more likely to own gadgets, indicative of their higher spending clout.
Postpaid subscription numbers were also higher compared to the general population, with respondents noting that mobile phones were critical to managing their busy schedules and family relationships, and also provided needed entertainment given the monotony of work.
"By being constantly on their mobile phones and staying online through their high connectivity and multiple connection points, BPO consumers are more accessible via the Internet," Mr Jamieson said.
"BPO consumers live multi-screen lives. They watch TV while they have a tablet or mobile phone on hand," he added.
"This gives advertisers and marketers huge opportunities to drive innovation and interest to various categories such as consumer goods, pharmaceutical products, telecommunications, and financial services."
Companies, he said, should form "retailer collaborations" -- specifically convenience stores and fast food/coffee shops -- around BPO offices to tap the market.
The BPO industry's work force grew by 21% or 137,066 to 776,794 last year, the Information Technology and Business Processing Association of the Philippines has said. Head count and revenues are expected to grow by 15-20% this year.
Game support seen as an emerging niche in IT-BPO
MANILA, Philippines - With the popularity of online games these days, the Philippine IT-BPO industry should tap the potential of the game support sector.
Andro Baluyut, chief executive officer of GameOps and a board member of the Game Development Association of the Philippines (GDAP), said game support is important to sustain the growth of the local video game industry.
"When it comes to online games, the quality of the support provided to players can determine the life span of a game and the community that plays it. Having an intimate understanding of the game allows service providers to not only achieve their internal goals but also directly and measurably ensure the success of their client's product. This stimulates more business and improves client relations," he said.
Baluyut's company GameOps focuses on online game support. Its services include strategic consultancy, game and community management, retention, and