Parallel universe

Michael Alan Hamlin

Posted on January 23, 2008

Business thrives despite a dysfunctional political system

In a speech before the Foreign Correspondents of the Philippines (FOCAP) last week, Senator Manuel “Mar” A. Roxas II noted that despite the drawbacks of a dysfunctional political system, Philippine business is in many respects thriving. It seems to exists, he said, in a parallel universe, implying that everything wrong with the political realm has been mostly corrected – or at least overcome – in the business sector.

Roxas points to the business process outsourcing (BPO) industry, in part, to validate his argument. The industry, according to the Department of Trade & Industry (DTI) and the Business Process Association of the Philippines (BPAP), generated US$5 billion in revenues last year, up 34% from 2006. BPAP CEO Oscar Sañez said last week that revenues will increase at least another 30% this year, to $7 billion. By 2010, Sañez projects that the Philippines’ BPO industry will generate $12.2 billion in revenues, equivalent to 10% of the global market.

Industry representatives present during a news conference to formally launch the upcoming e-Services Philippines: Global Sourcing Conference and Exhibition to the press last week gave convincing testimony that the Philippines is indeed on target to meet Sañez’s projected goal. e-Services is the annual BPO conference organized by the Center for International Trade Expositions & Missions (CITEM), a DTI export promotions agency (Full Disclosure: CITEM is a client of my firm.).

The conference and exhibition take place February 11-12 at the SMX Convention Center on Roxas Boulevard. Over 150 exhibitors will leverage e-Services to project themselves and their services and products to potential clients in western markets. They include both successful firms like industry stalwarts SPi and AMDATEX as well as startups like the newly minted Cebu-based software developer SIMON and enterprise consultancy Kaisa.

AMDATEX CEO Jim Donavan told us recently that “participating in e-Services is an excellent opportunity for companies that wish to be internationally visible. “We consider it an excellent venue for emerging local players to market themselves in a globally competitive market.” Donavan said e-Services also provides another benefit: Helping local firms “cope with the latest demands of the business” through conference sessions featuring top industry executives from around the world.

The industry executives participating in a panel discussion during last week’s news conference were strikingly upbeat, not just about e-Services, but the Philippines’ growing stature as a tier-one provider of BPO services. K.S. Kumar, EVP and head for Global Operations at Sutherland Global Services, said the Philippines’ good fortune is in good measure the result of proactive government (as opposed to dysfunctional politics).

Kumar said the Philippine Export Zone Authority (PEZA), for example, cuts through red tape and facilitates approvals. Other factors include the right resources; specifically, people and telecoms. And then there is fate. Kumar said that timing is working in the Philippines’ favor, as turnover and labor costs increase in India, and investment incentives are allowed to expire (The Department of Finance should take note.).

All these factors, according to NetSuite country manager James Dantow, have contributed to making the Philippines “close to being the top player” among centers for BPO services, including software development. Investments like NetSuite’s in the Philippines also demonstrate a higher purpose, according to Dantow. “We want to help Filipinos stay in the Philippines,” he said.

NetSuite – which was recently spun off from Oracle in an IPO – accomplishes that aim by providing opportunities and remuneration that previously were unavailable in the Philippines. Dantow’s remarks suggest that in the Philippines NetSuite is providing engineers the opportunity to engage in top-level design and project management, and that the company is paying highly attractive rates for the work.

A homegrown software developer, Pointwest Technologies, is also demonstrating that Philippine developers are far more than coders and process wonks. The company’s president, Ma. Cristina “Beng” G. Coronel, said the company has grown from just nine employees in 2003 to over 400 today. Its clients are mostly FORTUNE 1000 companies, and its work includes sophisticated reservation and check-in systems for international airlines.

e-Services will be much more than a pep rally for the BPO industry, however. Approximately 20 international and 15 local C-level executives are confirmed speakers for the conference, which will focus on “centers of excellence” in the BPO industry around the world. But you might wonder why the Philippines is talking up centers of excellence, as you should.

The reason, according to Fe Agoncillo-Reyes, CITEM executive director and DTI assistant secretary, is that the Philippines is positioning itself as the center of the centers of excellence. Where it belongs.

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