Michael Alan Hamlin

Posted on June 30, 2010

To commemorate today’s inauguration of President-elect Benigno (Noynoy) S. Aquino III as the 15th president of the Philippines, I’m tempted to reveal partial results of a survey commissioned by the Business Processing Association of the Philippines (BPAP) and Outsource2Philippines. Much of the survey is designed to gather baseline data about the status and development of the business process outsourcing industry, but it is also designed to elicit perspective on the relationship of the industry with government.

You’ll recall that in her farewell address to the nation, among the accomplishments enumerated by outgoing President Gloria Macapagal-Arroyo was the stunningly fast growth of the BPO industry, and the creation of close to half a million jobs. The BPAP-O2P survey will reveal whether the perspective of industry executives is aligned with that of Ms. Arroyo in terms of her government’s contribution to the industry’s development. (Disclosure: BPAP is a client of my firm, TeamAsia-which is conducting the survey-and I am an officer of O2P.)

The survey will provide insight into the quality of the industry’s relationship with the incoming administration as well, and to some extent, what executives expect of the Philippine government. Unfortunately, I must resist the temptation to reveal the preliminary results of the survey because it is still in the field, and I don’t want to do anything that might unreasonably influence results. So the results will have to wait.

However, I can describe the survey. The section addressing the BPO industry’s relationship with government begins by asking respondents to characterize the industry’s relationship with Ms. Arroyo’s administration. Ms. Arroyo has frequently accepted invitations to inaugurate BPO facilities in ceremonial ribbon cuttings. But did her government do more for the industry than provide ceremonial visibility?

That brings me to the biggest temptation of all: How would you characterize the Philippine business and regulatory environment? In other words, what role did the regulatory environment contribute to BPO investment rates? And is it possible that a more attractive regulatory environment might have contributed to even faster growth of the industry? The incoming government should consider the perspective of BPO industry executives if they want to sustain and accelerate job creation.

A related question, “How would you characterize investment incentives provided to the BPO industry?” will provide insight into the industry’s view of the role of incentives in generating investment and jobs. The Department of Finance under Ms. Arroyo’s administration criticized the granting of investment incentives, and regularly issued press releases suggesting that incentives had cost government billions in foregone revenue. Survey responses will suggest how competitive Philippine government incentives are, and whether investors will take their dollars and jobs elsewhere as competition in the industry increases.

The survey also provides an evaluation of the performance of key departments of government that interface with the BPO industry. They include the Department of Trade & Industry (DTI) and its investment incentives agency, the Board of Investment. Respondents are also asked to rank the performance of the Philippine Export Zone Authority, another DTI agency that grants incentives to exporters. Most BPO services suppliers are considered exporters.

It also asks respondents to rate the Commission on Information and Communications Technology (CICT), an agency that has been trying to become a department for most of Ms. Aquino’s nine-year-old administration. CICT is responsible for government’s ICT strategic agenda, and its capacity for delivering constituency services online. It also plays a business development role for the BPO industry, although it does not grant investment incentives.

Respondents are also being asked to consider whether CICT should finally become a department of government, rather than a mere agency, although its chairman is already considered a cabinet-rank official. Arguments supporting elevation to department status are vague, but suggest increased authority. Others argue that a cash-strapped government has no business increasing its overhead. What do industry executives think?

The impact of the conduct of the national election that brought Mr. Aquino to power is also being assessed in terms of investor and client perception of the Philippines. With all the negative news regularly associated with the Philippines, did the historic, automated election produce some positive buzz? More to the point, how does perception of political stability affect investment inflows?

Of course, as Mr. Aquino assumes executive responsibility for his nation today, he will have much more than these questions to think about. But to investors and workers in the BPO industry, they are among the most important.

(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand . Write him at mahamlin@teamasia.com and follow him on Twitter, Facebook and LinkedIn.). Copyright © 2010 Michael Alan Hamlin. All Rights Reserved.)

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