Philippine outsourcing is undergoing transformation!

CHANGING BPO LANDSCAPE
CALL CENTERS ARE STILL A HOT SOURCE FOR LOCAL JOBS
BUT OTHER BPO SERVICES ARE ON THE RISE

By David Llorito, Debbie Pepito & Louise Francisco
Research Staff, BusinessMirror

The country’s cyberservices industry appears to be undergoing a transformation. According to BusinessMirror’s Job Ad Index in August, not only is the much-ballyhooed sector getting bigger, it is also expanding into other business activities that may soon blur the difference among the different types of outsourcing services.

For August, BusinessMirror’s Jobs Ads Index rose 18 percentage points from its base in June, driven largely by the continuing demand for workers in cyberservices, construction and engineering, manufacturing, and hotels, restaurants and resorts. For the month, total job ads reached 31,177, about 30 percent of which came from the cyberservices sector. In June, the base on which the index is computed, total job ads reached only 26,216, yet even then cyberservices already accounted for a third of the want ads.

Since May, the research staff of the BusinessMirror has been monitoring job advertisements in the Philippines as a way to determine labor demand, business confidence and the performance of the country’s economy in general. Every day, the research staff has been tallying job-ad placements in the Manila Bulletin, the Philippine Daily Inquirer and the Philippine Star, as well as those posted on Internet job sites jobstreet.com.ph, jobsdb.net and bestjobs.ph, classifying the ads by industry and occupation.

This research effort is inspired by the Help Wanted Index developed by the Conference Board, a New York-based nonprofit organization that “disseminates knowledge about management and the marketplace to help businesses strengthen their performance and better serve society.”

Outsourcing transformation
Since 2003, prospects of the cyberservices industry have been constantly reported as being hampered by a skills crunch. Yet results of the Job Ads Index in the last three months continue to buck this observation. In August, for instance, jobs advertisements posted by the sector grew 54 percent from its base in June, an indication of its continuing robustness.

For one, the volume of business at the country’s call centers is constantly expanding. Dell Inc., the American computer manufacturer that operates a call center in Pasay City, for instance, continues to hire call-center agents as it targets to have a 1,400-man labor pool. Currently, it employs 900 call-center agents. Next year, it is set to open another call-center operation to provide additional technical support for US consumers. The new site is expected to take its first customer calls in February 2007. Staffing plans for the new location are already being finalized.

“Our Pasay City team has done an excellent job in answering customer questions and solving their issues, delivering Dell’s outstanding customer experience that comes with the direct relationship between us and our customers. That is a major factor in our decision to expand our investment in the country,” said Richard Hunter, Dell’s vice president for Americas customer experience and support.

Added country manager Michael Garrison: “We continue to exceed growth plans and are focused on improving the customer experience. We need experienced problem solvers who can simplify and resolve increasingly complex technical and customer-care challenges for home consumers.”

Besides Dell, other heavy job advertisers in the cyberservices sector are Ab Systems, Teletech and Advanced Contact Solutions.

But the sector isn’t just about call centers these days, as there is a growing trend toward other outsourcing activities. Although more than half (52 percent) of the 9,192 job ads posted by the cyberservices sector in August were for call centers, hiring activity was also robust in software development and other IT-enabled services (40 percent) and back-office processing (5 percent). The remaining 5 percent of cyberservices job ads were for animation, medical transcription, and engineering design.

And as the scope of services expands, pretty soon it may not be that easy to classify companies as purely call centers. Accenture, for example, which primarily does software development and back-office work, recently opened its own call center, while call centers like People Support have ventured into medical transcription. Client Logic is also venturing into medical transcription.

“I think there will be a convergence of activities,” observes Frank Holz, chief executive of consultancy firm Outsource2Philippines. “A lot of these guys are doing call-center work but they’re also doing BPO [back-office] work for the same client. So on one hand, you’re doing the back-office accounting or you’re doing an HR function. Pretend that somebody has a question about that, they can call in and you got the call-center activity related to that also.”

Holz predicts that although call centers will continue to expand, these companies will eventually venture into other types of BPO work. “The future isn’t as bright [for call centers] as it is for the other types of activities. You might find some arguments on that but that’s how I see it. If you have a certified public accountant doing the books for a company, that’s worth a lot more than a call-center person answering requests for information,” he said.

Perhaps that’s why call centers are now exploring markets other than the English-speaking world. For instance, Link2Support in Eastwood City, Libis, has been posting job advertisements for Korean technical support representatives. The company already has 10 Korean call-center staff.

“The account itself services mostly English-speaking countries but we do have customers in Thailand, Indonesia and Korea, so we thought putting agents who speak other languages was a good idea,” said Raymond Deato, Link2Support’s human-resource specialist for foreign-language accounts. “Koreans, for example, do not speak English that well, so they would really be more comfortable speaking to a technical support representative who can speak Korean.

“It’s just harder for us to recruit because we’re a technical support account, so we have to consider an applicant’s technical background,” Deato added. “The others are mostly customer-care accounts, so kahit ano’ng course pwede dun. But we do have Spanish-speaking Filipino agents. Marami naman kasi ang mga mestizo dito. It’s just for the Thai, Indonesian and Korean accounts that we have foreigners.”

Convergys, one of the biggest call centers in the country and a Fortune 500 company, has also been seeking multilingual customer-care representatives, particularly those who can speak Mandarin, Fookien and Cantonese. Emerson, an engineering design-outsourcing firm, was also looking for customer-services associates who are fluent in German, French, Italian and Mandarin for Sykes, Emerson’s call-center partner.

There are also those like Prime@ Technology Specialists Inc. that are seeking helpdesk analysts who can converse in Nihonggo and English, while Nihon Software Outsourcing Vision Inc. is in the market for Nihonggo-speaking finance and administrative assistants.

BPO work has become so popular that several entrepreneurs have ventured into setting up their own call centers out of their homes such as Aicom Solutions (telemarketing), Get-A-Filipino (inbound and outbound calls, data processing and medical transcription), Freedom Telework (back office), Agi (Internet content provider) and Jump2Top (Web development, online marketing).

“We have an office coming up in Ortigas area…but the process is taking time and we need to expand quickly, so we thought that home-based operations would be great for our company,” said Roque Lim, sales and marketing assistant of Aicom Solutions. “We did corrective actions first and tried home-based operations and it worked!”

Lim stressed that this is just temporary but he obviously enjoys the convenience of the present setup.

“It’s so convenient, comfortable and flexible…. I can work in pajamas,” said Lim. “At the same time, you don’t have to have the hassle of traveling, no transportation cost. When you work in call centers, there’s a graveyard shift, and when you go out, it’s kind of dangerous. Working at home, you may feel uncomfortable working graveyard shift but you are safe.”

Factories and hotels
Apart from cyberservices, hiring in the construction and engineering sector also continues to be strong with job placements totaling 5,125 in August, a 22-percent jump from its base in June. As in the last three months, however, the bulk of these jobs—85 percent—are overseas, mostly in the petroleum industry in the Middle East and Nigeria—no doubt an effect of oil money being funneled back into oil and gas exploration, as well as modernization activities by the Gulf states.

The manufacturing sector also continues its hiring binge, with 3,037 job-placement ads in August, an increase of 22 percent from its base in June. Major advertisers include companies in food, furniture and fixtures, printing and publishing, chemical and chemical products, and metals. About 20 percent of the total manufacturing jobs are for overseas positions. In fact, most of the job placements in several industries such as rubber products, petroleum and coal, and nonmetallic mineral products are for abroad.

Business at hotels, restaurants and resorts seem to be doing well, too, given that the job ads in the hospitality industry rose 38 percent in August from its base in June. The continuing rise in visitor arrivals and the ripple effect generated by the outsourcing industry are among the main factors cited by the hospitality industry. The Hyatt group, for instance, is on the hunt for a banquet manager, a restaurant manager, a chef de partie, as well as engineers and accountants.

“This is more in response to the general growth in business demands,” explained Eugene Tamesis, director for marketing at the fairly new Hyatt Hotel and Casino Manila. “The manning levels when we started hotel operations in 2004 have grown in line with the demands of the business operations. Now with a fully operating hotel, the manning levels also have to be in accordance with the level of operations in our rooms, food and beverage and other operations.”

Tamesis said Hyatt’s occupancy has been rising since it opened two years ago. He said the hotel’s occupancy was at 51 percent at the end of 2005 and is expecting to increase to 65 percent by the end of this year.

“Our hotel has the highest growth percentage in the industry,” he boasted. “Our figures in 2005 were quite modest compared to the others but this year, we are already performing at the same level as our more established competitors.”

Hotels in the business districts of Makati and Ortigas are enjoying close to 90 percent occupancy, owing to the burgeoning outsourcing industry, sources said. Numerous executives from global outsourcing companies are coming to the Philippines to check on their operations, as well as oversee their training programs, thus boosting hotel business.

“Unfortunately, most of the BPO offices are located in Makati and the Ortigas areas,” conceded Hyatt’s Tamesis. “Therefore, growth from this segment is not expected to be as significant in the Manila Bay area, where none of these types of offices are located. However, we do have bookings from the BPO industry from our ‘Gold Passport’ members, Hyatt’s frequent-guest program, where they accumulate points from the number of stays they make in different Hyatt hotels all over the world. But the numbers are not as significant as compared to our traditional supportive industries belonging to shipping and manpower, embassy, government, pharmaceutical and gaming.”

As in the last three months, the global job market continues to weigh on the results of the Job Ads Index. Overall, a third of the job ads were for overseas. This pattern has been consistent in the last three months.

Besides construction and engineering, more than half of the jobs advertised for sectors like health and social work, nonmetallic mineral products, water transport, air transport were for overseas placements.

Nevertheless, ads for local placements are also on the rise. This largely observed in sectors such as agriculture (154 percent), mining and quarrying (51 percent), games and leisure (23 percent), media and entertainment (87 percent), and advertising and promotions (131 percent).

Even the real-estate sector is also enjoying growing confidence as it posted a 40-percent rise.

“There’s really a continuing recovery in construction and real estate in the last three years,” said Mark Taylor, operations officer of Sterling Construction and Development Corp., which produces prefabricated building materials. “In terms of revenue, we expect to grow 100 percent this year.”