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Marinell M.

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BSIT III

Philippine outsourcing in 2017

By Wilma C. Inventor-Miranda

Among the predictions for outsourcing in 2017, what stands out and seem the most common is the

uncertainty hanging over the industry. This uncertainty is traced to the victory of Donald J. Trump at the

US elections and the victory of the leave-the-European Union movement or Brexit. With this uncertainty,

outsourcing contracts between provider and client or buyer will likely be more flexible. For instance,

contracts will be more short term, with provisions for early termination in case of a pullout of the

outsourcing agreement.

It helps to analyze the results of outsourcing activities in 2016 so as to reasonably predict what will

happen in 2017. In a KPMG report, titled Global IT-BPO Outsourcing Deals Analysis, 64.7 percent of

total outsourcing services contracts came from the United States, followed by the United Kingdom at 9.2

percent, with Australia and France being two other key outsourcing markets.

I was also surprised that the top consumers of information technologybusiness process outsourcing

services were government and defense entities, contributing 55 percent and 13 percent of outsourcing

deals signed in 2016, respectively. The telecom sector was the next biggest contributor in terms of

contract value. Last year was not also as strong as 2015, with annualized contract value of only

$21.3million compared to $43.5 million in 2015, or a decline by 51 percent. This decline happened even

before Trump was sworn into office.

I should say the Philippines should prepare for this period of uncertainty in the industry. While the country

compared to the rest of Asean should not experience a decline in output or the GDP no matter Trumps

victory, that is because an infrastructure buildup this year were to compensate for the expected slack. In

addition, the Philippines has a strong economic foundation.

In the outsourcing sector, however, many contracts may be put on hold or renewed under more flexible

terms, pending a more stable environment and more firm economic policies in the United States.

Moreover, one of the predictions this year is that call centers will likely become extinct as self-service

tools and intelligent assistants, like virtual agents and chat bots, become more popular. According to

CIO.com in its seven top predictions for 2017, call centers will be replaced by the rise of tech-enabled
contact centers. The web site quoted Anna Frazetto, chief digital technology officer and senior vice

president at Harvey Nash.

The article also quoted Everest Groups Rajesh Ranjan, who said that in 2017 customers will rationalize

their contact-center vendor portfolios and identify key strategic partners.

The Philippines, being the No. 1 call-center services provider globally, should be prepared for this risk. It

can remain the top provider and strategic partner for customers so long as it upgrades its technology,

although at the expense of hiring fewer people as automation picks up.

The IT outsourcing sector, being the top provider in 2016, can remain the dominant outsourcing services

in 2017, although India is still the top provider in this sector. The Philippines can diversify and improve its

IT outsourcing services and other areas of outsourcing, like finance and accounting outsourcing and

knowledge-process outsourcing, the latter together with BPO bundled service as key contributors to BPO

deals in the fourth quarter last year, according to the KPMG study.

We have so much potential in the outsourcing sector but we have to manage the risks and strategize so

that we do not rely on only one area, such as call centers, but prepared to grab other opportunities that

are out there. We need to prepare our people with the appropriate skills and arm ourselves with the

needed technology so we remain competitive in the outsourcing arena and still be the top destination for

BPO services.

Wilma Miranda is the managing partner of Inventor, Miranda & Associates-CPAs, treasurer of KPS

Outsourcing Inc. The opinions expressed herein are the views of the writer and do not necessarily reflect

the views and opinions of these institutions.

Back Office Outsourcing and Why Companies Need to Use It


by: Catherine Reyes
Back office outsourcing can be defined as a subdiscipline of business process outsourcing (BPO) wherein
back office tasks or essential non-client facing support positions are outsourced to onshore or offshore
outsourcing companies.
In the evolution of back office outsourcing, we have seen that more and more specialized back office
tasks are being handled by BPO companies.

Back Office Outsourcing


Back office outsourcing provides a vital link to businesses to provide them with more technical and robust
manpower that will enable small businesses to immediately scale its operations without additional capital
expenditures.

Some of the back office jobs that are being outsourced are the following:
Human Resource Recruitment
Accounting and Finance Services
Data Encoding and Data Processing
Support Desks

As you can see, these jobs require technical and particular skill sets to be able to perform the tasks
expertly.
Companies Need To Use It
With the growing demand to be globally competitive, companies need to cut their operational costs. More
often, companies are hesitant to outsource their back office jobs because of perceived loss in operational
management.
This is true with traditional outsourcing.We at MicroSourcing have a solution for this: Managed
Operations.

MicroSourcing makes it possible for your organization to have its own operations in the Philippines by
way of a unique alternative which delivers the ideal middle ground between outsourcing and starting your
own company in the Philippines.

To illustrate:
With this setup, you have your own dedicated team thats located remotely. You can even set their
working hours to coincide with yours or 4-6 hours ahead. That way, your company is literally working
while you sleep.As a company, before you start back office outsourcing it is a must that you a have a
solid plan about what your goals are. Is it scalable growth? Is it setting up a permanent team offshore?
Whatever your goals are it is important to partner with the right team that will help you achieve your
objectives.Talk to our experts and openly discuss how MicroSourcing will provide top notch services for
your back office processes.

Call centers
DEMAND AND SUPPLY By Boo Chanco (The Philippine Star) | Updated March 31, 2017
Our largely American BPO industry is apparently on a roll. The BPO sector is expected to generate $40
billion in revenues, 7.6 million direct and indirect jobs, 500,000 jobs outside of the National Capital
Region, and cover 15 percent of the total global outsourcing market by the end of 2022.

Thats according to the industry road map. But right now, many new investments are on a wait and see
mode. Worries about what Presidents Trump and Duterte would do have made investors take a breather
until things become clearer.

Apparently, President Duterte really spooked some of the big players when he picked a verbal fight with
the former US ambassador and with President Obama as well. The American executives were shocked
with the strong anti American rhetoric of President Duterte and became worried with what that means for
American investments here.

Then Donald Trump got elected US president. He also had bold and disturbing plans about a border tax
that would reduce the economic justification for outsourcing jobs abroad.

Were it not for Duterte and Trump, industry players have been raring to pour in more investments to
increase our footprint in the BPO world market.

Apparently, they really like Filipino BPO workers. An expat executive who has set up BPO operations in
many foreign countries including China, India and the Philippines only had good words about our people
and our country in his blog.

I spent a lot of time in Manila and I think I can pretty confidently say Filipinos are the friendliest bunch of
people youll meet anywhere. Their English language skills are also exceptional, courtesy of a long history
of American settlement. You have zero problems being understood and conversing openly anywhere in
the capital and the same goes for discussions with outsourcing vendors.

One thing Ive noticed in Australia over recent years is a really clear shift to the Philippines for call
centers where previously youd have been speaking to someone in India I suspect it is a combination of
their strong English skills, friendly dispositions and emerging tech sector thats driven the shift

Cost wise, the Philippines was consistently lower certainly than China and regularly than India too. The
economics of each of those countries mean it will likely stay that way for some time too.

Last Tuesday, I met Craig Reines, the guy who runs the Sitel operations in the Philippines, at the EDSA
Plaza Tuesday Club. I first met him last year and from our conversation, he remains bullish as ever about
the Philippines as a call center haven.
Craig isnt too worried about Trump or Duterte and apparently, neither is his company. Sitel just
inaugurated its fourth customer experience center in Baguio, its 13th nationwide. And from his
enthusiasm, it seems they are just getting started.

Sitel started operating in the Philippines in 2000 and was among the first to venture out of Manila by
opening centers in Baguio 13 years ago. Craig, in his speech during the Baguio inauguration, said
Sitel Philippines grew rapidly from 2015 and 2016, averaging 30 percent year-on-year.

In the last 18 months, Sitel has added seat capacity and jobs within Pasig City, Quezon City and
Mandaluyong City, but we are most proud of the significant new capacity investments in new provincial
centers such as Tarlac and Palawan, along with this beautiful new 4th facility in Baguio.

I remember Craig being very enthusiastic about Palawan when I last talked with him. He was impressed
with graduates of the Palawan State University who were working in a hotel in Coron when he was on a
family vacation there. I guess that led to the Sitel center in Palawan.

Craig explains that it makes sense for BPOs to start moving out of crowded Metro Manila and help boost
job opportunities in the regions. The presence of schools and universities in key regional cities means
there are qualified trainable people they could hire at better rates.

Craig proudly pointed out, Sitel is the undisputed leader in inclusive, provincial growth for our industry. It
all started right here in Baguio City, and the phenomenal performance of our Sitel employees creating
highly reference-able, international client success stories is what set our company and our industry on
the exciting path to develop our nation and bring high quality jobs closer to where people live.

Craig said the goal of the industry roadmap to create 600,000 IT-BPM jobs nationwide is possible only if
they start moving out to the provinces. Sitel Philippines now has 23,000 employees nationwide.

Craig knows how it is to be a pioneer in the industry. He helped establish one of the early call centers
in Cape Town, South Africa before his assignment to the Philippines. He knows all about being mindful of
cultural differences and how to adjust to local cultural norms.

In his speech during the Baguio inauguration, Craig focused on the economic contributions of
his industry. Taking Baguio as an example, Craig said Sitels investment has generated many direct jobs
in this community but also over 30,000 indirect jobs in Baguio City.

The World Bank says for every peso generated, 16 times that is created in economic activity. The
economic impact starting with our first investment 13 years ago in Baguio City has led to additional
investments by Sitel and many firms, further increasing disposable incomes, increased tourism, etc. and
we estimate this to be an astonishing P75 billion or over $1.5B.

Well, the industry is one of only two legs of the Philippine economy, the OFWs being the other leg. The
BPO industry is expected to overtake the OFW contribution soon. Craig sees the fears generated by
Duterte and Trump merely as momentary concerns.

A senior economist of the ING Bank in Manila agrees. In a press briefing last January on the banks
global economic outlook, Joey Cuyegkeng said We think both OFW remittances and the outsourcing
sector will continue grow. But by 2018, revenues from the outsourcing sector will outstrip revenues from
OFW remittances.

Mr. Cuyegkeng concedes there will be a wait and see stance on BPO investments, but he thinks theyll
reassess once the US administration comes up with their programs that can affect the sector.
Both presidents will in time see the value of what the industry is doing for their US and other clients as
well as for the economies of the two countries. I share Craigs view that those who will make bold
expansion decisions now will benefit as soon as the political drama of the two presidents wind down.

BPO Tax Benefits Remain, According to DOF


by: Mary Christine Galang
Wednesday, August 02, 2017

BPO sector to remain competitive in the export market


The Department of Finance (DOF) said that the first package of the Philippine government's
Comprehensive Tax Reform Program (CTRP) will not impact the BPO sector and that the sector will
maintain its competitiveness in the export market.
Finance Undersecretary Karl Kendrick Chua said in a statement that the Tax Reform for Acceleration and
Inclusion Act (TRAIN) or House Bill 5636, which is included in the first package of CTRP, seeks to
remove the tax benefits enjoyed by "indirect exporters" or suppliers of export-oriented firms and that
there is no change in tax policy for exporters.
Chua clarified that under TRAIN, BPO firms, which are referred to as "eco zones" (special economic
zones), will continue to retain their VAT exemptions and zero-rated status, while the ones outside,
including Board of Investments (BOI)-registered firms, will retain their zero-rated status.
"Receipts from foreign services within the SEZs of the Philippine Economic Zone Authority will remain
VAT-exempt, as is the case now, because they are outside customs territory by legal fiction, or zero-rated
if the exporters are outside the special economic zone, including those that are BOI-registered," Chua
said.
"As for exporters outside SEZs, they are zero-rated on VAT payments and are entitled to get back their
VAT payments once they apply for such refunds under the proposed 90-day refund system, while all
other taxpayers, including suppliers to exporters, will have to pay the VAT," he added.
Chua assured indirect exporters that their zero-rated VAT privilege will only be removed if and when an
improved VAT refund system is in place, which will allow them to claim cash funds for VAT payments
within 90 days of filing their VAT refund applications to the Bureau of Internal Revenue (BIR).
He maintains that the BPO sector will remain highly competitive and that the tax policy will remain the
same after TRAIN.
"Demand services are driven by the high quality of service and talent they offer," Chua said.

BPO Industry Remains Strongest Job Generator


by: Mary Christine Galang
Friday, July 28, 2017 | Outsourcing News |
More companies are turning online for their recruitment, as evidenced by a 12% increase between May
2016 and 2017 in the latest results of Monster Employment Index (MEI), a monthly gauge of online job-
posting activity, based on a real-time review of millions of employer-job opportunity data from career
websites and online job listings nationwide.
Monster.com managing director for Asia Pacific and Middle East Sanjay Modi said that the Philippines is
set to gain sustainable-employment growth in the year ahead. This is due to a highly stable macro
economic environment supported by strong economic structures.
"This is evident from the latest BMI research results which said the Philippiness business friendliness has
made it favorable for investments, production activities and job creation," he said.
"In line with our MEI findings, the Philippine Statistic Authoritys latest data showed the unemployment
rate has fallen when compared to the corresponding period from last year," he added.
The MEI results showed the fifth positive annual growth for the country since January of this year, with
106 total job listings last compared, which is higher than the recorded 95 in May last year.
Strongest online hiring growth in the IT-BPO industry
Web-based recruitment continues to enjoy an upward trend, with the internet technology (IT) and
business process outsourcing (BPO) services industry gaining the strongest growth in online hiring.
There was a 30% increase in May 2017, with 138 employments were placed online compared to the 106
posted during the same period in 2016. This is considered as the highest growth industry year-on-year
(YoY) increase in web recruitment in May.
According to the MEI's monitored occupation groups, customer-service talents are the most in-demand
and most hired, at a 40% YoY growth in May this year from 107 to 150. It was a 10-percent increase from
the 30% YoY growth in April of the same year.
It is followed by software, hardware, and telecom, from 106 to 117. Hospitality and travel, healthcare,
engineering, real estate, and human resources and administration are recorded to have less occupational
demands.
The BPO sector currently employs 1.2 million people and is anticipated to grow to 1.8 million within the
next five years, as stated in the Information Technology-Business Process Association of the Philippines
Roadmap 2022 report.
The second strongest sectors are logistics, freight, transportation, courier, shipping, import, and export,
with an increase of 17% from 108 to 126.
Education has the lowest growth, with negative 3%, from 113 to 110.
On the other hand, the engineering and real-estate sector has a 6-percent decline from 88 to 83 YoY in
online hiring in May.
"Being a shining spot in Asias economy, it is likely the country has come under the scrutiny of
international players who can potentially and rapidly introduce new jobs in a short span of time. Even
then, therein lies a need for business owners and employers alike to remain cautious and to always have
sufficient plans to cushion potential headwinds," Modi said.

REFERENCE :
http://www.businessmirror.com.ph/philippine-outsourcing-in-2017/

https://www.microsourcing.com/blog/201704/

https://www.microsourcing.com/news/