Keynote - BPAP

8/14/2019 Keynote - BPAP

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WorkingDraft-LastModified8/21/200710:21:17PM

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Experience Excellence:Experience Excellence:The Philippine AdvantageThe Philippine Advantage

Oscar SaezOscar SaezPresident and CEOPresident and CEO

Business Processing AssociationBusiness Processing AssociationPhilippinesPhilippines


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Philippine economy: weathering the crisisPhilippine economy: weathering the crisis

GDP Growth (%)

1Q 09 2Q 09Philippines 0.4 1.5

Singapore -10.1 -2.5

Taiwan -10.2 -7.5

Hong Kong -7.8 -3.8Thailand -7.0 -4.9

Malaysia -6.1 -3.9

2

Inflation at a 22-year lowInterest rates at an all-time lowStrong growth in particular subsectors:

Services exports 15.2% (including BPOand tourism) Mining 21.4% Retail trade 8.8% Fishery 5.9% Air transport 4.5%

Source: National Economic Development Authority

Remittances from overseas Filipino

workers

Strong banking and finance sectorreforms from 1997 Asian financial crisis

Continued growth of the BPO industry

Philippines Projections2009 2010

GNP 2.1-3.1 4.7-5.6

GDP 0.8-1.8 2.6-3.6

Source: ADB, country Web sites; NEDA


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2009 Outlook - BSP2009 Outlook - BSP

3

Actual Projections

2008 2009 2009

Real GDP Growth(%)

3.8 1.0 (Jan-Jun) 0.8-1.8

Headline Inflation 9.3 3.7 (Jan-Aug) 2.5-4.5

OF Remittances(US$ Bn)

16.7 10.0 (Jan-Jul) 16.4

Current Account(US$ Bn)

3.9 3.9 (Jan-Jun) 4.1

Balance of Payments(US$ Bn)

0.1 2.8 (Jan-Aug) 0.7

Gross InternationalReserves (US$ Bn)

37.6 41.5 (end-Aug) 37.5-38.5


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Domestic financial markets improve BSPDomestic financial markets improve BSP

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Business Process OutsourcingBusiness Process Outsourcing VoiceVoice Non-Voice (F&A, , HR)Non-Voice (F&A, , HR)

IT Services OutsourcingIT Services Outsourcing Software DevelopmentSoftware Development IT and Data Center OperationsIT and Data Center Operations IT InfrastructureIT Infrastructure Engineering and DesignEngineering and Design

Services OutsourcingServices Outsourcing Engineering DesignEngineering Design Architecture DesignArchitecture Design

The Business Processing Association of the PhilippinesThe Business Processing Association of the Philippines

www.bpap.org
http://www.bpap.org/http://www.bpap.org/


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Business Process OutsourcingBusiness Process Outsourcing VoiceVoice Non-Voice (F&A, , HR)Non-Voice (F&A, , HR)

IT Services OutsourcingIT Services Outsourcing Software DevelopmentSoftware Development IT and Data Center OperationsIT and Data Center Operations IT InfrastructureIT Infrastructure Engineering and DesignEngineering and Design

Services OutsourcingServices Outsourcing Engineering DesignEngineering Design Architecture DesignArchitecture Design

The Business Processing Association of the PhilippinesThe Business Processing Association of the Philippines

www.bpap.org
http://www.bpap.org/http://www.bpap.org/


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co ri ht 2008: Business Processin Assoc of the Phili ines. All ri hts reserved

90 million people; 36 million workforce; over 450,000 College graduates annually

Large pool of highly educated, English-speaking talent with strong cultural affinity to NAmerica

Highly reliable infrastructure

Competitive cost structure

Diverse choices of suitable locations in-country

Strong government support

The Philippines in Global BPO and IT-ES spaceThe Philippines in Global BPO and IT-ES space

Global #2Global #2 BPO destination after IndiaOver $6 billion$6 billion in export revenues growing at 36% annuallyEmploying ~400,000~400,000 workers, end 2008

Drivers for success


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8Source: Everest Global Inc.; Market Vista 2008: In Review

Global Sourcing MapGlobal Sourcing Map


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Sources: Nasscom and John Clements Consultants, Inc. ; Everest data

Number of BPO Workers

Manila is the largest offshore BPO city in the WorldManila is the largest offshore BPO city in the World

100% = US$19-21 billion

Offshore BPO market bydestination2007; Percentage


ilippines is now a significant global playerilippines is now a significant global player


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. . .and now establishing in-roads into the non-voice. . .and now establishing in-roads into the non-voiceBPO market as well as IT and ESOBPO market as well as IT and ESO

11

67% 61%

15% 24%

18% 15%

Revenues Employees

Contact center (voice BPO)

Non-voice BPO 1

Animation, Software& Engineering

6.1 billion 380,000100% =

Philippines Outsourcing & Offshoring market size2008; Percentage

1 Includes Back office and TranscriptionSources: Joint BPAP/BOI/PEZA/CICT Task Force (2008)

Local Filipino suppliers

Global/India-centric suppliers

MNC Captives

NOT EXHAUSTIVE


Non-voice BPO revenues to double in 2 years!
http://images.google.com/imgres?imgurl=http://ph.88dbmedia1.jobsdb.com/db88uploadfiles/2007/01/29/4FA09ABF-7E59-41F2-90D2-773F8F94ABF8.JPG&imgrefurl=http://ph.88db.com/ph/Services/Post_Detail.page/business_services/call_data_centers/%3FPostID%3D87754&usg=__JwbsPVSjUGM4aAdrop8YEVsx340=&h=60&w=173&sz=3&hl=en&start=4&tbnid=pHx92WSn8eNN4M:&tbnh=35&tbnw=100&prev=/images%3Fq%3Dimperium%2Btechnology%2Binc%26gbv%3D2%26hl%3Denhttp://images.google.com/imgres?imgurl=http://www.jobstreet.com.ph/clientlogo/p/pointwest.gif&imgrefurl=http://ph.jobstreet.com/jobs/2009/3/default/80/2084292.htm%3Ffr%3Dc&usg=__lAXxHsaYzQXW3ukEdtt7M3h2kUk=&h=100&w=199&sz=4&hl=en&start=8&um=1&tbnid=5RXq2w9mw1_C9M:&tbnh=52&tbnw=104&prev=/images%3Fq%3Dpointwest%2Btechnologies%26hl%3Den%26um%3D1http://images.google.com/imgres?imgurl=http://home.arcor.de/olayinka/logo_deutschebank.png&imgrefurl=http://home.arcor.de/olayinka/linksenEng.html&usg=__rqO3u0Mge0px96nH9__EGUwkAkg=&h=343&w=1653&sz=39&hl=en&start=7&um=1&tbnid=-sLcQqarymFLSM:&tbnh=31&tbnw=150&prev=/images%3Fq%3Ddeutsche%2Bbank%26hl%3Den%26um%3D1http://images.google.com/imgres?imgurl=http://ph.jobstreet.com/logos/agenalogos/integreon.jpg&imgrefurl=http://ph.jobstreet.com/jobs/2008/10/default/80/2012356.htm%3Ffr%3DJ&usg=__YC5T3Oa2iwaxlBjjU2zr_mRsBuM=&h=95&w=478&sz=22&hl=en&start=3&tbnid=9BoqKSM4UymvIM:&tbnh=26&tbnw=129&prev=/images%3Fq%3DIntegreon%26hl%3Den%26safe%3Doff%26rlz%3D1T4GZEZ_en-GBIN287IN287http://www.citibank.com.ph/portal/citiwm_home_center.jsphttp://images.google.com/imgres?imgurl=http://www.trendco-vick.com/images/customers/p%26g.jpg&imgrefurl=http://darmano.typepad.com/logic_emotion/2006/08/innovation_exec.html&usg=__ccpeIxO6PfJvBl7o9ZfUK5PqVbI=&h=150&w=298&sz=36&hl=en&start=3&um=1&tbnid=ezGFvtlD8VnXlM:&tbnh=58&tbnw=116&prev=/images%3Fq%3DP%2526G%26um%3D1%26hl%3Den%26safe%3Doff%26rlz%3D1T4GZEZ_en-GBIN287IN287%26sa%3DNhttp://images.google.com/imgres?imgurl=http://www.pointwest.com.ph/images/news/sencor.gif&imgrefurl=http://www.pointwest.com.ph/main.php%3Fid%3D0%26fr%3Darticles/article%26aid%3D8&usg=__MnJl6cppERUFt57Vq8WfzhqgBRo=&h=55&w=238&sz=3&hl=en&start=4&tbnid=fXH08K9GMbIWdM:&tbnh=25&tbnw=109&prev=/images%3Fq%3DSencor%2BBPO%26hl%3Den%26safe%3Doff%26rlz%3D1T4GZEZ_en-GBIN287IN287http://images.google.com/imgres?imgurl=http://www.citem.gov.ph/catalogonline/images/cmp/7374.jpg&imgrefurl=http://www.citem.gov.ph/catalogonline/main/copages.php%3Fccode%3D7374&usg=__fEAgFF34k-UzqjDl_Mj9foR3JMU=&h=76&w=200&sz=40&hl=en&start=10&tbnid=RHJ6Xo8whmc2eM:&tbnh=40&tbnw=104&prev=/images%3Fq%3DAmerican%2BData%2BExchange%26hl%3Den%26safe%3Doff%26rlz%3D1T4GZEZ_en-GBIN287IN287http://www.spitech.com/web/spi/home.jsp


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Philippines has become COE for BPO due to depth of talentPhilippines has become COE for BPO due to depth of talentavailable in this sectoravailable in this sector

Expertise in diverse BPO and KPO functions:

Finance/HR/Publishing/Supply Chain/Legal/Medical- Accounting and bookkeeping - Legal Transcription- Account maintenance - Litigation Support- Accounts receivable collection - Content Development- Accounts payable processing -Contract Summarization- Fund adm/reconciliation - Editing, Sub-titling, Translation- Payroll processing - Publishing- Retail banking support - Health Services revenue cycle- Asset management - Travel Services Back Office- Financial analysis and auditing - Credit/Loan processing- Inventory control and purchasing - Health Insurance- Expense and revenue reporting - General Insurance- Financial reporting - Sales and marketing- Human resources administration - Tax reporting- Customer Management - Financial leasing- Credit card administration - Transaction management- Factoring and stock brokering - Sourcing and Procurement

- Revenue management - Logistics- Transaction processing - Disaster recovery- Business data processing - Business Intelligence- Database management - Network management- Supply chain management - Warehouse and inventory Mgmt

- Market Research and Analysis- Intellectual Property Management- Account Risk Management-Equities/Portfolio research & analysis

Total BPO workers: 323,300

Revenues in 2008: US$ 5Bn, voice + non-voice BPO, growing at 36%/year co ri ht 2009: Business Processin Assoc of the Phili ines. All ri hts reserved


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IT Skills

IT Operations Mgt Data Center Operations Applications Development& Maintenance IT Infrastructure

Service Desk

Maintenance

Asset Management

Remote Network

Technical Consulting/ Business Analysis

Application Development & Deployment

Package Implementation

Application Conversion & Integration

Application Maintenance & Support

Philippine IT Outsourcing continuing to establish a strongPhilippine IT Outsourcing continuing to establish a strongniche in global ITO spaceniche in global ITO space

Total IT professionals: 35,300

Revenues in 2008: US$ 601 Million, +42% vs year agoco ri ht 2009: Business Processin Assoc of the Phili ines. All ri hts reserved


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And creative sector showing potential for growthAnd creative sector showing potential for growth

Total animation and game development studios in the country: 50Total animators in the country: 7,000Revenues in 2008: US$120 million, +14% year ago

Capabilities:- 2D/3D animation incl pre and post production work- Flash animation, web design, graphic & art design- Interactive game dev (PC gaming and console games)

- Medical/Educational animation

http://www.soundtrackcollector.com/images/cd/large/Lilo_Stitch_WD60773_7.jpghttp://www.starpulse.com/Television/Powerpuff_Girls,_The/gallery/POWERPUFFCTV002/


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The Philippine talent value proposition: Large pool of English-The Philippine talent value proposition: Large pool of English-speaking talentspeaking talent

Source: Phils Comon Higher Education : CIA World Factbook 2007; *China data for unemp and literacy is major Cities onl

Suitability rates are empirically based on a total of >80 interviewswith HR professionals working in each country

Number of college degreegraduates

2007 Annualgrowth

Business & Accountancy 128,000

Engineering & Tech 55,752

IT-related courses 42,047

Architecture 3,100

Medical Sciences 31,400

Fine Arts/Humanities 7,660

TOTAL Tertiary level 454,818 3.8%

Pop Labour force Unemp rate Literacy

World 6,602M 3,400M 6.3% 82.0%

India 1,130M 509M 7.8% 61.0%

China 1,322M 798M 4.2%* 90.9%*

Brazil 190M 96M 9.6% 88.6%

Philippines 90M 36M 7.9% 92.6%

Abundant labor force of 36 millionOver 400,000 college graduates per year Large pool of accounting and businessgraduatesEnglish proficiencyAffinity with Western cultureCustomer service orientation

Highly trainableCost effectiveHigh level of commitment and loyalty


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Of 100 graduates with the correct degree, how many would you employ if you had demand for all?

Per centEngineer Countries

The Philippine talent value proposition: QualityThe Philippine talent value proposition: Quality

* Mexico is the only country where interview results (higher number) were adjusted ex-post since interviewbase was thinner Source: Interviews with HR managers; HR agencies and Heads of Global Resourcing centers;McKinsey Global Institute

Asia

LatinAmerica

EasternEurope

Suitability rates are empirically based on a total of >80 interviewswith HR professionals working in each country

42* 35*

Finance/accounting Generalist

20

13

35

25

10

50

50

50

10

20ChinaPhilippinesIndiaMalaysiaBrazilMexico

RussiaCzechRepublicPolandHungar y 30

20

40

30

50

15

15

25

13

25 11

8

20

10

30

3

30

15

20

10


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Comparison of direct operating cost 1 per FTE for transactional F&A work2006; US$ thousand per annum

UK US Australia Mexico E. Europe India China Philippines

75-77

60-61

36-37

20-2521-2314-17 16-17 15-16

~55% savings

~75% savings

~80% savings

Source

Destination

171 Operating cost includes salary, facilities, equipment, telecom, training, and attrition costSource: Everest Research Institute (2008)

Companies are re-structuring their global operating networks to take advantage of this opportunityCompanies are re-structuring their global operating networks to take advantage of this opportunity

The Philippine talent value proposition: Cost competitivenessThe Philippine talent value proposition: Cost competitiveness



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Rankin Asia

Score Global Ranking

2008 20071 Taiwan 69.2 2 62 South Korea 64.1 8 33 Singapore 63.4 9 114 Japan 62.2 12 25 Hong Kong 54.1 21 216 Malaysia 34.2 36 367 Philippines 29.8 47 478 India 28.9 48 469 China 27.6 50 49

10 Sri Lanka 24.9 54 5011 Indonesia 23.1 58 5712 Bangladesh 22.4 60 -13 Vietnam 21.4 61 6114 Pakistan 20.9 62 60

Economist Intelligence Unit: 2008 IT IndustryEconomist Intelligence Unit: 2008 IT IndustryCompetitivenessCompetitiveness

Source: EIU IT Competitiveness Report 2008

2


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Risk perceptions: The Philippines, India, China, and manyRisk perceptions: The Philippines, India, China, and manydeveloping countries share overall risk ratingdeveloping countries share overall risk rating

Source: Economic Intelligence Unit(EIU) 2008

A Hong Kong, Singapore

B Hungary, Malaysia, Taiwan, SouthKorea

C China, India, Indonesia, Philippines,Thailand, Vietnam

Brazil, Guatemala, Jamaica, Mexico,Paraguay, PeruEgypt, Morocco, South Africa,Albania, Armenia, Azerbaijan,Russia, Serbia, Turkey, Ukraine

D Bolivia, Cambodia, Ecuador,Honduras, Kenya, Laos, Pakistan,

Venezuela

E IraqSource: Political & Economic RiskConsultancy Ltd. 2009

EIU Risk Rating 2008



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IMF, March 2007: The Philippines has established a strong presence in voice-based BPOsectors such as call centres, and there are also signs of growth potential in other offshoreservices, such as medical transcription and animation.

Gartner , Dec 2007: The Philippines has become a destination for call centre and back-officefinance and accounting operations; rates highly in cost, labour quality and language/cultural compatibility. Nov 2008: The Philippines has a good labour pool that is scalable at low cost.Its overall cost structure is lower than India's, and wage inflation and attrition ratios are alsolower.

Nomura Securities , November 2007: We think that the Philippines has grown into the No.2 outsourcing base after India in call centrebased BPO fields. Everest Consulting, Jan 2009: The Philippines, whose offshore market has grown 46

percent annually since 2004, is poised to emerge as a leading destination for non-voicebusiness process outsourcing (BPO) work .

Frontier Strategy Group , September 2007: The Philippines is among seven key marketsthat are above the rest and are the most critical to achieving corporate growth andoutperforming the competition in 2008 and beyond

National Outsourcing Association (UK) : Philippines awarded Off-shoring Destination of the Year for 2007 and 2009

Top 10 Outsourcing Cities in Asia Pacific:#2 Manila

Top 10 Asian Cities of the Future:#7 Quezon City#8 Cebu

#10 Davao

Gaining positive reviews from respected analysts and organizationsGaining positive reviews from respected analysts and organizations
http://www.noa.co.uk/index.php


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Philippine IT-BPO: Prospects for growthPhilippine IT-BPO: Prospects for growth

Copyright 2009: Business Processing Association of the Philippines. All rights reserved

US$ million

48% CAGR 26%

23%

26%

27%


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22Source: BPAP Team analysis

Roadmap 2010 launched in June 2007 to ensure growth of theRoadmap 2010 launched in June 2007 to ensure growth of theindustry is sustainedindustry is sustained

BPAP Roadmap 2010

Suitable andabundant talent

Operationalperformance

Qualityinfrastructure

Conducivebusinessenvironment

Need to recruit over one million new people into the industry to reach 10% market share High percent of top talent in emerging areas outbound to other markets (e.g., nurses,

engineering, accountants) Mismatch in location density between providers and labor. Smaller labor pools not tapped

Wage pressures emerging, reflecting accelerating growth and lack of transparency on wages Competitiveness relative to established players (e.g., India) and emerging players (e.g.,

Vietnam) at-risk

Wage appear to be growing faster than billing rates, creating imperatives for operationalexcellence, scale and migration to high value services

Availability emerging as major issue NCR rental space only available to reach 68% of revenue target Given market uncertainty, facilities being built only on commitment, slowing time-to-market

Rental rates rising sharply in Makati Central Business District

Need to ensure that current incentive regime continues to sustain competitiveness Most locators concentrated in NCR; other cities may not be O&O-ready Under resourced industry association Good investor support in pre-investment phase; potential to improve in execution phase

Persistent issues around critical risk factors that affect outsourcing decision (e.g., IPprotection, data privacy)

Riskmanagement

Businessenvironment

Talent

Next wave cities


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BPAP 2007-10 executing the roadmapBPAP 2007-10 executing the roadmap

Talent Development Developing a comprehensive assessment and training program BPAP Assessment Tool, ADEPT, Middle-management program Improving awareness for career opportunities in O&O CampusCaravan Tapping alternative talent pools; ability to fund PGMA Scholarships


Programs will deliver ~290,000 incremental qualified workersto the industry from 2008 to 2010!More than 50% ahead of baseline requirement!


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BPAP 2007-10 executing the roadmapBPAP 2007-10 executing the roadmap

Business Environment Leading the industry priorities behind govt policy and legislativeagenda Fiscal incentives, Data Privacy, IP protection, Cybercrime,Labour Code amendments, DICT Supporting investors with set-up through industry roundtable


Due diligence assistance Business registration

facilitation After care service

Government BOI, PEZA,LGUs

Provide end-to-end qualityassurance for investorssettingup operations in thePhilippines

Assist investors withgovernment approvals

Legal consulting

Provide overview on talentpool based on competencyrequirements

Deliver recruiting and trainingquantity and qualityrequirements

Staffing consultants/Advisors

Provide industry overview Organize site visits and

meetings with vendors & govt

BPAP advisors

Provide best optionsavailable that fit requirements

Provide end-to-end servicesupport Complete delivery and after-dales service

Infra Telco, Property, Hardware

Investor AssistanceGroup

BPAP 2007 10 i h dBPAP 2007 10 ti th d


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IlocosCagayan Valley

Central Luzon

Southern Tagalog

Bicol

Western Visayas

Central Visayas

Eastern Visayas

Western Mindanao

Northern Mindanao

Southern Mindanao

Central Mindanao

Cordillera

Davao

Iloilo

Metro Cavite

Bacolod

Cagayan de Oro

Metro Laguna

Super cities have >15,000 IT-BPO workersLarge cities have a potential capacity of 10,000 15,000Mid-sized cities 5,000 10,000

Another 20-plus cities offer a potential capacity of


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BPAP JUST HOSTED A GLOBAL BPOBPAP JUST HOSTED A GLOBAL BPOCONFERENCE OCT 20-21CONFERENCE OCT 20-21

CHAIRMANs PANEL

composed of Leaders of thedifferent Global IT/BPOorganizations

ACADEME PANEL composed of representatives fromdifferent schools and universitiesworldwide

SHARED SERVICES/CAPTIVE PANEL composed of representatives fromshared services operations

ANALYST PANEL composed of variousanalyst/advisory groups

MORE INFORMATION

www.internationaloutsourcingsummit.co
http://www.internationaloutsourcingsummit.com/http://www.internationaloutsourcingsummit.com/


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An InvitationAn Invitation

Discover thePhilippineAdvantage!

Experience ExcellenceExperience Philippines

www.bpap.org

Keynote - BPAP

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