Experience Excellence: The Philippine Advantage
Transcription
Experience Excellence: The Philippine Advantage
Experience Excellence: The Philippine Advantage January 2011 Miguel Garcia President Diversified Technology Solutions International – DTSI Anthem Solutions Inc Board of Trustees – Business Processing Association of the Philippines All information and data in this presentation is the exclusive property of BPAP, Everest Global, and Outsource2Philippines and cannot be copied, distributed, or sold without the express written permission of the copyright owners. Copyright © 2010 BPAP, Everest Global, & Outsource2Philippines ADM, IT infrastructure management, product development Design process delivery services CPO FAO, HRO, LPO, health care information management, transcription, research and analytics, supply management, procurement, industryspecific services (health, telecoms, energy) ITO/ESO Customer interaction and support, telemarketing, advisory NON-VOICE VOICE Philippine ITIT-BPO: Established excellence in voice to growing nonnon-voice capability 1 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. Creative process outsourcing: animation, game development Road Map 2010 put the industry on a rapid growth trajectory Philippine IT-BPO industry size 2006–2009; US$ billion x% YoY Growth Impact over 5 years Contribution 4%–5% of annual GDP to GDP ~25% ~19% ~26% ~50% # FTEs 240 (~‘000) 300 370 440 530 Global share1 6% 6% 7% 8% 5% Employment Largest private sector generation new job creator 350,000 direct and Up to 0.7–1.0 million indirect jobs Foreign exchange earnings Significant export impact 3rd-largest export earner based on net value added Growth of Next Wave Cities™ Catalyzed growth of 10+ Next Wave Cities™ adding over 50,000 jobs FTEs = full-time employees, YoY = year on year 1 Philippines IT-BPO market as percentage of global offshore services market, in revenue terms Sources: BPAP; Everest analysis Proprietary & Confidential. Copyright © 2010 BPAP, Everest Global, & Outsource2Philippines 2 Philippine ITIT-BPO: DoubleDouble-digit growth during the global financial crisis Over $7 billion in revenues, 19% growth amidst the global crisis Sector 2009 Revenues ($000,000) % change vs YA Contact center (voice BPO) 5,100.0 23.0 Back-office/KPO (non-voice BPO) 1,118.0 35.0 IT outsourcing 568.0 -5.5 ESO and design process delivery 228.0 0.0 Transcription (non-voice BPO) 186.8 3.0 Animation 120.0 0.0 4.5 50.0 7,325.3 19.0 Game development TOTAL Philippine IT-BPO (export) Source: BPAP, ACPI, CCAP, GDAP, MTIAPI, PSIA 3 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. Philippine ITIT-BPO: DoubleDouble-digit growth during the global financial crisis Over 70,000 new jobs created in 2009 Sector Contact center (voice BPO) 2009 % Employment change (FTEs) vs YA 280,000 23 Back-office/KPO (non-voice BPO) 86,000 25 IT outsourcing 35,300 0 ESO and design process delivery 12,000 0 Transcription (non-voice BPO) 20,224 0 8,000 0 640 28 442,164 19 Animation Game development TOTAL Philippine IT-BPO (export) Source: BPAP, ACPI, CCAP, GDAP, MTIAPI, PSIA 4 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. The Philippine talent value proposition: proposition: large pool of young, EnglishEnglish-speaking talent Number of college degree graduates 2009 Medical and natural sciences, allied fields 132,244 Business, accounting, and related fields 107,272 Social and behavioral sciences, education 68,764 Engineering and architecture 50,734 IT-related and mathematics 47,928 Fine arts, masscom, humanities 12,269 TOTAL Tertiary level Annual growth 469,654 Abundant labor force of 38 million Over 450,000 college graduates per year Large pool of accounting and business graduates English proficiency Affinity with Western culture Customer service orientation Highly trainable Cost effective High level of commitment and loyalty 5.8% Pop Labor force Literacy World 6,768M 3,179M 8.7% 82.0% India 1,130M 509M 7.8% 61.0% 4.3% 91.6% China 1,330M 814M Suitability rates are empirically based on a total of >80 interviews with HR professionals working in each country Source: CHED 2010; CIA World Factbook 2010 Unemp rate Brazil 201M 102M 8.1% 88.6% Philippines 100M 38M 7.5% 92.6% 5 Suppliers and captives service a range of verticals and globally prominent logos Wide range of industry-verticals serviced Captives of 60+ Fortune 1000 firms Supplier presence across industry verticals1 Banking and financial services # FTEs servicing (’000s) # Firms 75+ 50+ MDR and healthcare 40+ 40+ Telecom, travel, energy, and media 25+ 15+ 25+ BFSI = banking, financial services, insurance; MDR = manufacturing, distribution, retail 1 Per Everest-O2P survey of ~200 firms across the Philippines IT-BPO industry Sources: BPAP database; survey results Contact center sector: The world’s best One of the fastest-growing industries in the country No. of contact centers in the Philippines: 239 (Oct. 2010) Total full-time employees in 2010: 350,000* Estimated revenues in 2010: US$6.3 billion* Revenue growth from 2009: 25%* Key Players in the Country Third-party providers: Convergys, TeleTech, Stream Global Services, Sykes Asia, Aegis PeopleSupport, Teleperformance, Sitel, CyberCity Teleservices, Telus, ePLDT Ventus, Sutherland, ACS, HTMT, IBM Daksh, KGB, Transcomm, ePerformax, Link2Support, Genpact Captives: HSBC, Dell, Shell, Siemens, Verizon, Citigroup, Six Continents–Intercon Hotels, Henkel Financial Services, GE Money, Trend Micro, Oracle Technology, Western Union, Ford (Percepta), DHL 2010* Offshoring Destination of the Year National Outsourcing Association, UK *As reported by CCAP, December 2010 7 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. *(also 2007 & 2009) Back--office and KPO: BestBack Best-kept secret • • • No. of service providers: 96 Total full-time employees: 86,000 Estimated revenues in 2009: US$1.12 billion,+35% vs year ago Key Players in the Country Captives: JP Morgan Chase, Emerson Financial Services, Deutsche Knowledge Services, Thomson Reuters, Chevron, Maersk Global Service Centres, Manulife Financial, Procter & Gamble, B&M Global Services (Baker & McKenzie), Ericsson, Lexmark, McKinsey, Hewitt Associates, Nestle, Watson Wyatt, DSM (White & Case), Integra BPS (formerly AIG) Third-party providers: SPi, Accenture, Amdatex, IBM Business Services, DDC Group, Digitrans Japan Phils. Inc., RG Financial, Sencor, Transprocure, EXL, RR Donnelly, SVI Corporation, Vantage Information Services (MT), Global Excel (HR), BPO International, E-Scribir, Prople, Infinit-O, Affinity Express, Eximius BPO, Asiatype, Integreon 8 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. “Invariably our local offices are impressed with the dedication and energy brought to the table by our Manila service center colleagues.” Joeri J. Timp Executive Director B&M Global Services Copyright © 2010 BPAP, O2P, TeamAsia Diversification into nonnon-voice and more complex services continues 9 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. Non--voice capability uncovered Non • Meaningfully large-scale delivery centers for transactional non-voice services are possible • Multi-function centers delivering an array of voice and non-voice services (including limited IT delivery) are possible • Complex non-voice services (e.g., analytic, legal services) can be delivered from the Philippines although the center size is likely to be small The Silent Knight—The Philippines’ Emerging Non-voice BPO Capability Everest Research Institute, January 2009 10 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. The Philippines can play an important role in the global services supply chain for nonvoice BPO. Everest Research Philippines is second only to India in provision of offshore healthcare services ~US$1.5 billion ~25% Rest of the world (~US$400 million) ~8% ~67% Philippines (~US$94 million) India (~US$1 billion) Off-shore healthcare market 1 NASSCOM estimates 2 ValueNotes Research estimates Source: Everest analysis China – key services supported: Healthcare customer care Network support Central and Eastern Europe – key services supported: Healthcare customer service and BPO outbound Support for oral and surgical (e.g., ophthalmology) areas 100-150 firms with an average size of US$5-10 million. Key areas include: Medical Transcription: Estimated at ~US$650 million, employing ~52,000 FTEs1 Revenue Cycle Management: Estimated at ~US$350 million (including coding)2 Claims processing: (emerging activity area) Major payer process outsourced Sizeable availability of HIPAA trained talent pool Healthcare offshoring in the Philippines has grown rapidly over the last 5 years Philippines’ Healthcare offshoring market size 2004-09; US$ million CAGR: ~40% FTEs serving global markets1 Industry focus split APAC Cont. Europe (1%) Domestic UK North America Industry overview Key industry strengths • Extensive experience in medical transcription • Small but growing presence in HIM and revenue cycle • Sizeable and amenable talent pool management • 30+ setups with over 12,000 FTEs earning around over US$90 million in industry revenue • Serve North American, European, and Asian markets 1 Everest-O2P survey results Source: BPAP, Primary interviews with suppliers, Everest analysis – Abundant nursing and allied medical graduate pool – Strong English voice skills – Cultural affinity to U.S. • Emerging local demand for EMR / EHR, telemedicine etc. Philippines has been exporting IT services for over 3 decades Software development companies: 135 (export only) • Total IT professionals: 35,300 • Revenues in 2009: US$ 568 million • Capabilities • Applications development and maintenance • IT operations and infrastructure • Software product development • Business analysis, project mgmt, education Key Players in the Country Accenture, IBM Solutions, HP, RCG, Siemens, Headstrong, Fujitsu, Pointwest, Oracle, Lawson, Misys, Logica, NEC, Safeway, Netsuite, Tsukiden, Jupiter Systems, Sun Microsystems, Unisys Source: BSP 13 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. Creative process outsourcing: exporting animation, digital games, designs, and other creative content Total animation and game development studios in the country: 77 • Total animators and game developers in the country: 8,640 • Revenues in 2009: US$124 million • Capabilities - 2D/3D animation incl. pre- and post-production work - Flash animation, Web design, graphics and art design - Interactive game dev (PC gaming and console games) - Medical/educational animation, e-learning Key players in the country Toon City, Top Draw, Artfarm Asia, Toei Animation (since 1986), Animation 1, Holy Cow!, Digital Exchange, Top Peg Animation and Creative Studio, Geebo Digital, Flipside Games, CreativeAsia, Cutting Edge, Anino, Micronet Software Manila, Japan Media Programming–Cebu 14 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. Engineering and design process outsourcing: geographically diverse market • Total number of engineering design companies: 45 • Total number of full-time engineers: 12,000 • Estimated revenues in 2009: US$228 million Capabilities • Over 75,000 licensed professionals • 40,000 graduates of engineering courses annually (CAD-enabled) • Internationally accepted engineering standards―computer-aided manufacturing (CAM); computer-integrated manufacturing (CIM) Key Players in the Country Bechtel, Bouygues Construction, Chiyoda, Eichleay Pacific, Fluor Daniels, Foster Wheeler, Hyundai, JGC Phils. (since 1989; now 850 FTEs), Kajima, Keppel, KHI Design and Technical Services Inc. (for Kawasaki), MHI Technical Services Corp. (for Mitsubishi), Nakayama, Parsons Brinckerhoff, Tsuneishi (in Cebu) 15 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. The Philippines has established itself as a mature Tier--1 destination in a competitive global Tier environment Mature Eastern Europe: Established near-shore destination Mexico, Brazil, Columbia, Chile, and Argentina: Evolving rapidly as nearshore base to drive penetration in North America Source: Everest analysis Credible Emerging China: Domestic and APAC centric scale and capabilities Philippines: Reaching #1 in voice BPO (330K+ FTEs) #2 in non-voice/ITBPO (200K+ FTEs) Egypt, Morocco, and South Africa: Significant government-backed push to target UK and Europe India: Industry leading scale and capabilities Voice: 350K+ FTEs Non-voice IT-BPO: 1.4M+ FTEs) Proprietary & Confidential. Copyright © 2010 BPAP, Everest Global, & Outsource2Philippines 16 Philippines is also relatively stable, though there are concerns around safety and labor pool sustainability Risk index for English BPO (Higher score implies higher risk) 2.15 2.19 2.01 Skilled Englishspeaking talent availability 1.75 1. 76 1.81 1.87 1.87 India Philippines Poland Malaysia Egypt Safety and security Investment climate Physical and social infrastructure Romania China Proprietary & Confidential. Copyright © 2010 BPAP, Everest Global, & Outsource2Philippines Mexico 17 Philippines is among the toptop-3 global sourcing locations in terms of talent availability Annual tertiary graduate pool 2010; ’000s Annual supply of F&A/business graduates 2010; ’000s Annual supply of technical talent for IT 2010; ’000s Sources: Commission on Higher Education (CHED, Philippines); global industry data; Everest analysis Philippines is currently among the most costcostcompetitive destinations for ITIT-BPO services MARKET AVERAGES Direct operating cost1 per FTE for English voice work 2010; US$ ’000 per annum per FTE ENGLISH-LANGUAGE VOICE EXAMPLE 70-72 Reflective of market averages. Range could vary depending upon Tier-1 vs. Tier-2 cities Suppliers vs. captives Scaled operations vs. mid-size operations 29-32 24-26 19-20 US Tier-2 Mexico City Krakow Kuala Lumpur 16-17 15-16 Cairo Metro Manila 14-15 Delhi/NCR 1 Ongoing costs only; excludes margins/mark-ups, centralized corporate overheads, initial investment, set-up costs, and travel costs Note: Exchange rates for local currencies with respect to the U.S. dollar have been averaged for 12 months from Oct. 1, 2009 to Sept. 30, 2010 Source: Everest analysis Proprietary & Confidential. Copyright © 2010 BPAP, Everest Global, & Outsource2Philippines 19 Combined with broader talent pool indicators, Philippines is well positioned amongst global locations Cumulative talent competitiveness index for BPO (Higher score implies greater competitiveness) 3.05 Scalability 2.20 Experienced talent pool 1.56 Quality of English accent (cultural affinity with U.S.) 1.46 1.30 0.95 0.75 0.64 Size of graduate pool India Philippines China Egypt Key takeaways Top-3 global location in graduate pool size Third-largest talent pool in delivery of voice, F&A, and IT services Amongst the largest experienced talent pools globally Source: global industry data Malaysia Mexico Poland Romania Likewise, Philippines is the among the lowest cost locations for nonnon-voice BPO work… Direct operating cost1 per FTE for F&A transactional work 2010; US$ ’000s a year per FTE MARKET AVERAGES FAO EXAMPLE 1 Ongoing costs only; excludes margins/mark-ups, centralized corporate overheads, initial investment, set-up costs, and travel costs Note: Exchange rates for local currencies with respect to the U.S. dollar have been averaged for 12 months from Oct. 1, 2009, to Sept. 30, 2010 Source: Everest analysis …and for IT services Direct operating cost1 per FTE for IT Applications Development and Maintenance (ADM) 2010; US$ ‘000s per annum per FTE MARKET AVERAGES ADM EXAMPLE 1 Ongoing costs only; excludes margins/mark-ups, centralized corporate overheads, initial investment, set-up costs, and travel costs Note: Exchange rates for local currencies with respect to the U.S. dollar have been averaged for 12 months from Oct. 1, 2009, to Sept. 30, 2010 Source: Everest analysis Competitive investment incentives Income Tax Holiday (ITH) for 4 years, extendable to 8 years After the ITH period, special 5% tax on gross income in lieu of all national and local taxes Exemption from duties and taxes on imported capital equipment, spare parts, supplies, and raw materials Domestic sales allowance of up to 30% of total sales Exemption from export taxes, wharfage dues, imposts and fees Exemption from Value Added Tax (VAT) on allowable local purchases such as telecom, power, and water bills Additional deduction of 50% of total manpower training cost under the special 5% gross income tax regime Source: Philippine Economic Zone Authority There are 129 IT parks and centers across the country Reliable and redundant connectivity TGN-IA Transmission Backbone Networks BALLESTEROS AAG PLDT Digital Fiber Optic Network (DFON) Globe Telecom Fiber Optic Backbone Network (FOBN) TelicPhil (BayanTel) Nationwide Digital Transmission Network (NDTN) LAOAG VIGAN TUGUEGARAO CAUAYAN SFLU DAGUPAN BAGUIO SOLANO URDANETA TARLAC EAC CABANATUAN CANERO SUBIC SAMPALOC AURORA MAKATI ERMITA BACOOR APCN2 NASUGB U NAGA BATANGAS PAGBILAO PILI MAMBURAO LEGASPI C2C DONSOL SORSOGON MASBATE CALBAYOG SAN JOSE ROXAS Cable Landing Stations ILOILO BACOLOD Ballesteros, Cagayan Tanza, Cavite Nasugbu, Batangas Bauang, La Union TACLOBAN CADIZ BANATE ORMOC SAN REMIGIO TALISAY LILOAN LAHUG TALISAY DUERO MARIBOJ OC TAGBILARAN DAUIN MAASIN CABADBARAN CDO MANTICAO BUTUAN ILIGAN PAGADIAN COTABATO DAVAO ZAMBO ANGA GEN. SANTOS The Philippine work place infrastructure proposition: IT IT--BPO designed, suitable infrastructure Lowest rental rates in the region; dedicated IT parks right in the center of business districts RCBC Plaza, Makati City Eastwood City Cyberpark Quezon City Bonifacio Technology Center, Taguig City PBCom Tower Makati City METRO MANILA McKinley Hill Taguig Northgate Cyberzone Muntinlupa City BPAP: Executing the road map •Business environment • Leading the industry priorities behind govt policy and legislative agenda – fiscal incentives, data privacy, IP protection, cybercrime, Labor Code amendments, DICT • Supporting investors with set-up through “industry roundtable” Infra – Telco, Property, Hardware • Provide best options available that fit requirements • Provide end-to-end service support • Complete delivery and afterdales service Government – BOI, PEZA, LGUs • Due diligence assistance • Business registration facilitation • After care service BPAP advisors • Provide industry overview • Organize site visits and meetings with vendors & govt Investor Assistance Group Legal consulting • Provide end-to-end quality Staffing consultants/Advisors • Provide overview on talent pool based on competency requirements • Deliver recruiting and training • assurance for investors setting up operations in the Philippines Assist investors with government approvals quantity and quality requirements 26 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. BPAP: Executing the road map Metro Manila has 340K ITIT-BPO FTEs, making it the BPO capital of the world; 30 other RP cities host BPO companies Cordillera Ilocos Cagayan Valley Baguio Central Luzon Manila Developing and promoting Philippine toptop-10 nextnext-wave cities to host more BPO companies Angeles/Clark Santa Rosa Southern Tagalog Bulacan Metro Cavite Lipa Bicol • Next Wave Cities™ Eastern Visayas Western Visayas Bacolod Iloilo Cebu Central Visayas Dumaguete Cagayan de Oro Northern Mindanao Western Mindanao Southern Mindanao Super cities have >15,000 IT-BPO workers Central Mindanao Large cities have a potential capacity of 10,000– –15,000 Mid-sized cities 5,000– –10,000 Davao Another 20-plus cities offer a potential capacity of <5,000 FTEs each 27 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved. Road Map 2016: Driving to Global Leadership Proprietary & Confidential. Copyright © 2010 BPAP, Everest Global, & Outsource2Philippines 28 Why is the Philippines a Top Offshore BPO Location? Cost Competitiveness Excellent Telecom Infrastructure Plentiful Quality Office Space Tax-Free Holidays • Labor costs for English speaking professionals amongst lowest in the world • All-in costs amongst lowest in the world • Began deregulating early, in the mid-90s • Cost of bandwidth has dropped over 85% in last 5 years (from $14K in 2001 to < $1.5K per month for E1 lines to US) • Abundant and low-cost real estate in several urban areas • Renters’ market today, 1.1 million sq.m. in new supply 2009-2010 of which less than 10% is committed • 4 to 8 year Income Tax Holiday • Approximately 15% tax rate after lapse of holiday Strong Government – Private Sector Partnership • Comprehensive McKinsey-BPAP (Business Processing Association of the Philippines) Roadmap 2010 to achieve $10+ Billion revenues, 1 million employees Global Reputation • Catching up with India ($4.1 Billion in 12/08 versus $4.8 Billion for India in 3/08 but faster growth rate • Positive experiences of captives Dell, JPMorgan, HSBC, Citi and outsourcers Accenture, IBM, Teletech, Convergys, etc. 29 Philippine IT outsourcing: continuing to establish a strong niche in global ITO space IT Skills IT Operations Mgt Data Center Operations Applications Development & Maintenance IT Infrastructure Service Desk Technical Consulting/ Business Analysis Maintenance Application Development & Deployment Asset Management Package Implementation Remote Network Application Conversion & Integration Application Maintenance & Support Copyright 2009: Business Processing Assoc iation of the Philippines. All rights reserved 30 Managed Services for the Enterprise Managed Services Business Drivers Reduce Cost Extend Solution Availability Managed Service Organizations Provide Economies of Scale Real time monitoring of solution and communication network Global Best Practices Resource Limitations Access to best practices adopted by top companies Managed Service Organizations Provides Abundance of Skilled Manpower Increase Productivity Risk Management Focus on core business – not communication applications/ multi-vendor networks Service Level Agreements Enterprise Managed Services Focus Areas Communication Infrastructure Call Center Infrastructure • IP Telephony • Automatic Call Distribution • Audio Conferencing • Reporting • Audio Messaging • Self Service • Video Infrastructure • Workforce Management • Recording • Computer Telephony Integration Computing Network Infrastructure • WAN • Desktop Infrastructure • LAN • Server Infrastructure • Security • Storage • Wireless Managed IT Services Scope of Support • • • • • Incident Management Problem Management Change Management Release Management Security Management • • • • • Capacity Management Service Desk Availability Management System Administration Performance Management Managed Services Operates on ITIL-Based Standards International set of documented IT best practices, which supports: Reducing capital IT costs Improving communication and information flows Improving user productivity Measurement and improvement of IT performance and service provisioning between IT and other departments Ability of IT to adjust as business opportunities and challenges arise Defines IT in terms of services rather than systems ‒ Clearly identifies roles and responsibilities for Service Management Effective foundation for quality IT service management ‒ Provides proven value to customers Flexibility to choose services and scale as needed ‒ Definable and repeatable framework creates consistency and simplifies working together Managed Services Value Hierarchy Enterprise Value Build and Managed Outsourcing Out-Tasking Staff Augmentation Rapid Skills Deployment Core Competency Optimization Operational Efficiency Capital and Operational Effectiveness Build and Managed Facility Build Out • Site Selection • Architectural Design • Civil, Mechanical, and Electrical Works • Project Management • Supplier Management • Security Technology Build Out • Solutions Architecture • Capacity Planning • Equipment Acquisition • System Integration • Connectivity Maintenance Services Managed Services • 24x7 Technical Support • Onsite Dispatch • Parts Replacement • Multi-Vendor Management • 24x7 Monitoring • 24x7 Helpdesk • T1, T2, T3 Support • ITIL Based Processes • Network Optimization • Facility Management Monthly Charges Per Seat Usage Service Level Agreement Diversified Technology Solutions International Inc. Corporate Overview • Leading Systems integrator, managed facilities and managed technology provider in the Philippines with Contact Center Domain and BPO Expertise • Servicing over 50 contact centers, majority of top US call centers and Fortune 500 companies • Installed/enabled 100,000+ call center seats in the US and Philippines Value Offerings • • • • • Turnkey facilities complete with technology and telephony using a capital preservation model Flexible facility solutions which include incubators and swing space Network infrastructure connecting the US and the Philippines Assistance on ancillary services such as recruitment, accounting, legal services Contact Center Optimization, M&A Technology Integration, and Business Process Consulting and Professional Services • Contact Center Applications and Solutions including Hosting and Managed Services • Supply of technology, global purchase discounts extended and full post sales support • Global project management