From 1989 to the Present: A Story of BPO in the Philippines

FSO Destination Primer
From 1989 to the
Present: A Story of BPO
in the Philippines
By David Kinnear
With a large labor pool and a very receptive government, the
Philippines’ outsourcing star is rising.
K
eep it simple. How might this observation be applied to BPO?
Perhaps, most plainly, by knowing that the single most critical aspect
of successful BPO is people. People are the essence of BPO, not
(essential though they may be) the computers and communications
lines that help connect it all together – nor the myriad of acronyms
that abound in the BPO industry these days.
As a service provider, the people who work for you and for
your clients will dictate your success as an organization. In a service
business such as BPO, this is critical. BPO is fundamentally a
“people business” – where geography and culture are the key – and
technology is an enabler. But if you don’t get the “people” part right,
the rest is academic. And it is this acute relevance of the “people
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factor” that highlights the clear, current, and future leadership role
of the Philippines in the global BPO sector – especially as the BPO
sector grows and moves toward more complex outsourcing.
Says Jan Trevalyan, founder and president of the DDC Group,
“Especially when working on more complex BPO engagements, we
have found there to be a much greater cultural disposition toward
problem-solving and quality control in the Philippines – which
translates to significantly better results for our clients.” Trevalyan has
overseen the growth of the DDC organization from its inception
to the present day. There are now over 3500 staff in the Philippines
– heady growth since those early days in 1989.
India’s well-publicized economic rise and apparent disposition
for BPO, combined with past political issues in the Philippines,
have perhaps overshadowed the Philippines’ undeniable business
potential as a global BPO center. However, its true potential is now
fast-emerging – this being fueled by major government support and
investment in infrastructure improvements such as the new airport
and the so-called Cyber-Corridor. These are major investments with
world-leading growth and success in mind. The vision for growth
is attractive – and results are already in evidence. The strategic
importance of this activity is clearly understood by none other than
the Philippines’ president herself.
It is this acute relevance of the
“people factor” that highlights the
clear, current and future leadership
role of the Philippines in the global
BPO sector.
Reflecting on the sheer scale of the undertaking, President Gloria
Arroyo noted, “Our cyber services corridor actually stretches 600
miles from Baguio in Northern Luzon to Zamboanga in Mindanao.
It’s served by a $10 billion high-bond with Profiber backbone and
digital network and it’s home to 75,000 call centers and BPO agents,
who all speak English and many of whom speak Spanish, Japanese,
Chinese, or Arabic. And all of whom provide cyber services at par
with global standards.”
But technology aside, the key differentiator of the Philippines
(most commentators would still say) lies in the people themselves
and a cultural predisposition for service provision and customer
care that is now sorely lacking in many western markets. And this
bodes well for the growth of the industry there in a way that will
also benefit the population of the Philippines.
“It is clear that our strategy, investment, and commitment to
the Philippines have proven well-founded. And, the essence of
our success lies in the caliber of our staff and management in the
Philippines,” says Brett Trevalyan, DDC group financial director
and head of the U.K. business.
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Philippines Quick Facts
Language: The two official languages are English and Filipino.
Schools teach in English, based upon the U.S. education
system.
Literacy rate: 95.9 percent of the total population. The literacy
rate is one of the highest in the world, certainly when compared
to others in the Far East and other developing nations (e.g., India’s
is 52 percent; Mexico’s is 89.8 percent). (Figures compiled by
the World Bank 1998.)
Sector Growth: According to the Commission on Information
and Communications Technology (CICT), ICT-related services
have created around 41,000 new jobs in the Philippines in the
first nine months of 2005. The figure is around 95 percent of
the total employment opportunities generated in the ICT sector
in 2005.
Johnny Filart of Hanson Advisors, based in the Philippines,
agrees. “The Philippines… has the unique advantage of having
Filipinos deeply embracing a ‘service-oriented culture,’ ” he says.
“This is evidenced by the fact that it has over ten million Filipinos
working overseas as seamen, nurses, teachers, domestic workers,
etc. Now comes BPO. Whether in voice process outsourcing such
as inbound/outbound call centers or in non-voice services such
as medical transcription, architecture and engineering, animation,
accounting, data encoding and processing, etc. Inherent to the
Filipino people is our ability to serve multiple types of culture in an
excellent way. It is always our aim to please!”
Driven by business opportunity – and by increasing competition
for decreasing margins for less complex volume work – providers
in the BPO sector are moving quickly toward the transfer of more
complex work offshore. Whereas much early offshoring was primarily
data entry, the range of solutions now offered is far broader and
deeper. First- and second-tier customer support functions have vast
growth potential. But perhaps greatest yet is “knowledge processing”
or “KPO.” Service providers that can organize, package, and deliver
access to information itself are critical to consumer demand in the
West. In western consumer markets, there is a clear demand for
“on tap” information. Just consider how much reliance the typical
western consumer places on search engine technology now. This
bodes well for the Philippines where there is a natural disposition
for supporting complex services where thought, expertise, and
experience are required versus purely rote processing.
“In complex or particularly data-sensitive BPO scenarios, we’ve
focused on the Philippines, given [the] consistently high education
standards and markedly lower rates of turnover among staff versus
other locations. We place heavy emphasis on sound management and
good employment practices to encourage staff well-being, long-term
loyalty, and tenure,” says Peter Holland, North American operations
director for DDC HRO – the human capital and human resource
BPO business of the DDC Group.
India’s well-publicized economic rise and apparent disposition
for BPO, combined with past political issues in the Philippines,
have perhaps overshadowed the Philippines’ undeniable business
potential as a global BPO center.
The Philippines came out on top of DDC’s list
in all of the above criteria. The business experience
in the Philippines has been very positive. This has
proven instrumental to growth and has contributed
to consistency of delivery on the issues on quality,
lower cost, and efficiency. Many employees have been
with the organization since 1989, and that loyalty
has been rewarded through growth that provides
opportunity for all.
Incidentally, simultaneous to pursuing business
goals, we have found that involvement in local
initiatives to improve the quality of life in the
Philippines is a good way to assist the community.
Linda Koehler, president of DDC Atlanta, speaks very highly of
the caliber of people she works with in the Philippines supporting
DDC client operations, and she praises the one-firm sense of
camaraderie she observes there despite the great physical distance
between Atlanta and the Philippines. She notes, “Although we are
many time zones apart, we work together as one entity, one office,
and certainly one company.”
Further afield in the Netherlands, Aime Cruysberg, president of
DDC Europe, speaks in similarly positive terms of his experience:
“By outsourcing to the Philippines, we gained thousands of welleducated, flexible, and loyal colleagues.”
In 1989, a global search was conducted with key criteria in mind
for setting up central data processing operations, which have since
evolved into broader-based BPO capabilities. Key considerations,
which still apply today, included:
l English-speaking workforce
l High literacy rates
l Good work ethic
l Low/competitive labor costs
l Good educational infrastructure producing a steady flow of
highly qualified potential employees
l Good communications with North America and Europe
The Philippines – A Primer:
The Philippines is situated in South East Asia, an
archipelago of 7,107 islands, which stretches from
the south of China to the northern tip of Borneo. It has a population
of over 68 million people, more than 18 million of whom are in the
capital city of Manila.
Considered the third largest English speaking country in the
world, the Philippines has world-class facilities and services. The
country has excellent accommodations, fine restaurants, modern
shopping centers, modern communication services and exhibition
organizers, and reliable tour operators.
Recent analysis suggests the Philippines to be the top location
for more complex BPO activity where quality of outcome and
customer service experience, not just cost reduction, is a prime
consideration.
The Philippines’ population is English-speaking, highly educated,
naturally enthusiastic, and of a problem-solving disposition.
They are very proud and conscientious people, who are friendly,
loyal, and diligent. The work ethic and the attention to detail are
excellent. 
David Kinnear is co-founder, president and CEO of DDC HRO, a member of the DDC Group of Companies. DDC is a provider and enabler of
onshore/offshore data processing and human capital BPO solutions. He may
be contacted at: [email protected].
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