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The Philippines Competitive Advantage: It’s People
The Philippines might be poor in many ways but it is impressively rich in terms of an available smart and literate workforce. World Bank managing director Juan Jose’ Daboub gave his impression of the Philippine workforce as a strategic asset during a recent visit to the Philippines. “You (The Philippines) have a young population, better than 90% literacy, and an enterprising and talented workforce,” he said.
The local and foreign companies comprising the outsourcing industry know this and their huge investments underscore the vast potential of the Filipino human resource. The Philippine competitiveness goes back a few years when multinational brands began sending their critical offshore work to the country. Dubbed as the “best kept secret” of many a global firms like Procter & Gamble, AIG, HSBC, Intel, and Shell just to name some, the Philippines became home to these brands mainly because of its highly skilled, talented workforce, cost-competitive salaries, reliable infrastructure, and business-friendly policies.
The most important asset that the Philippines have to showcase to the rest of the world is its people and being the third largest English-speaking country in the world. The educational system of the country was set up by the Americans when the Philippines were still a colony from 1898 up to 1945. From entering kindergarten to college, the medium of educational instruction is American English. This resulted to the Filipinos excellent grasp of the English language that has remained the medium of instruction from pre-school up to post-graduate university.
More than 95% of Filipinos are Catholic and it is the only Catholic dominated country in Asia. Filipinos value college education highly and is considered as an important legacy that a parent can give to children. Their Spanish and Asian upbringing makes the Filipino naturally hospitable, caring, peaceful, and with a patient temperament.
These are indispensable elements in call centers where customer satisfaction would spell the success or failure in communications. Moreover, the outcome would reflect the quality of service that is provided by the call center company.
Increasing cost pressures
With the accelerating growth of the outsourcing industry over the medium term and the limited ability of the available workforce to increase with the trend, concerns are raised about the low cost of labor as a competitive advantage of the Philippines. The predicted upward movement in labor cost, however, is not at all disadvantageous because it may even keep the sector “lean and mean” and further improve the quality of the output. True enough, the “third wave” or electronic revolution further redefined work requirement in the ITeS era as to include the highly specialized skills.
Quoting a news article written by E.D. Ong in 2003 from the Manila Bulletin, Mr. Manuel also affirmed Toffler’s prediction. “But now, as call centers have gained prominence in the country as the primary ITeS sector, the majority of the work ‘focuses on the high end and more complicated aspect of the business such as level-three help desk, financial work and technical support which require highly skilled well-educated agents’,” he said.
Fortunately, the Filipinos are able to display a high degree of flexibility in adapting to the high demands of such progressive changes. Hence, “providing knowledgeable and quality-focused labor” is already given greater emphasis in the marketing activities of call center and Business Process Outsourcing (BPO) companies. Putting a premium on human capital
As further proof of the Philippines, competitiveness in human capital is the growing interest of leading edge Indian investors to forge ties with companies already operating in the Philippines. Recently, India’s National Association of Software and Service Companies (NASSCOM) was in the Philippines to forge a partnership with the Philippines' Business Processing Association of the Philippines (BPA/P) to collaborate in further developing the BPO sector. Together, the Philippines and India only cover 10% of the entire global outsourcing market. Their goal is to increase this share to 30% over the coming years.
Responding to the increasing demand, the national government is playing its part in boosting the training of prospective applicants for the local BPO job market. By investing in education, it aims for a steady supply of trained workers in the medium term. In May 2006 the government announced the availability of scholarships to so-called “near hires” in BPOs. “Near hires” are those who passed the preliminary recruitment process but may lack some necessary skills, such as Business English proficiency, to enter the BPO industry.
Through a voucher program with the Technical Education and Skills Development Authority (TESDA), an institution responsible for vocational-technical training, the government has allocated some training certificates for these near hires, who are mostly high school graduates. This is to facilitate their quick absorption into an industry that is continuously looking for new talent.
Earlier, President Arroyo also instructed the TESDA to speed up the creation of call center finishing schools to meet a potential demand of two million Filipinos being employed in the sector by 2010. This coincides with the upgrading of the basic education in the elementary and secondary levels. An integral part of the basic education curriculum is intensive training on the English language. Budget Secretary Anaya committed an additional US$320 million funding for the Department of Education in 2007. Observers see these moves on the part of the government as timely given the serious consideration of some companies to tap the potential of college undergraduates to fill the job vacancies. In fact, some of them have already recruited college students to their operations.
Philippine Cyberservices Corridor The Philippine Cyberservices Corridor is a plan that is being pursued by the government of the Philippines to create interconnected centers of technology-related services that are spread out all over the country. Services include business process outsourcing, medical transcription, and the like. It is part of the ten-point agenda of President Gloria Macapagal-Arroyo and is one of the five "super-regions" outlined in her 2006 State of the Nation Address.
The cities covered by the Corridor would give wider options for investors in relation to their preferred area of operations aside from Metro Manila. Presented as a tree-tiered project, the Philippine cyber services corridor project will be located primarily in places that have strategic ICT plans in place. First tier is Metro Manila, Sta. Rosa, Metro Cebu, and Metro Davao. The second tier covers Baguio, Poro Point, Dagupan, Tarlac, Batangas, Lipa, Legazpi City, Naga, Tacloban, Iloilo, Duamguete, Cagayan de Oro, and Gen. Santos City while the third tier includes Cabanatuan, Tuguegarao, Tagbilaran, Puerto Princesa, Iligan, and Zamboanga.
The Commission on Information and Communication Technology will take the lead in addressing the need to develop English language competencies, enhance skills in ICT among others, in the areas covered by the Corridor.
The Philippine business processing sector is growing at such a fast rate that last year the industry grew by 137 per cent or 2.5 billion dollars in revenues. During the same year, the industry saw a 53 per cent increase in the BPO workforce or 81, 000 new jobs generated.
If the figures speak for themselves, there is no doubt that in the global market for offshore work, the Philippines is king.
---Mio Cusi
(Mio Cusi is a senior reporter for the Manila-based BusinessMirror. Currently assigned to cover the macroeconomic beat, he has written numerous articles on the comparative advantage of the Philippines among other Asian countries in relation to BPO services.)
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