Philippine BPO: Exploring Metro Manila’s Cyber Parks

By Kathleen Yu

Cyber Parks (Techno Parks, IT Parks, Ecozones) are ideal destinations for setting up a BPO or call center in the Philippines. Outsourcing companies prefer to locate business operations inside technoparks, mainly because of the large number of tax incentives and government exemptions available in these areas. Businesses established inside IT Ecozones are eligible for numerous benefits, including income tax holidays from 5-8 years, permanent residency status to foreign-based business owners and investors, as well as the payment of 5% tax on gross income after the company’s income tax holidays have expired. Government exemptions on capital equipment, the employment of foreign nationals, and gross income remittances are also readily available to foreign and locally-owned BPO companies in these areas. Metro Manila, considered as one of the top BPO destinations in the world, is home to a large number of these Cyber Parks, some of which include the Eastwood City Cyber Park in Libis, the McKinley Hill Cyber Park near Fort Bonifacio, UP-AyalaLand Technohub in PHILCOA, and the Northgate Cyber Zone in Alabang.

According to Michael McCullough of real-estate brokerage firm KMC MAG Group, “More and more foreign and local companies, BPOs and call centers are now setting up business in these cyber parks to take advantage of the numerous tax incentives, low operational costs, and easily available commercial office space. Locating your enterprise inside an IT Park offers a lot of benefits for your company, including the opportunity to collaborate with other companies in similar fields.”

The Philippines has experienced a great deal of economic improvement from the establishment of Cyber Parks, especially in terms of IT-related services. Data from the Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA) has revealed that over 17 investment sites are managed in the National Capital Region (NCR) alone. It was also stated in the Manila Bulletin that there are currently 70 contact centers and 50 licensed business process outsourcing (BPO) establishments in the Philippines and it is very likely that the country will soon monopolize a larger portion of the global BPO market. Statistics from the Department of Labor and Employment (DOLE) also revealed that the employment rate for IT establishments grew by more than 20% in the first quarter of 2010. Some of these job positions include programmers, IT sales representatives, technicians, software developers, IT planners, IT engineers, network specialists, business consultants, and many more.

Listed below are some of the Cyber Parks found in Metro-Manila


Northgate Cyber Zone Alabang

The Northgate Cyber Zone is a business center and IT Park located in the town of Alabang, which boasts a large number of information and technology industries. IT companies from overcrowded cities like Metro-Manila and Makati are now relocating operations to the Northgate Cyberpark in Alabang, injecting capital into the thriving industrial park. More and more foreign multinationals are also looking at Alabang as an ideal destination for setting up outsourcing industries in the Philippines.

McKinley Hill Cyberpark is a 14 hectare PEZA Economic Zone that houses a large number of BPOs and information technology companies. Recently declared an IT park by President Arroyo, the Cyberpark promises to create a large number of job opportunities for the working Filipino. A number of foreign and local BPOs have already set up operations in the area and more are still arriving on a daily basis. McKinley Hill is also considered as one of the largest cyber parks in the country.

Eastwood City, considered as one of the most progressive cyber parks in the Philippines, is a 16 hectare state-of-the-art commercial district, located in Quezon City. Eastwood is considered as one of the most important commercial and residential centers in the country. Call centers and BPO companies have already set up business in the area, and more and more are still arriving. Multinational companies like IBM and Citibank also have offices in Eastwood City.

The UP-AyalaLand TechnoHub is located along PHILCOA, near the University of the Philippines, and is a Science and Technology (S&T) Park that aims to bring together colleagues in related fields, strengthen existing synergies and spark ideas for the research and development of the Science and Technology Industry.

Legal Process Outsourcing Surges in the Philippines

By Kathleen Yu

Legal Process Outsourcing (LPO) is one of the fastest growing sectors in the Philippine BPO industry. This is mainly due to the financial difficulties currently experienced by many US, Australia, Canadian and British law firms, as a consequence of shrinking legal budgets. According to research conducted by knowledge process outsourcing firm Evalueserve, the global LPO industry employed over 5,200 professionals in the first quarter of 2010 with India and the Philippines leading the pack with an estimated annual profit of USD 300 million. Legal Offshoring services are expected to employ over 19,000 professionals and post an annual revenue of USD 960 million by December of 2015. Some LPO firms in India have even predicted an annual growth of as much as 200%, citing recession-related litigation in the U.S. However, their expectations have not yet been realized. This is because U.S. lawyers themselves are now looking at alternative options to address the legal recession, and cut down on job losses.

The global Legal Process Outsourcing (LPO) Industry grew by as much as 40-60% in the last year alone. Although some areas collapsed from the recession, litigation, document review, and corporate compliance services brought both business and profits to the Philippines. More and more foreign and local law firms are now turning to the legal process outsourcing industry to cut down on their company’s overheads and reduce company expenditures. According to Evalueserve, these overhead expenses are usually related to marketing, general administration, information technology (IT), accounting, clerical, legal and knowledge management, and account for about 17% of a firm’s total expenditures. Companies that avail of legal process outsourcing (LPO) services reduce these costs by approximately 7%.

Amanda Carpo of Manila consulting firm Kittelson & Carpo Consulting says that “The biggest advantage of legal process outsourcing is that it is cost-effective and extremely efficient. A U.S. attorney typically charges anywhere from $150-600/hour for legal services and there is a good part of the work that can be outsourced to  legal process outsourcing firms for a fraction of this cost which provides value to the client. Apart from that, legal process outsourcing (LPO) firms sometimes have a faster turnaround time processing legal documentation, because they specialize in this. Private law firms and the legal departments of businesses simply lack the time, infrastructure, and technology to efficiently manage this procedure.”

Some legal process outsourcing services offered by law firms in the Philippines include legal coding, legal transcription, legal scoping, legal research, legal writing and drafting, legal documentation review, legal analysis, court reporting, due diligence, billing, litigation support, data entry, and many more.

Staff Leasing: Great Option for Outsourcing to the Philippines

The rise of the Philippine BPO Industry has seen an accompanied increase in staff leasing services, including the recruitment of SEO Specialists, Web Developers, Webmasters, Copywriters, Programmers, Data Encoders, Virtual Assistants, and Contact Center Agents.  Staff leasing is considered a hassle-free hiring solution for foreign and local companies doing business in the Philippines. Not only does it eliminate Human Resource (HR) costs and payroll, staff leasing also minimizes administrative responsibilities, and enables small and medium-sized companies to expand their business operations to different client markets. Larger companies also benefit from the arrangement, which offers cost-effective human resource management, employee payroll, compensation services, risk management assistance, training, and development.

According to Michael McCullough, IT and Operations Head of staff leasing company Offshore Leased Staff, “Staff Leasing saves your company time, money, and effort. It eliminates human resource (HR) costs, and reduces tax and insurance liabilities for your company. Staff leasing also negates the tedious hiring process, and enables your company to focus on the more important aspects of your business enterprise.”

Staff Leasing in the Philippines is increasing at a rapid rate. More and more foreign and local companies are now availing of staff leasing services in the country. This is primarily because the Philippines is the third largest English speaking country in the world, and boasts an excellent, English literate workforce. The literacy rate in the Philippines, at 93%, is also the highest in Asia. According to statistics from the Meta Group’s Global Economy Index, the Philippines topped the job knowledge index-beating out over 47 countries-and was praised for the information processing skills of its workforce.

Staff leasing is a simple, hassle-free process, and is almost similar to HR Recruitment and Headhunting. The only difference is that employees are evaluated by the staff leasing company even after the hiring process has been completed, and are continually managed to suit your company’s needs. The leasing company also eliminates tax and insurance concerns for your enterprise, essentially co-employing your employees.

It’s official: PH beats India as No. 1 in BPO

After challenging India for the top position for several years, the Philippines is now the world leader in business support functions like shares services and business process outsourcing, according to the latest reports and trends analyses.

In fact, the country overtook India in these categories last year, according to IBM’s latest Global Locations Trend Annual Report, released recently in New York.

India now ranks No. 2, the first time it was not in the leading position for these activities, according to the IBM report, launched in October but made available online last month.

“The Philippines has taken over the lead in the global ranking from India,” the report said.

The IBM report said the Philippines offered a similarly attractive business environment for international business support functions as India. Unlike India’s BPO hot spots, however, labor costs here have not increased as much.

Revenue: $5.7B in 2010

On Thursday, the Contract Center Association of the Philippines said the country had become the call center of the world, with around 350,000 Filipinos working in call centers against India’s 330,000-strong workforce.

Revenues from the country’s call center industry are also expected to reach $5.7 billion this year, higher than India’s $5.5 billion, the CCAP said.

The call center industry, which provides so-called “voice” services like customer support and sales, is part of the BPO industry.

Call centers make up 70 percent of the BPO industry in the Philippines.

Currently, there are 600,000 Filipinos employed in the country’s BPO industry, according to the Business Processing Association of the Philippines.

India is here

In yet another sign of the Philippines’ BPO dominance, Tata Consultancy Services, the information technology services, business solutions and outsourcing arm of India’s giant Tata Group, opened its first BPO center in Southeast Asia at the Bonifacio Global City in Taguig on Thursday.

“We believe that the Philippines has a very high quality of talent that can represent the company before our Asia-Pacific customers and our global customers,” said Vish Iyer, head for the Asia-Pacific region for Tata Consultancy Services.

Iyer also said Tata chose the Philippines because it “wants to be here to see the Philippine BPO industry grow from its current $9 billion [in annual revenues] to the projected $25 billion in 2016.”

The BPO center that Tata Consultancy inaugurated will have 400 seats, and a target of three clients, including Citibank.

Abid Ali Z. Neemuchwala, vice president and global head for business process services and process excellence, said the company expects to more than double this to 1,000 seats and a target of five clients two years from now.

The firm generated revenues of about $6 billion last year.

Support for BPO industry

In November, Senator Miriam Defensor-Santiago said she would file a measure to “jump-start legislative support for the BPO industry, especially its workers” and urged other legislators “to formulate laws supporting this booming sunshine industry.”

According to the International Labor Organization, the BPO industry may be broadly divided into voice services such as call and contact centers, and non-voice or “back office” services, like finance and accounting, data processing and management, and human resource development.

An ILO report released last July noted that Filipino BPO employees were earning 53 percent more than workers of the same age in other industries.

The study pegged the average monthly salary of local BPO employees at P16,928, with men earning 13 percent more than women.

Local BPO employees also work 44.7 hours per week on the average, with overtime work averages of 1.12 hours per week.

Night work

The study also found that 42.6 percent of BPO employees in the country work at night, and that respondents have reported sleep disorders, fatigue, eye strain and body pains.

Following India in IBM’s ranking of BPO leaders were the United States, Poland, China, Britain, Columbia, Costa Rica, Fiji, Ireland, South Africa, Sri Lanka, Hungary, Australia, Egypt, Chile, France, Canada, France, Singapore and the Netherlands.

The IBM report said Sri Lanka was another Asian country that had succeeded in positioning itself as an alternative to India. Reports from Cynthia D. Balana and Lawrence de Guzman, Inquirer Research


Indian Call Centers and BPOs Set Sights on the Philippines

The future of Indian business process outsourcing or BPO, which registered a loss of growth momentum from 29% in the second quarter of 2008, to 17% in 2009, is uncertain with most experts predicting a drop to single-digit growth by the fiscal year of 2010. India is widely regarded as the largest and fastest growing BPO  service provider in Asia and has dominated global outsourcing markets for over a decade. The Indian BPO industry generates $12.4 billion in total revenue and employs more than 3 million people in various outsourcing services; however, rising wages, rates of attrition, and a shortage of English proficient skilled workers, has led to the gradual decline of many voice-related tasks in Indian BPO. This, in turn, has opened doors of opportunity for countries, particularly the Philippines, allowing them to tap into the global BPO market.

According to Gregory Kittelson of Manila-based Consulting Firm Kittelson & Carpo Consulting, “Clients are now looking to the Philippines for more cost-efficient BPO services, and as this demand continues to grow, the Philippine BPO sector will surely reap the benefits. We have already registered and assisted a number of India/American-based BPOs and call centers, such as Omiglobe, Compvue and more that have relocated operations to the Manila.”

The Philippines is regarded as an ideal outsourcing destination, for several reasons. The country boasts a large pool of English proficient workers, an advantage for call centers setting up operations in the area. Philippine-based BPOs and outsourcing companies also enjoy various government-issued tax incentives and exemptions, and start-up costs for businesses are much lower than in India. It’s close proximity to top outsourcing clients like the United States, also make the Philippines an ideal location for setting up BPO companies. To date, the Philippines employs 557,000 skilled workers in the BPO sector, registering a total growth revenue of nearly $7 billion.

Moreover, the Philippines is set to overtake India in the sale of telephone-based customer services late this year, notching up revenues of $5.7 billion, compared to India’s expected income of $5.58 billion. While India continues to dominate the global BPO industry, with annual revenues of up to $12.4 billion, the Philippines is growing on an unprecedented scale, and revenues are expected to increase to $9.5 billion this year, registering a 28 percent growth from the second quarter of 2009.

Although India still dominates over 50% of the global BPO market, prospects are diminishing for the future of the country’s BPO industry. A shortage of skilled, English-proficient graduates, rising wages and attrition, increasing infrastructure and overhead costs, are all glaring problems in the Indian BPO sector. Whether viable solutions will be found, to address these problems, remains to be seen.  Tough times lie ahead for the Indian BPO industry which will need to address these issues to sustain itself.

Office Space Solutions: Serviced Offices in Makati and Manila, Philippines

Serviced offices offer a much needed convenience to foreign and local companies setting up business in the Philippines. These offices usually come fully-furnished, and are equipped by a separate facility management company. The managing company purchases the individual desks, office space, and operating equipment, then rents them out to client companies. Also referred to as executive suites, managed offices, business centers, or executive centers, serviced offices boast a large number of benefits, including plug and play options, prominent business adresses, and flexible short term contracts. These types of offices often have more flexible rental terms, compared to conventional leased office space, which are subject to more restrictive leases. Additional office space is easily allocated within short notice, making it more convenient for client companies in general, should a particular business change in size. Serviced offices are also more cost-effective, owing to the fact that client companies do not require to set aside capital for start-up costs and solicitor’s fees.

Most serviced offices are equipped with the latest technology, including plug and play options, high speed internet access and state-of-the-art facilities. A large number of workstations are available to employees, and can be used by anyone. Serviced offices have become a viable alternative to conventional leased office space. They are used buy a large number of foreign and local companies in the Philippines, some of which include start-up business ventures, branch offices, expanding companies, and foreign companies in need of local representation. The accessibility of serviced offices also makes it an attractive option to many companies. Most offices are usually open on a 24 hour basis, and provide high-speed internet access to anyone, anytime. However, serviced offices have their own share of limitations. For one thing, a serviced office often gives clients a generic impression of your company. Serviced offices also have higher monthly rental rates than conventionally leased office space. Most serviced offices are usually found in Central Business Districts (CBDs) like Makati, Manila, Ortigas, and Fort Bonifacio.

Serviced offices in Manila usually range from Php 15,000-30,000 per month, depending on the type of facilities available to the renter. Office rates in Makati, on the other hand, range from Php 15,000-40,000. However, some rates are only given on application. This is usually the case for offices located in premier business areas in the city, such as Ayala Avenue, Makati Avenue and Paseo del Roxas.

According to Michael McCullough of Makati-based real-estate brokerage firm KMC MAG Group, “”Serviced offices offer an immediate business location solution without having to spend all the time and money building out an office. You often get a great corporate address and the facilities you need to impress clients.”

Adds Business Consultant Gregory Kittelson of Manila consulting firm Kittelson & Carpo Consulting, “Many of our smaller clients registering a business in the Philippines take advantage of serviced offices while ramping up on the initial hiring of employees. Once the the company matures and hires more employess, they then leave the serviced office option and look for leased office space throughout Metro-Manila.”

Commerce Flows into Subic, Philippines

By: Eden Lorren Pabalan

Subic Bay, Philippines is bordered on the east by Zambales mountains and the South China Sea on the west. A former US Naval base, Subic is now a freeport zone and a gateway for the transportation of goods. And, while it’s topography is more of a jungle paradise, technology, infrastructure, and industry have changed the landscape and the standard of living in the community. Real estate and BPO companies doing business in the Philippines are rising fast in the area and investors are now looking at Subic as a top BPO destination in the country.

The newly completed SCTEx (Subic Clark Tarlac Expressway) a P36 billion peso expressway is a leading avenue through Olongapo, Tarlac and bridges the three cities of Tarlac, Subic, and Clark. Access from the Metro Manila area through the superhighway is convenient, safe and predictable.

Investments in office space and residential infrastructure are growing in Subic. Subic Bay Gateway Park is a commercial hub  home to a number of Korean and Taiwanese companies doing business in the Philippines. It offers 300 hectares of prime industrial land.

Ayala Land Inc., the Philippine’s biggest real estate developer has signed a 50-year lease with the government to develop a 7.5 hectare  commercial hub along Rizal Highway, within the Subic Bay Freeport and are in the steps of final completion for Anvaya Cove, a luxury resort area. An estimated P3 billion pesos are on the line for this investment venture. The proposed plan for the vicinity is to establish a shopping mall, hotel, and a Business Process Outsourcing building.

PLDT Corporation is also eyeing Subic as a BPO hotspot in the Philippines. The company has already inked a 17 hectare development project with the Subic Bay Metropolitan Authority, an  ICT hub that will bring the freeport to the frontlines of ICT infrastructure development in the country. Other call center companies are already open for business in the area, such as US-based Sutherland Call Center and Teletech.

According to Outsourcing Consultant Gregory Kittelson of Kittelson and Carpo Consulting, a Makati-based firm, “We are now seeing more interest from foreign investors in Subic.  Every year,  more and more of our clients are setting up operations in Subic and getting involved in outsourcing, shipping, and the importation and exportation of goods and services in the area.”

The growing BPO business in Central Luzon is continually creating job opportunities for Filipinos. Subic will soon be known not only as a beach and diving paradise, but also as a busy and prosperous economic zone in the Philippines.

Global BPO: Philippines vs. Malaysia

By: Kathleen Yu

Malaysia and the Philippines are two of the largest outsourcing destinations in Southeast Asia, both countries competing to achieve higher market shares in the global Business Process Outsourcing “BPO” industry.

Hailed as the “2nd top Business Process Outsourcing (BPO) Destination in the Asia Pacific” by global market intelligence provider IDC, the Philippine BPO sector has boasted an annual growth rate of 46% since 2006. Three key Philippine cities were recently awarded slots on the “Top Ten Asian cities of the future” by UK-based periodical Financial Times, putting Quezon City at 7th, Cebu at 8th, and Davao at 10th place.

Convergys Philippines is the largest BPO company in the country, employing over 22,000 professionals in the local outsourcing industry. Philippine BPO revenues were up by 19% in 2009, totaling to $7.2 billion. The Philippines is considered the third largest BPO destination in the world, dominating 15% of global markets.

According to BPO Consultant Gregory Kittelson of Makati-based firm Kittelson and Carpo Consulting, “With low operational costs and a large number of government-issued tax incentives, the Philippines is an ideal investment destination for foreign multinationals and other start-up companies.  Foreign BPOs prefer setting up operations in the Philippines because the Philippine workforce is exceptionally skilled, and boasts a large number of English-speaking professionals. Filipinos are also known for their hospitality and friendly manner, which has earned the country an enviable reputation as one of the prime outsourcing destinations in the world.”

Located south of the Philippines, Malaysia is another prime outsourcing location in the Southeast Asian region. The country is home to a number of international BPO companies, like Scicom (MSC) Bhd, SnT Global Sdn Bhd, and Vsource Asia Bhd.Malaysia offers unique advantages in government support, human capital, infrastructure, and domain expertise, which makes it an ideal destination for start-up BPOs.

Contact centers and BPO companies in Malaysia are growing in number, mainly because of the Malaysian economy’s resiliency in facing the global economic crisis. The inflation rate in Malaysia is 2.4%, lower than most Southeast Asian countries.

Bolstered by a change in political leadership, Philippine BPO is expected to register a 30-40% profit increase for the first quarter of 2010. The Malaysian economy, on the other hand, will continue to feel the effects of the 2009 Global Economic Recession, which has already caused a 2% slump in the country’s GDP for the previous year alone. Although both countries are ideal outsourcing destinations, the stability of the Philippine economy puts it at a sharp advantage over less secure Malaysian markets. Whether similar trends will prevail in the future remains to be seen.

Global BPO: Philippines vs. Latin America

By: Kathleen Yu

As the global Business Process Outsourcing “BPO” market continues to expand, outsourcing destinations like Latin America and the Philippines are seeing more foreign investors and increasing annual revenue. These areas expect a 30-40% profit upswing from BPO for the first quarter of 2010.

Latin American BPO is poised for growth, with large multinationals like Citigroup, Pfizer, and Ford setting up operations in the area. Other international offshore players in the area include TCS, Convergys and IBM. Latin American countries offer a number of fragmented domestic IT and BPO services, which enable bigger companies to capitalize on local acquisitions. Proximity to the United States and similar time zones may have led to 32% growth in voice transcription services in 2009 for the region.  Whatever the reason, the tides are shifting toward Latin American shores and away from India, the traditional leader in the voice transcription field.

The Philippine BPO sector dominates 15% of the global market, and is the third largest in the world. Call centers comprise 80% of Philippine outsourcing, which relies on the local workforce to supply voice transcription services for foreign multinationals. The Philippine BPO market is expected to overtake India as a global outsourcing provider, with revenues expected to reach $13 billion by 2010. A more mature BPO market , English speaking workforce, government support, fiscal incentives, special tax zones, and strategic location translates to better service providers and more cost efficient service gives the Philippines clear advantages over Latin American BPO.

According to BPO Consultant Gregory Kittelson of Kittelson and Carpo Consulting, “The Philippine BPO industry is one of the fastest growing in the world. Many foreign companies prefer the Philippines because of its low operational costs, educated workforce, and numerous tax incentives. Not only does this bode well for the country’s economy, it also sends a message to the rest of the world, that the Philippines is indeed a force to be reckoned with.”

Both markets are competitive and have unique advantages and disadvantages. By analyzing the nature of both industries, as well as their respective geographical locations and legal environments, it is possible to determine which country is best suited as an outsourcing location for your enterprise. The right information is key.

Global BPO: Philippines vs. India

By: Kathleen Yu

Business Process Outsourcing (BPO) is one of the fastest growing industries in the world today. As emerging leaders in the global BPO market, both India and the Philippines are considered prime outsourcing destinations for multinational companies all over the world. India dominates with 37% of the global offshoring market, Canada at 27% and the Philippines in third at 15%. However, the Philippines, which boasted a 40-50% industry growth in the last three years, is now on the fast track to overtaking India as a global BPO provider.

The Indian BPO industry averages an annual revenue of $11 billion dollars, about 1% of the country’s total GDP. The government estimates that at its current growth rate, the outsourcing industry could reach $50 billion by 2012. However, there is still much to be desired in linking the country’s BPO industry to its local education system and skilled English speaking workers are not always available. This increases company spending on in-house training for employees and led to the skills shortage currently affecting India’s BPO industry. Only about 700,000 professionals are employed in the country’s outsourcing sector.

In sharp contrast, the Philippines boasts one of the largest English speaking workforces in the world today. Most of the country’s professionals are fluent in English, the lingua franca of the global outsourcing industry. The country also has an average literacy rate of 93%, one of the largest in the world. Filipinos have neutral  American accents, giving them the advantage where verbal communication is concerned.  The advantage has led to a total average revenue of $7.5 billion for the BPO industry in 2009 alone. Profits are still expected to soar; experts estimate revenues of up to $10-12 billion by 2010. Manila, Philippines was recently named a top BPO location in Southeast Asia is second only to Bangalore, India. Over 900,000 professionals are currently employed in the local BPO industry and the number is expected to increase in the coming years.

According to Business Consultant Gregory Kittelson of Kittelson and Carpo Consulting, “The Philippine BPO industry is growing by as much as 46% annually and may soon overtake India as the industry leader. In fact, we have started to see an influx of BPOs and call centers from India registering businesses in the Philippines and setting up operations here.  The opposite is not the case.”