Philippine call centers escape wrath of Ondoy

The Philippines' outsourcing industry emerged unscathed from the destruction inflicted by storm 'Ondoy,' industry executives said.

Only minimal effects were experienced by the Contact Center Association of the Philippines (CCAP), the country's biggest organization of call centers, said, citing stranded employees of three of its member-firms.

Companies such as TeleTech, ICT, and NCO said none of their equipment weredamaged since most their facilities were located in malls, CCAP executive director Jojo Uligan said in a phone interview.

ICT, which has a site in Riverbanks mall in Marikina City, was able to salvage its computers and networking gears by transporting them to the second floor of the building at the height of Ondoy’s downpour.

In the meantime, NCO also has a site in Marikina City but it occupied the second floor of Robinsons mall. It did not report any damages as well.

TeleTech, said to be the biggest call center operator in the country with 17,000 agents, reported two of its sites – in Robinsons malls in Cainta and Novaliches – were surrounded with water but the company said this resulted in “minimal disruption."

The company's “proprietary cloud-based delivery network minimized any business interruption to its clients through its highly reliable failover architecture and its ability to temporarily reroute its clients’ customer inquiries to other locations in TeleTech’s global delivery network," the US-based call center operator said in a statement.

CCAP’s Uligan said call centers in other flood-hit areas such as Laguna were also not affected.

Big player Convergys, which has call center facilities in the province, did not report any disruption or damages.

“If there were some damages, I guess it’s just some tables and chairs," Uligan said. “In terms of business loss, it was not that significant since the numbercalls just decreased by a few percentage."

Those trapped inside the sites, Uligan said, were discouraged from going home and were given sleeping quarters and food.

TeleTech, for instance, doubled the pay of its agents who chose to work while waiting for the waters to subside.

In Libis, Quezon City where a number of call centers are located, agents were also asked to render overtime service since most of their colleagues were not able to report for work.

Uligan said CCAP’s board will soon meet to finalize a disaster mitigation plan which their members can adopt.

“Although each call center has its disaster plan, our strategy will also involve pooling our resources," he said. “We’ve already drafted this a long time ago but Ondoy may have pushed us to finally finish it."

In a way, the great deluge gave the outsourcing industry, particularly call centers, the opportunity to test the robustness of their IT infrastructure.

“One reason why the call center did not suffer very much from this calamity is the fact that they merely rerouted the traffic to other sites," said Martin Crisostomo, executive director for external relations of the Business Processing Association of the Philippines (BPAP).

BPAP, the umbrella group for all outsourcing firms in the country, counts CCAP as a member.

Crisostomo said it was actually the road network, rather than the country’s Internet infrastructure, which prevented call centers from operating in full capacity.

“The telecom infrastructure was not disrupted at all during the typhoon. And even if the power was cut off in the affected areas, the call centers had generator sets on hand," Crisostomo said.

He said some call centers such as Sitel, whose site in Julia Vargas St. in Pasig City was not flooded but had a huge number of employees residing in nearby areas, have also released the 13th month pay for its employees.

TeleTech is among those which initiated fundraising efforts by tapping its worldwide employee base.

Crisostomo said a Makati-based legal outsourcing firm, DSM, has also donated outright cash of P50,000 to each of its employees affected by the flood.

IBM to relaunch, augment global delivery center in RP

IBM’s global delivery center (GDC) in the Philippines is getting an upgrade and will be relaunched soon after performing well and rising to become the company’s fourth highest-earning site globally since being unveiled in October 2005.

This was announced by Richard Patterson, who recently visited the country as part of his functions as vice president for global delivery at IBM global business services.

The global delivery organization, which provides HR services such as consulting and IT application management, is one of the two divisions of IBM’s outsourcing business. The other component, called the global technology services, is comprised mainly of call center services.

The GDC in the Philippines, based in Eastwood City in Quezon City, is one of the eight centers around the world. Other sites are located in Argentina, Brazil, China, Egypt, India, Romania, and Vietnam.

Patterson said the GDC plays a major role in IBM’s globally integrated enterprise (GIE) business model. This model, he said, employs a “follow the sun” approach in which services are continuously delivered in several parts of the globe.

The Manila center, which was inaugurated in 2005 by President Gloria Arroyo, provides in eleven languages to more than 178,000 employees of Procter & Gamble and IBM located in 65 countries.

According to Patterson, the global financial services did not dampen the growth of the Philippine GDC. “There was no slowdown of the backlog of the work we’ve been doing,” he said.

As the fourth highest-performing site among the IBM’s global GDC network, Patterson said the Manila center would be augmented with additional personnel. At the time of its launch, the facility housed some 370 employees.

“We continue to see a demand for services from our center here in the Philippines,” the executive said, adding that the local population has the right skills set to perform the services required of them.

IBM has also revealed that it will open in the fourth quarter its first Innovation Center in the country at the UP-Ayala Techno Park in Commonwealth Ave. in Quezon City.

The Innovation Center will be IBM’s second facility in Southeast Asia after Malaysia. The laboratory will focus on developing open-source and Web 2.0 solutions geared towards helping the Philippines move up the BPO chain.

$6B BPO sector builds on early gains

For an industry that prides itself in following processes meticulously, the success of business process outsourcing (BPO) seems to have hinged on seemingly small measures that later turned out to be “game changers.”

One such policy shift that would later come to have massive positive implications on the industry was the government’s decision to allow individual buildings to be accredited by the Philippine Economic Zone Authority (Peza).

According to LiveIT CEO Fred Ayala, the government’s timely action to ease previously restrictive rules about incentives for investors was one factor that helped the BPO industry bloom.

Policy shift

“Before it [government] intervened, export processing zone rules provided incentives to investors only if they located in a specific industrial technopark,” he said.

“One of the key insights pushed by [the Department of Trade and Industry and the Board of Investments] was to suggest and push for changing those rules, so that the Peza framework could now allow building owners to designate and apply their buildings for Peza accreditation,” Ayala added.

The immediate result was the accreditation of the RCBC Plaza in Makati City as as the first Peza-certified building—a site that became a magnet for BPO firms despite the lingering effects back then of the 1997 East Asian financial crisis.

“If that had not taken place, a BPO coming here might have been told by the government, ‘you must locate in Mariveles,’” the Ayala executive said. “In such a situation, there is no doubt that the take off would have been much slower.”

“It’s like drilling for oil,” he said, crediting the BPO sector’s backers at the trade department for pushing for the rule change. “You have to go where the people are. Export processing zones are quite far from urban locations. So this change allowed BPOs to ‘drill for oil’ by looking for the best people where they were.”

After that, selling the Philippines to foreign firms as an outsourcing destination became a lot easier.

Another BPO industry pioneer, ICT Group president Karen Batungbacal recalled how critical it was for a concerted effort between the public and private sectors to jointly push the country as a product to potential investors.

“Back in 2000, I approached DTI to talk to [then] Secretary [Mar] Roxas and he quickly came on the bandwagon,” she said. “He understood that it was a ‘country sell.’”

Selling RP

Batungbacal said that in the BPO industry, foreign locators and their clients first had to be convinced about the viability of a particular country—its political, social and economic potentials—before even taking a look at individual firms offering their services to them.

This is where companies like Gartner—with its broad influence in the information technology industry—were critical to the country’s success.

“It was very important because companies would refer to consultancy firms or research firms if they wanted to locate offshore,” she said. “We needed to sell the country first.”

“Whenever I approach a potential client, the first hour or two would be about the country,” the ICT Group chief said. “Only after they are convinced about the country’s feasibility would I be able to talk about my company.”

With the public and private sectors focused on this goal, the BPO sector grew into a $6.1-billion-yearly industry with close to 400,000 employees today—and aiming for one million in just a few years.

“We are not resting on our laurels,” Business Process Association of the Philippines president Oscar Sañez said. “We are now focused on making sure that this industry is sustainable over the long run.”

Indeed the BPO sector is now widely credited as one of the industries that helped the country weather the worst global economic crisis since the Great Depression.

In the end, the sector’s success is all about having foresight, the cooperation of government agencies and the private sector, dogged determination and—according to former Board of Investments managing director Gregory Domingo—that crucial dinner between top officials of DTI and Gartner in 2001.

“That opened the doors of the world for us,” he said. “It changed everything.”

PLDT acquires medical outsourcing firm

The Philippine Long Distance Telephone Co. has expanded its business process outsourcing business with the acquisition of Laguna Medical Systems Inc. (LMS) for $8.25 million (about P400 million).

In a disclosure to the Philippine Stock Exchange on Wednesday, PLDT said the acquisition was made by SPi Global Solutions, a leading BPO company which is a unit of its wholly owned information and communications technology company ePLDT Inc.

LMS has over 50 consultants across the region who assist more than 200 hospitals attain coding and billing compliance as well as optimize entitled reimbursements for patient services.

This 22-year-old company also offers recovery audit contractor (RAC) defense and recovery services to help healthcare providers manage and defend RAC audits.

"As a result of the significant focus on healthcare reform in the US, we have been actively tracking companies in the coding compliance space with the goal of finding one to acquire whose corporate culture and values match our own," SPi president Peter Maquera said.

"LMS fits the bill. Their capabilities nicely complement our existing medical transcription, billing and revenue cycle management services and provide an excellent new entry point for us into this rapidly growing $25 billion industry," he added.

The inclusion of LMS' product offering, he noted, would strengthen SPi's relationship with more than 400 hospitals, multi-specialty clinics and physician practices.

"And it increases our healthcare-specific employee base to more than 2,000 worldwide," he said.

The US healthcare industry accounts for 16 percent of US gross domestic product and is the largest segment in the US economy.

With the US government now requiring healthcare workers to achieve a 95 percent or greater accuracy rate on medical coding, inexperienced healthcare providers with limited resources are seen struggling to meet this requirement.

This in turn is seen to provide growth opportunities for well-funded and -managed service providers in the coding compliance consulting market.

"SPi's acquisition of LMS is an excellent example of how we are executing on our strategic plan to accelerate growth and strengthen our position in the BPO arena," said ePLDT president Ray Espinosa.

Big Blue to expand RP services hub

With several hundred employees – many with business management skills -- at its disposal, the Philippine office of technology firm IBM is being positioned to become a global hub for experienced services providers.

IBM Philippines recently started re-expanding their local Global Business Services (GBS) to complete a network of multisite solutions offices that can offer 24x7 assistance to global clients.

The Philippines would be one of the eight such GBS locations worldwide. The others are Argentina, Brazil, China, Egypt, India, Romania and Vietnam.

During a visit to the Philippines, IBM GBS Vice President for Global Delivery Richard Patterson said they are hiring skilled workers to serve as the local pool that can be tapped for specific projects in offshore locations.

Patterson said adeptness to English is one of the key factors why the Philippines was again chosen to become part of the GBS, aside from its geographical proximity to other countries where IBM has a presence.

He noted GBS offers its services to a variety of industries such as telecommunications, travel, industrial manufacturing, financial and retail.

After the economic downturn, Patterson sees a return to "normalcy" in global industries, particularly those with multiple locations that need to ensure full operational capabilities.

“They would need to have the right people working with them to optimize their business and build relationships,” Patterson said, adding that the improved global business climate would fuel IBM’s offshore services business.

IBM to get workers for ‘delivery center’

TECHNOLOGY GIANT IBM Corp. yesterday re-launched a "delivery center" in a bid to bring more job opportunities to local talents.

Richard A. Patterson, vice-president for global delivery at IBM Global Business Services, said the Philippine strategic center aims to provide more information technology careers in the country as the company brings its clients near their target markets.

The Manila delivery center, which was established in 2003, is the fourth fastest growing center in eight strategic hubs globally, he said in a press conference.

Mr. Patterson said the Philippines was chosen as a location for the delivery center because of the stability of the peso and the "high level of support" from the government.

Moreover, "good quality" education, language proficiency, and the technical capacities of local talents make the Philippines an ideal place for a global delivery center, he added.

The Manila delivery center is part of IBM’s "globally integrated enterprise approach," adopted by the technology giant to give corporate clients an option to provide services close to their target markets.

Mr. Patterson explained that global delivery centers cater to both large companies and small and medium enterprises by providing consulting and applications services.

IBM’s delivery centers worldwide are focused toward the transportation, banking, telecommunication and industrial sectors, Mr. Patterson said.

BPO firm won’t hike workforce to cut costs

A UNIT of Philippine Long Distance Telephone (PLDT) Co. said it would not increase its workforce this year amid efforts to reduce costs, but would spend money on technologies to boost productivity.

Peter S. Maquera, chief executive officer of SPi Global Solutions, said in an interview late last week that the PLDT business process outsourcing (BPO) unit is looking at 10%-15% growth in revenues this year.

The company’s local workforce, which stands at 11,000 in 10 contact centers nationwide, is not expected to post a significant growth this year as SPi Global is trying to cut costs. Instead, the company will focus on investments in technology to maximize productivity and to support its move into high-value services in areas such as health and education, he said.

Meanwhile, Mr. Maquera called for the passage of a law creating the Department of Information and Communications Technology to allow the country to compete with larger BPO hubs like India.

Amid a greater consolidation of customers as well as vendors, an ICT department will serve as a powerful agency to market the high-value capabilities of Filipino talents, he added.

The establishment of such an agency will also strengthen the domestic market, thereby creating a long-term business opportunity for the local BPO industry, he said.

Six SPi Global contact centers are into voice services while four are in the non-voice services. The biggest site is in Parañaque, employing over 3,000 agents.

It merged with ePLDT last year when the latter acquired 100% of SPi Global in April 2008. SPi Global has a total of 14,000 employees in 29 locations in North America, Europe and Asia.