Tuesday, September 23, 2014

Selling the #Philippines to the #Fortune500 requires more than just feel-good emo rhetoric

Within the BPO sector, selling the Philippines to Fortune 500 companies requires a high degree of professional honesty coupled with concrete risk assessment and business-readiness solutions for critical scenarios like infrastructure downtime, security breaches, natural calamities, etc.

Most Fortune 200 companies won't outsource unless you've undergone due diligence measures and audits on PCI-DDS, alignment to Sarbanes Oxley 404, and even Dodd Frank. More importantly, Business Continuity & Disaster Recovery Plans boost client-investor confidence. That is why JP Morgan Chase, American Express, Wells Fargo, First Data, Western Union, Thomson Reuters — all have their global shared services hubs in the Philippines.

Now this is not a walk in the park. The BPO sector lobbies and coordinates intensely with the likes of PLDT to secure "right-of-way" infrastructure and linkages with Sprint and AT&T to enable greater connectivity. This is where we seek government intervention as PEZA/BOI certified companies.

Labor background checks are more and more important due to privacy law issues of Western customers whose private information can be outsourced to service centers in the Philippines. This requires collaboration with government agencies in terms of upholding identity and business cyber hacking deterrent laws; better training programs on fraud prevention; as well as ensuring that our HR policies do not put a blind eye on business-related fraud. There has been quite a number of identity theft as well as phishing cases involving Indian-managed centers that places a great deal of risk in outsourcing, so much so that companies penalize outsourcing centers up to 2M USD per breach.

What goes well for the BPO industry though is that when it comes to multi-million investments, the government is particularly generous in terms of taxation. It is not the same for so called "protected businesses" such as telco, mining, real estate, education, etc.

The financial services industry is cautiously optimistic that the recent RA 10641 (allowing full entry & ownership of foreign banks to operate in the country)signed last July is a step in the right direction. Together with the American Chamber of Commerce, the ECCP, and the BPO industry, we are still hoping for an easing of restrictions of the FINL.

On a related note, i would like to disabuse the notion that the outsourcing industry is mainly call centers. BPAP, i believe, sorely needs to educate non-BPO practitioners on this. We have a growing KPO on financial services that delve into investment banking, mortgage banking, auto loans, insurance that are non-voice in nature. Call centers are what i would call "Tier 1″ services.

Selling the Philippines requires a great deal of gravitas, and not one grounded on emotional hype.

A good benchmark is the Singaporean 2-pronged approach: Liberalize regulations on FDIs but ensure that the domestic markets are used by the same foreign owned companies as "source inputs" into their supply chain. This way competition and collaboration exists. Enhancing FDIs only is a shortsighted approach, while growing the domestic market is a long term initiative. In essence, the BPO sector is doing this for supplier inputs for plug and play facilities/real estate services, 24-hour fast food establishments, etc – but it is more of an emergent byproduct than a conscious strategy.

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