RP service sector draws US firms

More and more American firms are looking at moving key business processes to the Philippines, thanks to aggressive marketing by the country’s outsourcing industry, raising hopes for the Philippines to become a global outsourcing hub for western businesses.

"There is acceptance of the Philippines as a viable outsourcing destination and we are now in the radar screen of US companies," said Rosalie Montenegro, senior vice president of the Philippine Long Distance Telephone Co., which has been wooing more US corporate clients for its thriving call center business.

Montenegro recently pitched American businesses on the benefits of outsourcing to the Philippines, when she spoke at a seminar for CEOs and executives in New York held by Outsource Philippines, the industry body selling the country as an outsourcing destination.

"Many Americans came just to look at the Philippines after that seminar, and they were talking to us. All of a sudden we are with India," said Montenegro, comparing the level of interest in the Philippines with that shown to its more established rival.

Among those scouting out the country are major US banks such as J. P. Morgan, which is keen on setting up Philippine units to provide backroom and customer services, the way global financial giant Citibank has done for years.

Already, many US firms use dedicated Filipino call centers to provide customer service, generating jobs for over 30,000 Filipinos and dollar revenues reaching $173 million a year. Among these companies are major names like America Online, American Express, Microsoft, Barnes and Noble, Dell Computer, Sun Microsystems, Procter & Gamble and Bristol-Myers Squibb.

That is but a drop in the bucket for a booming global business reckoned by India to reach as much as $1.3 trillion a year. The Philippines, seeing how its deep pool of knowledge workers and low labor costs make it a more ideal outsourcing center than its rivals, is eyeing a chunk of that pie.

"Outsourcing is a niche where the Philippines qualifies and we would like to get our fair share of it," said senior presidential adviser Roberto Romulo, who helped Outsource Philippines secure government backing and seed funding for its marketing drive.

Romulo’s great hope is for the country to become a global powerhouse in outsourcing, particularly in the fields of business process outsourcing, medical and BPO transcription, animation, application development and software engineering.

Helping to make the sales blitz a success were the testimonies from global firms Procter & Gamble and AIG, which said they outsourced strategic services to the Philippines because of its large pool of skilled workers, excellent connectivity and low labor costs.

"Our Manila service center has exceeded our expectations for both cost savings and quality of service delivery. We continue to move additional global work to Manila as a strategic business services location," said P&G vice president Randy Reedy.

Accordingly, P&G had compared five sites in Asia before picking the Philippines in 1999. Its studies had shown that the country offered the highest workforce quality, next only to Australia and Singapore, as well as the most cost advantage, far more than either India or Singapore.

Similarly, AIG, which operates the widest property casualty and life insurance network of any insurer in the world, decided to move some back-end services to the Philippines as a cost-effective solution amid the increasing volume and complexity of its business.

It set up a joint venture with its local unit to provide services like data entry, mail management, post-sales servicing, indexing of documents, licensing and contracting for its global insurance operations.

The joint venture, which had 150 seats at start-up and is now targeting to have 500 by next year, has generated cost savings estimated at 40 to 45 percent per seat.