PH is top choice for ‘offshoring’

Study notes emergence of competing locations

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THE PHILIPPINES, India and China are the top three global shoring locations for corporations based on the number of jobs created in shared service centers, call centers and technical support centers from 2008 to 2011, according to a new report from global real estate adviser Jones Lang LaSalle.

The Philippines attracted 115 projects during that period, creating more than 72,000 jobs; India attracted 105 projects with 64,370 jobs and China, 56 projects with 25,455 jobs, said the JLL report “Onshore, Nearshore, Offshore: Still Unsure?” released last week.

The other top locations and the number of jobs created were: 4. United Kingdom (22,304); 5. United States (18,594); 6. Brazil (13,964); 7. Poland (13,476); 8. Mexico (11,515); 9. Romania (11,438), and 10. Costa Rica (8,878).

The JLL study said the changing global economic landscape was affecting corporate strategy and location decision-making. “The threat of recession, political uncertainty and rise of global emerging nations are causing international corporations to re-assess their location strategy. Companies are increasingly selecting from three   ‘shoring’ options: onshore, offshore and near-shore,” it said.

Commenting on the decision companies faced, Ian Mackenzie, head of solutions development for JLL in Asia Pacific said: “A longer term focus on improving business productivity, operational efficiency and future scalability is now driving corporate real estate decision-making, rather than straight cost-savings in the short term. Corporations are undertaking comprehensive and early initial business case-and-option analysis” in designing their location strategies.

“For Asia Pacific-based corporations, a growing number are seeking the cost and productivity benefits associated with shoring, often sticking to offshoring or near-shoring options within the region. At the same time, in order for emerging nations such as India, Philippines, China and Malaysia to attract greater foreign direct investments (FDI), greater transparency is needed as well as access to quality labor and better location options,” he added.

Lylah Fronda, associate director for markets of JLL Philippines, added: “We see first-hand that the Philippines continues to be the      preferred choice for offshoring. A highly skilled English-speaking population, coupled with a responsive real estate market with the right infrastructure creates a perfect mix for companies that understand the efficiency of going abroad for many business processes and call center operations.”

As to real estate conditions, the cost of offshoring operations in Manila was estimated by the study at $222 a square meter a year, more expensive than $187 in Bangalore or even $189 in Kuala Lumpur.  But this was cheaper than the $300 in Mexico City, $606 in Sao Paolo or $372 in Buenos Aires.

The overall vacancy rate in the Philippines was estimated at 3.6 percent, suggesting less choice of office space compared to other typical offshoring destinations. In Bangalore, for instance, the vacancy rate was estimated at 7.7 percent while in Mexico and Sao Paolo, the rates were 13 percent and 11.9 percent.  Buenos Aires’ rate was closer to that of the Philippines at 4.2 percent.

Meanwhile, the study noted that onshoring in mature markets was one trend that had re-emerged in recent months with a clear increase in strategic analysis and activity, particularly in the United States.

“Rebalancing within mature economies, as well as weakening currencies and growing availability of skilled labor, have led to a growth in the attractiveness of onshore locations. Locating business functions and supply chains onshore means companies can be closer to their customers, reducing supply chain complexity and risk and potentially allowing greater responsiveness to changes in demand,” the study said.

The study said paradoxically, the same logic of being close to the customer was also driving offshoring activity. “For international companies, particularly those in the pharmaceutical, and FMCG (fast-moving consumer goods) sector, seeking to align business functions and supply chains to high-growth emerging markets, an agile offshore location strategy can be a critical point of entry into a major market,” the study said.

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  • joerizal

    Sa ngayon oo. Pero kapag nanggulo na ang mga tinamaan ng lintek na terorista at muslim, tingnan natin kung mag-outsource pa sa Pinas. Saka puwede ba ayusin niyo yung pagsagot niyo sa call center? Para kayong parrot…For example: Caller: “I’m calling to report a problem with my cable service”, Pinoy call center:   “ok sir, I see you are calling to report a problem with your cable service”, etc. Ayusin niyo ang conversational english niyo para hindi ma-irritate ang tumatawag.

    • http://www.facebook.com/metz.ceprian Buknoy Bisaya

      lol…palitan mo nalang dun..

      • joerizal

        Wag na lang, baka lalo pang lumala. Kaya nga ako nagtatagalog at hindi ko pinangarap na magtrabaho sa CC.

      • http://www.facebook.com/metz.ceprian Buknoy Bisaya

        well at leas they earn a decent income for their family..para sakin sapat na yun. minsan talga eh may ayaw tayo o gusto sa isang bagay..

      • joerizal

        True, pero mawawala ang business sa kanila kung hindi nila tatamain ang pakikipag-usap. Marami ang nagalit sa mga CC sa India dahil sa sobrang kulit ng kausap na CC rep. Kaya nga nalipat sa Pinas ang karamihan, pero dapat ayusin pa rin para di mawala.

    • http://pulse.yahoo.com/_EXFI4EUGM23PQ4FMQKLVH36OXI Jose

      That’s probably more an issue with company policy than English proficiency though.

      Call center agents are usually heavily coached on what to say.

      • joerizal

        Siguro nga kasi panay ganon ang sagot nila, nakaka-irita. Yung mga nagpapatakbo ng kumpanya nila ang hindi marunong mag-ingles.

  • rickysgreyes

    We are already known as a great call center country. DTI should position the Philippines for other back door services like accounting, design, medical transcription, legal transcription, archi, engineering, gaming (video games), etc. We have a foothold on these but we could easily be the WORLD’s NUMBER ONE OUTSOURCE DESTINATION, SA GALING NG PILIPINO. DTI should really promote, position our country as such. Our export promotion agencies like CITEM and BETP, both under DTI are still geared towards manufacturing. The DTI and BOI heads should re-engineer their agencies.

  • RocSteady

    It is good PH is top choice for offshoring.  PH is one of the better english speaking countries compared to the other ones mentioned in the article.  The problem in my view is that costs are going up with a rising Philipine Economy.  With the Peso appreciating it is now more expensive for International companies to do business here.  If the Peso keeps going up some companies will outsource to cheaper countries.  Luckily the Philippines is not the most expensive option for outsourcing at this time.

    • http://www.facebook.com/metz.ceprian Buknoy Bisaya

      english is just one factor. cost is the biggest driver.

  • pugadlawin

    We welcome offshoring but this is short-term.
    P-Noy should help and develop local businesses to grow.
    We need our own industries, produce our own goods and not import cheap stuffs from China
    and we could hopefully limit our number 1 export – people.
    This is the only way to be sustainable and to move more Pinoys out of poverty.

  • Your_King

    People may not want to believe it but these many projects and many jobs created plus the expanding of call & service centers and BPO can be directly attributed to the work and long-term vision of FPGMA. The decisions she made and things she initiated help make this success for the Philippines into a reality during her term. I’m not at all political and do not want to get into choosing political sides but its the truth and credit must be given to where credit is due.

    • ProudPinoyinLosAngeles

      Fair enough! However FACT still remains that she remains a suspect of all these crimes against the Filipino people. Now, if these accusations against her are true and she is proven guilty, then she should pay for these crimes in jail.

      • Your_King

        Fair enough! If there are concrete evidence to prove these accusations against FPGMA then so be it. However, as of the moment all the cases against herlack lack these concrete evidence needed. Even the PCSO case, the first investigating Ombudsman panel found no evidence of plunder…yet Carpio-Morales somehow forced the case to go through. And now instead of the case moving forward, its stuck while special prosecutors try to find something that sticks since the case is weak. People should pay for their wrongs but if individuals are getting persecuted because of some political war then it does a disservice for the Philippines.

    • jose_rizal11

       kaya sinasabi mo na ok lng ung magnanakaw si gma hahaha stupido!!!!

      • Diablo_III

        hahaha. basta Crabs ok lang sa kanila..

      • Your_King

        it’s never ok to steal. But it’s also not ok to make baseless accusation with no merit. Fpgma did good for the country and the things that she supposedly did bad are mere accusation with weak evidence. I’m sure she was not perfect in all her moves and made some decisions that she’d like to take back but overall she helped the country in so many ways whether people like to admit it or not.

    • EdgarEdgar

      Very true.

      FVR paved the way, through his telco industry deregulation in the 1990s, for the entry of foreign players into the telco industry thereby lowering the data connection charges. With cheaper telco and data connectivity charges, setting up BPOs in the Philipines became cheaper.
       
      ERAP was pretty much intoxicated the whole time he was in office which ultimately led to his ouster.

      GMA was ahead of her time and saw the bigger potential for the BPO industry. When GMA started office in 2001, local BPO industry was only limited to call centers. By the end of her term, the BPO industry has grown in breadth and depth, diversifying into various niches, voice and non-voice, back-office and middle-office, and hyper-specializations. The then DTI Sec. Mar Roxas who only served from 2001-2004 benefited tremendously from GMA’s vision and launched his political career largely on the success of GMA’s vision. The real groundwork to promote the Philippines as the preferred BPO destination was carried out assiduously by then labor Sec. Patricia Sto. Tomas who is in the habit of staying out of media limelight.

      P-Noy, in fairness to him, has been quite successful in maintaining what could actually manage on its own as long as P-Noy stays out of the way. P-Noy’s endorsement and signing of the Anti-Cybercrime Law has unsettled many in the BPO industry as it exposes them and their clients to data surveillance resulting in breach of confidentiality. Instead of helping our BPO industry move up the value chain and create more high-paying jobs, P-Noy is hurting the industry with his politically motivated Anti-Cybercrime Law. Another example of how P-Noy’s politics is hurting our economy.

      • mumbaki ak

        basta madaming mr. crabs dito..talangka to the core!

      • EdgarEdgar

        that happens to be what the Business Process Outsourcing industry here have been saying about P-Noy’s unfriendly Anti-Cyberime Law and the lack of stronger tax holiday incentives to attract more ROHQs and COEs.

      • mumbaki ak

         how would transparency in internet transactions be unfriendly to BPOs? are they hiding something? and what about taxes? do they not wish to contribute to the growth of the country?

        mr edgaredgar, you are simply missing the entire picture, cherrypicking just to give your fallen idol some beauty. you don’t even consider the serious stance against corruption which has enhanced investor confidence in the country. for once, let your biases against p’noy rest and listen to what economists and foreign experts’ say about the country’s economy.

      • EdgarEdgar

        you missed the point. the use of data surveillance in the name of transparency is prone to abuse. this puts the data privacy and confidentiality of BPOs and their clients at risk. with our law enforcement’s poor record in curbing abuses and committing abuses, the BPO industry is right to be concerned. because of this, Barclays balked at setting up backoffice in PH. Wells Fargo may already have entered PH, but they have slowed down and altered their timeline to reconsider cost and data security. you are free to do you own industry-specific research, listen to people on the ground. DOST-ICT also has some information on this. please bear in mind that IBM, Convergys, Accenture, HSBC, Deutsche Bank, JP MorganChase, Citibank ROHQ, Shell Shared Services, Chevron Shared Services, AIG, GE Capital and other bigger names came to PH during Arroyo’s administration, all happening long after Mar Roxas has departed from DTI. Even Bank of America started in PH early in 2010. i merely quoted the concerns voiced out by the business process outsourcing association of the Philippines. all these information are available in the public domain. please feel free to google them and do your own research to broaden your own understanding.

        if P-Noy would really like to make a difference in the BPO industry, he should listen more closely to the industry’s needs just as former Sec. Patricia Sto. Tomas worked closely with the industry. (1) Increase the labor pool supply to mitigate the poaching and cannibalization within the industry and the upward trajectory of labor cost. (2) enhance quality of education in colleges to lessen the burden of training cost on the BPOs. (3) promote the infrastructure and accessibility of the so-called second and third wave cities. (4) provide better tax incentives to lure more BPOs in. in their 2nd or 3rd year of employment, many BPO employees are already in the 33% income tax bracket which is undue burden to the middle class. (5) in Metro Manila, improve safety and security in the streets as night to protect BPO employees. (6) create a BPO industry-wide healthcare plan to reduce cost burden on BPO companies — at 500,000 the industry has the scale. (7) plan for long-term prospects of the industry. upskill and upgrade to move the PH BPO industry up the value chain. the advent of disruptive technology is constantly rendering some existing work obsolete and creating new ones as well.

        P-Noy still has 3 years to go. he can still make a difference, or be remembered forever as the president who stood in the way of progress. have a good day.

      • Your_King

        Well said…fpgma was definitely a visionary and focused on the future of the Philippines. The decisions she made she took into account the long-term condition of the country. Her not so good relationship with the media caused her to be unpopular but that lack of relationship wi the media was because she was too busy doing things like launching the BPO and doing her many good works for the country.

      • EdgarEdgar

        Thanks. Allow me to also add, GMA’s not so good relationship with the media may also be because she does not suffer fools gladly and holds everyone to higher standards. A trait that most Filipinos will not find endearing, even if for our own good.

      • Your_King

        Basically, fpgma was more concerned with making sure her decisions and the work she did improved the country. Unfortunately, Aquino is more concerned with his persona and his celebrity status along with trying desperately to collect cool points.

    • http://www.facebook.com/metz.ceprian Buknoy Bisaya

      it was Roxas who initiated the study, and made recommendation to Arroyo, which she adopted.

      • Your_King

        Again it was fpgma’s ability to think.ahead of her time and being a visionary that this was possible. Certainly Roxas played an important role in the few years he was involved but at the end of the day…she was the President and therefore it ends with her. This doesn’t get to where it is today without her vision and her approval.

      • http://www.facebook.com/metz.ceprian Buknoy Bisaya

        arroyo did great things..especially laying the foundations for a future strong and wealthy economy..everything Pnoy enjoys today was because he made things more transparent and accountable and cut graft and corruption at the apex of the hierarchy.

        yes, arroyo did great things for the economy, but she stifled it also as she tolerated massive graft and corruption and shaddy/underhand dealings to perpetuate.

        Thanks to her husband.

      • Your_King

        The good things that fpgma has done for the Philippines are facts that can be checked and i’m not a political junky but fact is fact. Now as for the accusations of graft and corruption because of the Philippine justice system i can’t treat it anything other than just accusations because first off there is no conviction and second off, the evidence are either weak or non-existent.

      • http://www.facebook.com/metz.ceprian Buknoy Bisaya

        i have a first hand experience…so i know my point. esp with the husband.

      • Your_King

        I can’t speak for the husband because there aren’t plunder charges against him nor is he in jail. I can only speak for fpgma since she is the one that seems to be being persecuted by the Aquino Admin. If you were wronged by her husband then take it up with him or the courts. But as for fpgma i’m just trying to put out the facts. She may not be considered the greatest President of all time and i’m sure she’s made her share of decisions that she wishes she could take back but it cannot be argued that she did a lot of good for the country and was one of the hardest working President’s the Philippine’s has ever seen.

    • 12JEM

       Policies on VAT, CCT, Ro-Ro Develpment and many features of the Midium-Term plan of the government, etc are all PGMA’s. The problems with GMA were the corruptions and election cheating, etc that were prevalent during her time.

      • http://www.facebook.com/metz.ceprian Buknoy Bisaya

        tomo!

      • Your_King

        In addition to her major contribution to education like the ERDT, also BPO/IT, and even work with the PCUP and the poor and informal settlers etc…the corruption and election cheating are accusations that have yet to be proven since they lack evidence. At the same time corruption is never good, however, there is corruption in any Admin including Aquino and even way back toe Diosdado Macapagal yet i don’t think you would consider either one corrupt.

    • http://pulse.yahoo.com/_EXFI4EUGM23PQ4FMQKLVH36OXI Jose

      True.  Pity about all her corruption though.

      In any case, credit is due as well to FVR and Erap, who both (IIRC) contributed to outsourcing growth as well.

      • Your_King

        I don’t want to speculate on all the corruption because thus far all of them are mere accusations part of some black propaganda that is obviously part of some political war between Aquino and fpgma. However, we cannot discredit her many good contributions to the Philippines.

      • http://pulse.yahoo.com/_EXFI4EUGM23PQ4FMQKLVH36OXI Jose

        It certainly isn’t all ‘black propaganda’, as there was widespread perception that GMA was corrupt before P-Noy became president.

        And she did make some contributions, but forgive us for not glossing over all the corruption.

      • Your_King

        As long as there are solid evidence to prove the accusations then that’s part of the justice system. However, when cases like the PCSO case get elevated to non-bailable offenses when Ombusdman investigators already found no evidence of plunder then that’s when i can’t help take a second look at the charges.

      • http://pulse.yahoo.com/_EXFI4EUGM23PQ4FMQKLVH36OXI Jose

        The fact that she isn’t getting caught doesn’t mean there wasn’t corruption, especially in the Philippines.

      • Your_King

        There was corruption in the Philippine government long before fpgma was born and corruption in the Philippines government will unfortunately be around long after she is gone. We shouldn’t buy into what Aquino is trying to force feed us as if fpgma created corruption in the government. And fyi corruption is still prevalent even in the Aquino Admin. today.

      • http://pulse.yahoo.com/_EXFI4EUGM23PQ4FMQKLVH36OXI Jose

        No one ever said that GMA invented corruption in the Philippines. 

        I meant that her getting caught doesn’t mean she wasn’t corrupt, especially in a country where the powerful have escaped justice time and again.

        And force feed?  Screw that, there were corruption allegations against GMA LONG before P-Noy came to power.

      • Your_King

        Its just hard to me to completely judge and convict anyone, including fpgma, based off of allegations. Until someone provides concrete evidence of a crime then allegations remain just that, allegations.

      • http://pulse.yahoo.com/_EXFI4EUGM23PQ4FMQKLVH36OXI Jose

        That doesn’t invalidate my point: even if she isn’t caught, it doesn’t mean she is innocent.

      • Your_King

        That doesn’t invalidate my point: even if there are accusations against her, it doesn’t mean that she is guilty.

      • http://pulse.yahoo.com/_EXFI4EUGM23PQ4FMQKLVH36OXI Jose

        Yes, I never said it did.

  • chiefsiop

    stop buying communist chinese products

  • http://pulse.yahoo.com/_6I5OQSOZBPNU77JNCBBTXKX45M Wel Aguda

    masarap ang crabs kya labas n kayo at ng amiluto kyo.

  • Diablo_III

    BAWAL ang CRABS dito…

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