Dutch financial giant ING is positioning to grow its shared services hub in the Philippines, unfazed by doomsday jitters in the business process outsourcing (BPO) industry arising from headwinds in the local and global markets.
ING Business Shared Services (IBSS), ING’s only shared services hub in Asia, renewed its vote of confidence in the Philippines as a “captive offshoring” market for global companies amid the projected slowdown in BPO revenues.
Joey Cuyegkeng, ING Bank Manila branch senior economist, projected that revenues from outsourcing would grow by less than 10 percent this year and would taper off in the coming years.
Investment pledges in the outsourcing industry already contracted by 22 percent year-on-year due to “competition from other Asian economies, onshoring threats for US companies, security concerns, and uncertainties over incentives,” Cuyegkeng noted.
These BPO revenues accounted for around 47 percent of the Philippines’ structural inflows in 2016 and thus have had a huge impact on the strength of the local currency.
Together with overseas remittances, the $25-billion BPO industry has been a driver of domestic consumption.
Still, ING said on Thursday it remained “deeply invested” in the country’s potential growth.
“The trend for captive shared services centers is to move more knowledge- and skill-based operations to countries where labor is not only available, but also adaptable. So the Philippines continues to be a good location for many global companies,” ING Bank Manila’s incoming country manager Hans Sicat said.
Unlike the typical business model in the Philippines where a BPO serves third-party vendors, IBSS, as a captive shared services center, caters to ING’s in-house processing requirements in its Asia, Europe and North America businesses. This business model also enables ING to keep its staff attrition low, as well as expose its staff to global practices and standards.
Given IBSS’ growth trajectory, onshore operations have been transferred to a new and bigger office at the newly built World Plaza of Daiichi Properties, a Philippine Economic Zone Authority-registered ecozone site in Taguig City, to accommodate more in-house processing from ING’s global business. From the current four floors, IBSS expects to double its office space occupancy over the next few years.