Japanese firm invests in leading PH BPO enabler

Photo taken in 2007 shows Filipino call center personnel attending to US client at a newly opened business process outsourcing office in Manila. Industry officials have emphasized the need for BPO firms to diversify into more complex services if the sector is to sustain its rapid growth, as they said over 100 countries are posing a challenge to the Philippines’ dominance in the BPO sector. AFP PHOTO/ROMEO GACAD

MANILA, Philippines—The Japanese telecom giant NTT Communications Corp. has acquired a major platform in the Philippine information technology business process outsourcing (IT-BPO) industry by buying into the Diversified Technology Solutions International Group, the country’s leading IT enabler for the outsourcing industry.

NTT Com announced in Manila and Tokyo on Thursday that it had struck a deal to buy a 50.1 percent stake in Freedom Resources Holdings Corp., the holding company of the DTSI Group, thus making the local firm part of the NTT Group of Companies, one of the largest and most respected telecom and IT companies in the world.

NTT Com is a wholly owned subsidiary of global telecom leader NTT Corp., which ranked 31st on Fortune’s Global 500 list in 2011.

Founded and led by local entrepreneur Miguel Garcia 15 years ago, DTSI Group has a strong track record in building systems and providing services for IT-BPO operators, accounting for 60 percent of all seats in contact centers currently operating in the Philippines. Anthem, Inc., a DTSI Group company, is also forecasting high growth for its business of building and leasing contact center platforms to companies looking to start up IT-BPO businesses in the Philippines.

“Through the tie-up, NTT Com expects to strengthen its contact center capabilities in the Philippines by creating operational synergies with DTSI Group, including by leveraging their respective customer bases,” NTT Com said in its press statement.

After NTT Com’s entry, Garcia will keep management control of DTSI, a systems integrator that designs, builds, deploys and manages end-to-end business communications systems, IT services and hosted, managed and premise-based contact center services.

“From our inception, my vision for DTSI Group was to create a global company. Today, I am happy to announce that we will soon achieve that vision,” Garcia said.

“As many of our friends in the industry know, over the past several months we have evaluated a relationship with a potential strategic partner. We wanted a feel for alignment with our culture, our objectives, and our commitment not just to DTSI Group, but to our clients, our clients’ clients, and our country,” he said.

NTT Corp.’s roots go back over 100 years to the introduction of the telegraph in Japan. Since privatization in 1985, it has diversified into new markets, forming new subsidiaries and developing leading-edge technologies. The NTT Group had operating revenues of $130 billion for the fiscal year ending March 31. The group operates in 78 cities in 30 countries outside Japan.

Garcia said this deal meant that in the past 15 years, DTSI Group has built an organization worthy of investment by a global industry leader.

“It means our new strategic partner recognizes the potential of our organization, its prospects for strong growth, and the opportunities our country offers to grow their investment in a substantial and sustainable way. It means they see the potential in our people,” Garcia said.

DTSI Group, which has an annual consolidated revenues of about P2 billion, has about 243 employees. It has grown by a compounded rate of over 20 percent in the last few years.  It has helped set up most of the big BPO operations in the Philippines like those of Covergys, Teleperformance and JP Morgan and likewise acts as IT enabler to other sectors outside BPOs like financial institutions AIG, schools and hotels.

The Philippines is also becoming a center for global shared services in the banking, insurance, energy, engineering, and other industries. Global companies have been increasingly attracted to the Philippines’ abundance of fluent English speakers and incentives offered by the government.

In 2011, total BPO sales revenues in the Philippines by increased by 24 percent year-on-year to $11 billion, accounting for 5 percent of the nation’s GDP. The contact center industry was particularly vibrant, generating revenues of $7.4 billion, the highest revenue of any country in the world, surpassing even India.