CONFERENCE ON SERVICE SCIENCE, MANAGEMENT & ENGINEERING (SSME)€¦ · CONFERENCE ON SERVICE...
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CONFERENCE ON SERVICE SCIENCE, CONFERENCE ON SERVICE SCIENCE, MANAGEMENT & ENGINEERING (SSME):MANAGEMENT & ENGINEERING (SSME):
Towards Philippine Global Competitiveness Towards Philippine Global Competitiveness In In OffshoringOffshoring & Outsourcing& Outsourcing
August 5-8, 2008
Audio-Visual Room, CICT BuildingC.P. Garcia Ave., Diliman, Quezon City
Philippine IT-enabled services and BPO industry: on the world stage
OSCAR SAŇEZCEO Business Processing Association Philippines
Business Processing Association Business Processing Association of the Philippinesof the Philippines
●
Private sector-led organization representing all sectors of the BPO and IT-Enabled Services (ITES) industry and their support industries
–
BPO •
Voice •
Non-voice (e.g.F&A, HR)–
IT services•
Software development•
System integration•
Animation–
Engineering / R&D services– Allied industries (Property, Telecom, Staffing/Training Consultants, Systems integrators
●
Created to give the Philippine BPO industry a single point of contact for the world; one-stop information and advocacy gateway
●
210 company members and 5 association members (CCAP, PSIA, MTIAPI, ACPI, GDAP).
●
Full-time management team leading the execution of all initiatives
3
OffOff--shoring and outsourcing (ITshoring and outsourcing (IT--BPO) involves IT applications, BPO) involves IT applications, business process, and design/engineering servicesbusiness process, and design/engineering services
Source:
McKinsey Global Institute; Gartner 2005 database; IDC; interviews
IT applications services (ITO) Business process services (BPO) Engineering services (ESO)
Application development and maintenance•
Application development•
AD integration and testing•
Application MaintenanceSystem Integration•
Analysis•
Design•
Development•
Integration and testing•
Package implementationIT Infrastructure Services•
Help desk•
Desktop support•
Data centre services•
Mainframe•
Network operations•
IT consultingSoftware product development•
New product development•
System testing•
Localization/Support•
Gaming
Horizontal processes•
Contact centers•
Human resources•
Finance and accounting•
Supply chain (procurement, logistics management)
Industry/vertical processes•
Banking and insurance •
Telecom •
Public sector •
Utilities •
Health care •
High-tech •
Oil & Gas •
Consumer productsKPO•
Business research, financial research•
Animation•
Data analytics•
Legal process and patent research•
Other high-end processes
Manufacturing Engineering•
Upstream product engineering–
Concept design–
Simulation–
Design engineering•
Downstream product engineering–
CAD/CAM/CAE–
Embedded software –
Localization•
Plant and process engineeringArchitecture design• Design process• Building Management models
Outsourcing and Off-shoring (O&O) Services: Three main sectors
1 2 3
4
Direct employment FTEs
Revenues USD billions
Source:
BPAP/McKiinsey
Team analysis
1.5
2004
4.9
2007
+49%
100,500
2004
299,168
2007
+45%
Philippines ITPhilippines IT--BPO industry currently has close to USD 5.0 BPO industry currently has close to USD 5.0 billion in revenuesbillion in revenues
•
Strong intrinsic skills–
English language–
Cultural affinity to US –
Large pool of talent•
Competitive factor costs –
Labor–
Real estate–
Telecom •
Best in class incentives
Philippine ITPhilippine IT--BPO: Growing all sectors at tremendous rateBPO: Growing all sectors at tremendous rate
Sector 2007 Revenues ($000,000)
Past 3 years ave
growthContact Centre 3,600 52
Back Office (non-voice bpo) 398 46
Transcription (non-voice bpo) 197 24
Animation 105 38
Software 423 35
Engineering/Design Process 152 55
TOTAL Philippine IT-BPO (export only)
4,875 50
5Source: Joint BPAP/BOI/PEZA/CICT Task Force
• All sectors growing; Contact centres is 2/3 of industry and growing 52%/yr over the past 3 years• Back-office
services primarily in F&A, HR, Legal and Health services now 15%, growing 46%/yr• Software development is 10% of industry and continues to grow at 35%/yr
6
Philippines now the third outsourcing destination Philippines now the third outsourcing destination in the world, 2in the world, 2ndnd outside of North Americaoutside of North America
Source:
Everest research
7
•
Considerable pool of generalist and specialist talent•
Strong English skills, both verbal and writtenSuitable and abundant talent
1
The foundations of the PhilippinesThe foundations of the Philippines’’ success success
Source:
BPAP/McKinsey Team analysis
LowHigh
Quality infrastructure
•
World-class telecommunications•
Abundant and low-cost real-estate in major urban areas•
Accessibility3
Conducive business environment
•
Competitive incentives (e.g., income tax holiday)•
Specialized programs addressing near-term issues (e.g., near-
hire voucher program)•
Local governments and national government supportive 4
•
Among the lowest in labor costs •
Genuine global reputation in voice with multiple signature locatorsOperational performance
2
Key buy factors Philippines’performance Key points
8
The Philippine talent value proposition: Large pool of EnglishThe Philippine talent value proposition: Large pool of English-- speaking talent speaking talent
Source:
Phils
Comon
Higher Education : CIA World Factbook
2007; *China data for unemp
and literacy is major Cities only
Suitability rates are empirically based on a total of >80 interviews with HR professionals working in each country
Number of college degree graduates
2007 Annual growth
Business & Accountancy 128,000
Engineering & Tech 55,752
IT-related courses 42,047
Architecture 3,100
Medical Sciences 31,400
Fine Arts/Humanities 7,660
TOTAL Tertiary level 454,818 3.8%
Pop Labour force Unemp
rate Literacy
World 6,602M 3,400M 6.3% 82.0%
India 1,130M 509M 7.8% 61.0%
China 1,322M 798M 4.2%* 90.9%*
Brazil 190M 96M 9.6% 88.6%
Philippines 90M 36M 7.9% 92.6%
Over 400,000 college-
degree graduates annually out of 90 million population and a 36 million size labour force with literacy rate of 92.6%
9
“Of 100 graduates with the correct degree, how many would you employ if you had demand for all?”Per cent
EngineerCountries
The Philippine talent value proposition: Quality The Philippine talent value proposition: Quality
*
Mexico is the only country where interview results (higher number) were adjusted ex-post since interview base was thinner
Source:
Interviews with HR managers; HR agencies and Heads of Global Resourcing centers; McKinsey Global Institute
Asia
Latin America
Eastern Europe
Suitability rates are empirically based on a total of >80 interviews with HR professionals working in each country
42* 35*
Finance/accounting Generalist
20
13
35
25
10
50
50
50
10
20
China
Philippines
India
Malaysia
Brazil
Mexico
Russia
Czech Republic
Poland
Hungary
30
20
40
30
50
15
15
25
13
25 11
8
20
10
30
3
30
15
20
10
10
•
Frost & Sullivan, August 2007: Philippines among top 10 shared services and outsourcing locations in the world
•
IMF, March 2007: “The Philippines has established a strong presence in voice-based BPO sectors such as call centres, and there are also signs of growth
potential in other offshore services, such as medical transcription and animation.”
•
Gartner, Dec 2007: The Philippines has become a destination for call centre and back-office finance and accounting operations; rates highly in cost, labour quality and language/cultural compatibility.
•
Nomura Securities, November 2007: “We think that the Philippines has grown into the No. 2 outsourcing base after India in call centre–based BPO fields.”
•
Everest Consulting, Apr 2008: The Philippines is now the third largest destination geography for BPO services
•
Frontier Strategy Group, September 2007: The Philippines is among seven key markets that are “above the rest”
and are the “most critical to achieving corporate growth and outperforming the competition in 2008 and beyond”
•
National Outsourcing Association (UK), October 2007: Philippines awarded Off-shoring Destination for 2007
The Philippines is viewed as a favorable location for BPOThe Philippines is viewed as a favorable location for BPO--IT IT servicesservices
11
O&O marketUSD billions
Source:
Team analysis
~45
2005
~130
2010
CAGR+24%
OffshoringOffshoring and outsourcing is a large and growing marketand outsourcing is a large and growing market
Addressable market Actual penetrated market
~450
10% ~30%
12
Global offshore BPO industry offers large Global offshore BPO industry offers large growth potentialgrowth potential
Insurance
*
25-35
35-4010-12
10-128-10
20-25 120-150
Retail Banking
*
Travel & hospitality*
Auto mfg*
Telecom* F&A/HR Total
Industries Horizontal functions
4-5
10-15
Pharma* Others*
Current offshoring
2005 penetration **
Innovation can further expand the addressable market
Estimated addressable market*** by 2010USD billion
6% 9% 3% 9% 9% 8% 9% 9% 8%
Potentially offshorableAlready offshored
*
Including call centres, procurement opportunities; excluding opportunities in horizontals, e.g., F&A, HR**
Proportion of addressable market offshored
today; India share assumed as 46% ***
Includes addressable markets in currently offshoring
industriesSource: McKinsey Business Technology Office; McKinsey Global Institute; McKinsey Outsourcing & Offshoring
practice; Gartner 2005 database; IDC; NASSCOM Strategic Review 2005
13
Defining processes that are offDefining processes that are off--shorableshorable
*
Includes checking and savings accounts, money market, CDs and other basic retail products; excludes investment management, trust
and fiduciary services**
Includes consumer loans, auto finance, other unsecured consumer credit, small business lending; excludes mortgage, credit cards and corporate lendingSource:
McKinsey Business Technology Office (BTO) practice; McKinsey Global Institute; McKinsey Outsourcing & Offshoring
practice
Partially offshorable Offshorable
RETAIL BANKING –DEPOSIT AND LENDING
•
Application processing
•
Automated credit scoring
•
Manual credit evaluation
•
Verification of credit, address and employment
•
Account approval •
New account setup
•
Customer segmentation
•
Product design•
Distribution cha-
nnel management•
Branch and agent/ broker sales
•
Direct sales (call center, web)
•
Account maintenance
•
Branch customer service
•
Inbound cus-tomer service
•
Outbound service (fraud, account overdraft)
•
Dispute resolution•
Statementing
•
Portfolio monitoring
•
Early collection calls
•
Late collections, delegation to agency
•
Account closure
•
Cash fore-casting and supply
•
ATM maintenance •
Lock box and vault operations
•
Automated check processing
•
Manual check exception processing
•
Cash letter preparation
•
Returns and overdrafts processing
•
Branch deposits and withdrawals
•
ATM transactions processing and reconciliation
•
Money orders, wire transfers, electronic bills
•
G/L account balancing
•
Interest and fee calculation
Depository activities*
•
Same as above•
Charge-offs•
Litigation•
Seizure of collateral
•
Same as above•
Promisory note •
Q&A, loan fund-
ing and booking
•
Remittance processing
•
Same as above •
Same as above•
N/A •
N/ALending activities**
Offshorable
Percent of cost base
Cost savings in offshored activities
Deposits
20-30
50-60
9
31
5-10
50-60
28
19
10
10-20
50-60
0
25
30-40
40-50
15
8
30-40
40-50
20
<5%
40-50%
10%
15%
10
<5
50-60
0Lending
Product develop-
ment, sales and marketing
Credit evaluation and account setup
Payment processing Item processing Cash
management Customer service Default management
Account/loan acquisition Transaction processing Account servicing
Addressable market ~23-25 billion
Rich opportunity to develop F&A Outsourcing capabilityRich opportunity to develop F&A Outsourcing capability
14
15
Further value creation in ITFurther value creation in IT--BPO would involve moving from BPO would involve moving from factor cost to revenue enhancementfactor cost to revenue enhancement
Source: McKinsey Global Institute, McKinsey Outsourcing & Offshoring Practice
Labour cost arbitrage
Factor cost
Process productivity
Skills arbitrage
Automation
Centralisation
Reengineering
Cost avoidance
Leakage prevention
Capital cost avoidance
Opportunity loss (time or information)
Service extensions
Data mining
Price elasticity
Revenue enhancement (existing services)
‘Below the waterline’
products for existing markets
New markets
Skills-limitedservices
Revenue enhancement (new services)
Top software provider
Value creation from O&O
•
Lowered support costs by over 60% by moving to India and Philippines
•
25% of development team in China, India, Hungary, and other offshore sites
•
£50mn/yr saved through revenue audits
•
USD20+ million HRIS capital outlay avoided by outsourcing HR
Examples
Leading financial institution
•
Live customer support for USD40 per application
•
Focused sales campaigns extended to a wider range of credit card customers
Current focus of most offshorers
Leading industrial MNC
Leading high tech company
Leading telco, and top NA bank
16
The Philippines has the intrinsics to compete in The Philippines has the intrinsics to compete in several emerging service areas, but will need to several emerging service areas, but will need to take action to capture the opportunity take action to capture the opportunity
Source:
McKinsey Global Institute; BPAP team analysis
Low
Domain expertise required
High
17
The Philippines has the intrinsics to compete in The Philippines has the intrinsics to compete in several emerging nonseveral emerging non--voice areas, but will need to voice areas, but will need to take action to capture the opportunity take action to capture the opportunity
Source:
McKinsey Global Institute; BPAP team analysis
Low
Domain expertise required
High
Must get the macro issues right to attract any/all players
More targeted “sliver”
opportunities exist across key areas: 1. Healthcare2. F&A3. HR4. ITO5. ESO
18
These five slivers could potentially represent up to These five slivers could potentially represent up to a third of the Philippines 2010 aspirationsa third of the Philippines 2010 aspirations
*
Assumes the following CAGRs: healthcare, 44%; F&A, 33%; HR, 25%; ITO, 17%; ESO 19%**
Assumes the following CAGRs: healthcare, 54%; F&A, 72%; HR, 43%; ITO, 36%; ESO 85%Source:
BPAP; team analysis
•
Maintaining our current market shares across these five slivers would triple revenues by 2010
•
Additional penetration could yield 2-3x
Philippines revenues
Healthcare
F&A
HR
ITO
ESO
Totals
70
83
40
211
48
456
22
5
5
1
<1
2005
Maintaining market share, 2010*
Growing market share, 2010**
Implied market sharePercent
Represents 30% of Philippines 2010
O&O aspirations
600
1,000
240
1,000
1,000
3,840
30Percent of 2010 aspiration
400
350
120
450
120
1,440
11
USD millions
ILLUSTRATIVE
19
Healthcare: Philippines has substantial strength in Healthcare: Philippines has substantial strength in medical servicesmedical services
•
Although the market is still in its nascent stages, India is emerging as a strong contender for offshoring healthcare services
USD millions
Medical transcription–
Dictation conversion to text–
Maintain and update electronic recordsImaging
–
Document indexing–
Conversion of legacy documentsDisease codingMedical billing
–
Payment posting, reconciliationsForms and claims processing
–
Claims entry–
Member, provider, and agent customer care
*
2005 figures; excludes ITO and ESO; market share assumes 7,000 seats at USD11,900/seatSource:
NASSCOM Strategic Review 2006; press search; McKinsey analysis
Healthcare exports from India
•
Rising healthcare costs and demand for new products/services have made outsourcing an important tool for healthcare majors
Global landscape
4 Healthcare
Global BPO*100% = USD11 bn
+67%
2006
12545
2004
80
05
•
Philippines’
share of global healthcare BPO is substantial, but at low billing rates
•
Employs ~7,000, mainly in low-value medical transcription
•
The market is highly fragmented with >100 small-sized providers (~20 seats each)
Philippines
22 Healthcare
Philippines’
market share*100% = USD320 million
•
E-Data Services•
SVI•
Medscribe Asia•
TTSI •
SPi
•
Infinit-o•
Advanced MT•
Dictation Source•
Pilipinas Data Corp
Vendors
•
Large pool of graduates in medical fields (~30k/year)
•
~15k nurses exported/year•
HIPAA and AAMT standards•
Strong industry associations
•
No providers of scale•
Data sensitivity/ data protection•
Transient role for trained medical professionals
Cost Talent suit.
Vendor lndscp
Risk profile
Infra-structure
Biz environ
Talent avail
Enablers Constraints
Growth indicator
Processes commonly offshored
UncompetitiveCompetitive
20
•
With ~7,000 seats, Philippines has captured a 4.6% market share
•
Local vendors (e.g., PeopleSupport and SPI) are considering F&A as a potential service offering
Philippines
5 F&A
Philippines’
market share*100% = USD1.8 billion
•
IBM •
Accenture•
Deutsche •
Thomson
•
Chevron •
Citibank •
P&G•
AIG•
JPMorgan
Providers Captives
•
423,000 “young pros”
(7 years experience or less) with F&A degrees;
•
~130k graduates/year•
GAAP affinity•
Strong English skills
•
Ability of local providers to capture market share
•
Less mature provider/captive landscape
F&A: Philippines has enablers in place to capture larger shareF&A: Philippines has enablers in place to capture larger share
•
F&A accounts for 16% of global BPO, and is growing at an aggressive pace due to increasing demand and a rich array of valid options
USD billions
Accounting operations–
Booking expenses, benefits, fees, etc.–
AccrualsManagement of expenditures
–
Accounts receivable–
Accounts payable–
RemittancesInvestment accounting
–
Booking of ops-related investment activitiesAccount closing/General ledger
–
Investment accounting–
Accounting consolidations
*
2005 figures; excl. ESO and ITO; Philippines market share assumes 7,000 seats at USD11,900/person billing rateSource:
NASSCOM Strategic Review 2006; press search; McKinsey analysis
•
India is the F&A market leader with 70% share; eastern Europe is proving to be an attractive location, especially for western Europe
•
Growth of F&A in a location requires a foundation of key anchor captives
Global landscape
16F&A
Global BPO*100% = USD11 bn
0.5
2003
0.8
04
1.3
05
2.2
2006
+64%
•
Summersault•
Office Tiger•
BPO International
Enablers Constraints
Cost Talent suit.
Vendor lndscp
Risk profile
Infra-structure
Biz environ
Talent avail
F&A BPO exports from India
Processes commonly offshored
Growth indicatorUncompetitiveCompetitive
21
Human resources (HR): Strong capability in the PhilippinesHuman resources (HR): Strong capability in the Philippines
•
HR offshoring has been rather slow to take off, due to lack of process standardization and technology capability
USD millions
*
2005 figures; excludes ITO and ESO; Philippines market share assumed—to be validatedSource:
NASSCOM Strategic Review 2006; press search; McKinsey analysis
•
Increasing maturity is helping expand the scope of HR BPO beyond discrete process outsourcing
•
Few pure-play offshore vendors exist for HR BPO—the market is dominated by global players
Global landscape
7 HR
Global BPO*100% = USD11 bn
75
2004
165
05
300
2006
+100%
•
The Philippines HRO market is also dominated by global players, but has a small captive presence
•
The Philippines is perhaps best-suited to open the door to more meaningful HR offshoring, given the strong communi-
cations skills and service-minded nature
Philippines
5 HR
Philippines’
market share*100% = USD0.8 billion
•
Henkel•
BPO International•
Accenture
•
Chevron•
Shell
Providers Captives
•
Culture is ideal for HR roles (service-oriented, Westernized legal and government systems)
•
Strong English skills•
~70k professional OFWs/year
•
HR perceived as less offshorable, requiring more “human touch”
•
Lack of locally grown providers•
Lack of large captive presence
•
Hewitt•
IBM•
Global Excel
Enablers Constraints
Cost Talent suit.
Vendor lndscp
Risk profile
Infra-structure
Biz environ
Talent avail
Recruitment–
Screening–
Recruitment administration –
Candidate file managementCompensation and benefits
–
Performance management administration–
Payroll administration–
Pension/401-k administration–
Benefit administration–
Employee information managementTraining and development
–
Self-service training
Processes commonly offshored
HR exports from India
Growth indicatorUncompetitiveCompetitive
22
High growth potential: Information Technology offshoring (ITO)High growth potential: Information Technology offshoring (ITO)
•
The ITO industry has experienced a strong growth during the last few years and is further projected to grow
USD billions
Source:
NASSCOM Strategic Review 2006; press search; McKinsey analysis
•
However, it is facing declining margins due to the rise of transformational business processing outsourcing, which is capturing a significant amount of traditional ITO business
Global landscape
41 ITO
Global offshoring100% = USD44.5 bn
9
2001
18
2005
+21%
•
Philippines ITO is dominated by Accenture with the captive presence largely in helpdesk and technical support functions
•
Approximately 8% of the Philippines O&O efforts in ITO
Philippines
1 ITO
Philippines’
market share*100% = USD18 billion
•
Pointwest•
ADTX•
HP•
Accenture•
Headstrong
•
Sun Micro•
Intel•
Dell•
Intel
Providers Captives
•
Mature industry (20+ years)•
~100k graduates per year•
Workers perceived to be highly proficient in technical and business skills for ICT projects
•
Perception on process maturity (i.e., SEI-CMM certification)
•
Limited captive landscape•
High dependence on helpdesk
•
RCG IT•
Trend Micro•
Netsuite•
Gurango
Enablers Constraints
Cost Talent suit.
Vendor lndscp
Risk profile
Infra-structure
Biz environ
Talent avail
AD&AM–
Development–
Testing–
Review–
Support–
Quality control/acceptance testingSystem integration and package implementation
–
Analysis–
Design and developmentTraditional IT (IT infrastructure)
–
Desktop and server–
Network
Global revenue pool
Processes commonly offshored
Growth indicator UncompetitiveCompetitive
23
Limited penetration in Engineering Services offshoring (ESO)Limited penetration in Engineering Services offshoring (ESO)
•
High tech/telecom and automotive have been the leading industries, with bulk of offshoring going to China, India, Mexico and Taiwan
USD billions
*
2005 figuresSource:
BPAP, NASSCOM Strategic Review 2006, press search, McKinsey analysis
•
Increasing provider interest in ESO indicated by large offshore providers announcing Engineering Services as separate service line
•
Driven by need for proximity to OPD facilities
Global landscape
33 ESO
Global offshoring*100% = USD44.5 bn
15
2005
35
2010
+19%
•
At 0.3%, the Philippines has very limited penetration in this large and growing sector
•
Currently only 14 engineering design companies with total revenues of USD48 million
Philippines
0.3 ESO
Philippines’
market share*100% = USD14.7 billion
•
Fluor Daniel•
JGC Phils•
Bechtel•
Tsuneishi•
Kajima Corp
•
Hyundai Engineering•
Kellog•
Ford •
GM
Providers Captives
•
40k graduates in CAD-enabled courses per year
•
75k licensed professionals•
High level technical expertise•
CAM/CIM capabilities
•
Ability to attract demand•
Less mature eco-system (however, TI investment could trigger growth)
Enablers Constraints
•
Brown and Root•
Bouygues Const.•
Parsons•
EEI Corp•
Foster WheelerDetailed design
–
Design conceptualization–
2D, 3D drafting/conversionsTesting
–
CAE simulationsPre-production
–
Production tool design–
CAE/CAM for tool production–
Design updatesBuilding Information management
Global revenue pool
Processes commonly offshored
Growth indicator
Cost Talent suit.
Vendor lndscp
Risk profile
Infra-structure
Biz environ
Talent avail
UncompetitiveCompetitive
Roadmap 2010 launched Oct 2007Roadmap 2010 launched Oct 2007
24
BPAP and McKinsey &Co developed the Philippine IT-
BPO “roadmap”
to achieving strong global #2 position in the world
Sec Ray Anthony Roxas-Chuaappointed as the PhilippineGovernment’s “OutsourcingCzar”
President Arroyo announced therelease of $10million worth ofScholarship grants for deservingstudents to be employed in BPO
25Source:
Team analysis
Roadmap 2010 focusing on four broad themesRoadmap 2010 focusing on four broad themes
BPAP Team 2010
Key issues
Suitable and abundant talent
Operational performance
Quality infrastructure
Conducive business environment
•
Need to recruit over one million new people into the industry to
reach 10% market share •
High percent of top talent in emerging areas outbound to other markets (e.g., nurses, engineering, accountants)
•
Mismatch in location density between providers and labor. Smaller labor pools not tapped
•
Wage pressures emerging, reflecting accelerating growth and lack
of transparency on wages•
Competitiveness relative to established players (e.g., India) and emerging players (e.g., Vietnam) at-risk
•
Wage appear to be growing faster than billing rates, creating imperatives for operational excellence, scale and migration to high value services
•
Availability emerging as major issue–
NCR rental space only available to reach 68% of revenue target–
Given market uncertainty, facilities being built only on commitment, slowing time-to-market•
Rental rates rising sharply in Makati Central Business District
•
Need to ensure that current incentive regime continues to sustain competitiveness•
Most locators concentrated in NCR; other cities may not be O&O-ready•
Under resourced industry association •
Good investor support in pre-investment phase; potential to improve in execution phase
•
Persistent issues around critical risk factors that affect outsourcing decision (e.g., IP protection, data privacy)
Risk management
Business
environment
Talent
Next wave cities
26
*
Non-traditional pools include college drop-outs with less that two years tertiary education, high school graduates who do not enroll
in college, housewives, and retirees**
PPS: Percentage pointsSource:
CHED; MGI; BPAP; NSCB; ADB Statistical Database; interviews; team analysis
5 thematic programs to draw an additional 5 thematic programs to draw an additional 290290--560 thousand recruits560 thousand recruits
Estimated impact (2007-10)Thousand FTEsThematic program
Develop comprehensive assessment and training program
•
Tertiary degree graduates•
Drop-outs with minimum two years tertiary education
Affected talent pools
Improve awareness of career opportunities in O&O
•
Tertiary degree graduates•
Drop-outs with minimum 2 years tertiary education
•
Career shifters
Tap alternative talent pools
•
Non-traditional pools*
•
Non-NCR graduates
Improve “ability to fund” •
Drop-outs with less than 2 years tertiary education
•
High school graduates who do not enroll in college
Focus on “responsive”
curriculum changes•
High school graduates
Total
Short-term Low-end FTE High-end FTE Long-term
30 100
110 210
110
10 30
150
20 40
10 30
290 560
Talent
27
BPAP initiatives to help create the right environmentBPAP initiatives to help create the right environment for industry growth for industry growth
Source:
May 9 sponsor workshop; interviews; team analysis
Three key areas for BPAPKey issues in the Philippines business environment
Lack of institu-
tional framework during set-up
1
Weak risk perception
2
Mixed messages on government support
3
Public policyProtect current incentive regimeSimplify incentive processExpedite data protection regulation
Investor support
Set-up advisor certificationBPAP portal and helpdeskOperational excellence program
Promotion Risk surveyInformation Security campaign
Position Philippines as “destination of choice”
Business
environment
28
BPAP to provide services that would encourage BPAP to provide services that would encourage development of Next Wave Citiesdevelopment of Next Wave Cities
Source:
Team analysis
City readiness•
Which cities are ready?•
What are the gaps?•
Where is specific expertise?Penetration•
Who is operating here today? •
What activities do they undertake?
•
Where are they located? •
How many FTEs?
Segment readiness•
How have various slivers fared in the Philippines?
•
Which slivers have natural fit for the Philippines, i.e., growth prospects?
Topics
•
Investors/locators•
Real estate developers•
Utility providers•
Colleges and universities
•
National government•
LGU's•
Others
Information “demands”
Information Services
BPAP Inventory
BPAP city scorecard
Case studies
Next wave cities
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Ilocos Cagayan Valley
Central Luzon
Southern Tagalog
Bicol
Western Visayas
Central Visayas
Eastern Visayas
Western Mindanao
Northern Mindanao
Southern Mindanao
Central Mindanao
Cordillera
*
Super cities have a theoretical capacity of >15k, large cities of 10-15k, mid-sized cities 5-10k; the remaining 27 cities offer a theoretical capacity of less than 5,000 FTEs (for a total theoretical capacity of ~62,000-85,000
FTEs)Source:BPAP Scorecard; O&O inventory
BPAP leading the work with ICT Councils and BPAP leading the work with ICT Councils and private sector to prepare the new sites for ITprivate sector to prepare the new sites for IT--BPOBPO
106201
68
Largecities
47104
Mid-sized cities
308
Total
158
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Supercities*
Davao
Additional FTEs Theoretical capacity
at current yield rates
Theoretical capacity of the top 15 cities sustains an O&O
population of 200-300k FTEs
Cebu
Iloilo
ManilaQuezon
Baguio
Bacoor
Bacolod
Cagayan de Oro
Santa Rosa
Dagupan
Cabuyao
Legazpi
Zamboanga
Tacloban
Next wave cities
Roadmap 2010: Continuing ChallengesRoadmap 2010: Continuing Challenges
•
Talent development: effectiveness of multi-sectoral
interventions•
Driving operational excellence
•
Impact of worldwide recession•
Market development: exploiting untapped areas/niches
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