Responding to the global economic challenge

Succeeding in a globalized world presumes that one has world-class skills. We are now living in a Knowledge Economy, where innovation and technical expertise reign supreme. Britain’s Economic and Social Research Council says that “the creation of world-class skills is assumed to be a route to economic prosperity, reduced income inequalities and social cohesion.”

In the 20th century, high-value work was presumed to be the exclusive territory of developed countries in the West due to the fact that their workforce had access to top-caliber education and training, while low-skilled manual work largely belonged to Third World countries. During the overseas employment boom in the Middle East back in the 1970s, international construction and maintenance companies doing business in Saudi Arabia, the Emirates and Iraq were hiring Filipino skilled and semiskilled labor by the thousands, but the American, British and European “expats” dominated top management posts. Even if, say, a Filipino engineer, architect or accountant managed to make it to executive level, the pay scale and benefits were significantly higher for the expats.

But all that has changed.

With major shifts occurring in the education landscape, globally positioned business organizations have become keenly aware of the presence of well-educated and technically proficient talents in Asia and particularly in the Philippines. The salaries of Filipino talents are higher now but still comparatively lower than what their Western counterparts make. Still, the high level of sophistication in information and communications technologies plus the very friendly business climate and strong cultural affinity make the outsourcing of business processes to countries like the Philippines more than realistic and viable for these global businesses. It’s simply just the smart thing to do.

There have been numerous instances of foreign companies contracting out their work to Filipino professionals, but these were mostly in an individual capacity.

Sykes Enterprises was the first US-based call center in the Philippines. Founded by John W. Sykes in 1977 as an IT services and staffing firm, Sykes Philippines started operations in 1997 with 14 employees, but it initially offered only local and regional services. Its entry into the English-speaking market began later, in 2001.

In 1999, the HSBC-owned Cyber City Teleservices set up call center operations in the former Clark Air Base in Angeles City in Pampanga.

Cyber City’s first accounts were based in the United Kingdom.

The first true US-based contact center in the Philippines with a US-based account was eTelecare, put up in 1999 at the Philippine Economic Zone Authority (Peza) IT Park in Eastwood, Bagumbayan, Quezon City. With its 200 seats, eTelecare was actually the first tenant at that IT Park. Its first employee was Pam Wu, the head of human resources. Benedict C. Hernandez, executive committee chair of the IT & Business Process Association of the Philippines, was there during eTelecare’s early years to oversee operations. He recalled that eTelecare’s first 50 employees all had bachelor’s degrees, and that 48 out of the 50 graduated from Ateneo de Manila University.

The fledgling information technology and business process outsourcing industry registered a 25-percent year-on-year compounded annual growth rate on the average. The biggest jump in total hiring was from 2005 to 2006, at 45 percent. The growth declined somewhat by the end of the decade at 25 percent in 2010. However, in that year the Philippines finally took the top position in the voice category, surpassing India.

The Philippines continues to be among the most cost-competitive destinations for offshore, outsourced business process management in the voice category. The direct operating cost in the Philippines is anywhere from $14,000 to $16,000 per full-time employee per annum. Only India is lower at $12,000-$13,000 per full-time employee per annum.

There are now three fiber optic transmission networks in place (PLDT, Globe Telecom and TelicPhil) and five cable landing stations in the provinces of Cagayan, Cavite, Batangas, La Union and Camarines Norte.

The Peza Directory now lists 788 contact centers, 166 IT Centers and 43 IT Parks. Today, the IT & business process management industry has over 1 million full-time employees and expects to hire at least 300,000 more before the end of 2016.

This growth potential coupled with extremely rapid technological advances puts increasing pressure on our tri-focalized education system. It now has to respond to the global challenge of educating people to deal with the vagaries of a tech-driven world, and training them for jobs that are yet to be created. The transition to K-to-12 offers both our education policymakers and captains of industry a window of opportunity with which to form and strengthen mutually supportive partnerships, ranging from internships to research projects, to exchanges in ideas on teaching and learning.

Former UK prime minister Gordon Brown puts it so eloquently: “In a globally competitive national economy, there will be almost no limits to aspirations for upward mobility. Globalization dictates that the nations that succeed will be those that bring out the best in people and their potential.”

Industry-academe partnerships are the best way to do that, in the same way that education is the best weapon against poverty.

Butch Hernandez ([email protected]) is the executive director of the Eggie Apostol Foundation and education lead for talent development at the IT & Business Process Association of the Philippines.