Interview: Oscar Sanez CEO, Business Processing Association of the Philippines

Tuesday, 06 January 2009

Oscar Sanez, Chief Executive Officer of the Business Processing Association of the Philippines (BPAP), has over 28 years of senior management and leadership experience in consumer goods marketing in five countries. Prior to joining BPAP, he was Country Manager with Procter & Gamble Australia & New Zealand. He was also President, American Chamber of Commerce in Australia and Project Director, GILAS-Ayala Foundation Inc. ValueNotes: Tell us about BPAP and its objectives. Oscar: The Business Processing Association of the Philippines (BPAP) is the umbrella organization for the BPO and IT industries in the Philippines. We have 200 members that include companies providing services such as call centers, back office support, animation, IT and software and five association members (the Contact Center Association of the Philippines, Philippine Software Industry Association, Medical Transcription Industry Association of the Philippines, Animation Council of the Philippines, and the Game Developers Association of the Philippines). The board of directors is elected by the members. We have a full time management team. Our mission is to promote growth of the industry and to lead the initiative to sustain this growth. In 2007, the Philippines IT and BPO industry earned $5 billion in revenues. The industry has been growing at a rate of 45% annually. We have worked on a strategic roadmap with McKinsey to identify key initiatives such as:   Talent development: To support the supply of talent. Currently, we are working with universities for developing appropriate courses for short-term training in animation, call centers, etc. We are also working with the government for scholarships and skills assessment programs.   Management development program: To support mid-level management. This initiative is in partnership with the members of BPAP.   Accelerating infrastructure development outside Manila: We have 20% of businesses outside Manila and would like to develop new cities that can host BPO companies as we continue to expand our presence and search for more talent.   Improving the business environment and working with the government to launch the right business policy and legislation to support the sector such as data privacy, cybercrime, fiscal incentives and labor code amendments. ValueNotes: What are the biggest challenges that you face on a day-to-day basis? Oscar: There are challenges in the area of ensuring sustainable supply in the light of strong demand. Note that this is a fast-growing industry, demonstrating 49% growth annually over the past 3 years. If we are not able to assure investors that we can recruit the quantity and quality of talent they need and back up their sites with the right infrastructure support, all the promises we have made about the Philippines as the ideal BPO destination will not be delivered ValueNotes: The BPO industry in the Philippines has shown a positive growth over the last few years. What do you think have been the biggest contributing factors to this growth? Oscar: The biggest contributors to the growth according to me are:   Location attractiveness: The Philippines is the ideal location for investments. A huge talent pool (English speaking and IT professionals) is available in the country. There is a 93% literacy rate in the country. There are 450,000 college graduates annually. There is sustainable talent in the country.   Infrastructure: There is competitive infrastructure, telecom and labor costs, etc to support BPO requirements.   Government support: In terms of education and training for the industry, there are fiscal incentives offered by the government in the form of income tax holidays for this sector.   Culture: We have been hosting multi-national companies. The Philippines has a western oriented culture that is welcoming for US-based companies. ValueNotes: What would you say are the biggest challenges the Philippines BPO and IT industries face over the next 5 years? Oscar: The challenges for the industry are around developing capabilities. While we have capabilities in the voice-based services area, capabilities in areas such as back office (F&A - Finance & Analytics), engineering, animation, publishing and gaming need to be developed. There needs to be more investment in these areas. We have a large engineering talent pool with 50,000 engineers every year. We also have a large creative talent pool. ValueNotes: How will you market the Philippines as an attractive destination to companies? Oscar: The Philippines has the right environment / organizations with high quality experience. Outsourcing today is not only about cost advantage, but also quality of services. The Philippines offers both cost advantage and quality to the companies. The country provides a stable environment – politically and economically. ValueNotes: What advantages does the Philippines possess over its neighbors (particularly India and China)? Oscar: The Philippines offers not only cost advantage, but also high quality and a large pool of English-speaking talent with strong cultural affinity to the western economies. There are not many countries that have our unique features. The country also complements India in a lot of ways. There are several Indian companies with centers in the Philippines. Companies today are looking at multi-geographic delivery centers and certainly this is advantageous to the pace-setters in the global industry like India and the Philippines ValueNotes: What are the key sectors? Where do you see the future growth? Oscar: The voice-based services account for around 65% of the industry, while the rest is back office services, IT and engineering services. In the back office services, the bigger chunk is F&A work (40%), followed by HR services (25%), and the balance 35% includes transcription, animation, publishing, etc. Engineering services will grow faster, only because the base is low currently. However, we see more investments in the sector. Animation and gaming will grow in the future, followed by publishing, legal and F&A. ValueNotes: Given the current crisis in the US economy, several in the industry see the next few years as a tussle for the BPO and IT industries. What is your opinion? Will this impact the BPO industry? Oscar: Everyone will be affected. Some projects will be pulled, while some other developed projects will be stopped in IT. However, we still see overall growth in the industry. We have been witnessing greater interest in investments from across various sectors such as FMCG, telecom, hi-tech, transport, retail, etc. We might reduce / review the projections; however, it will not be below 30%. The future of services will be similar to the global manufacturing supply chain. There will be many markets and many players participating in a global services supply chain. Our focus in the short term is to drive operational excellence. As we consistently deliver quality we should be able to increase attractiveness in offering other services. In the long term, these higher value services will drive over-all value and competitiveness for the Philippines.

 

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