We have to wake up

A friend was visiting from Washington. He’d first been here in 2001 scouting around for where to put a call center. It was to be India or the Philippines. “Americans just wouldn’t fit in in India; here they’d be right at home”. So the Philippines was it. He established a call center here with 150 people, today it’s close to 22,000. Then there were overall some 40,000 people in call centers. Today the industry is over an astounding 300,000.

There was great pride in the fact that the Philippines had overtaken India, and it’s a great achievement.

But the common perception that the Philippines ranks at the top in the BPO field is not supported by surveys. A.T. Kearney in its latest Global Services Location Index listed RP as number 9 in the top ten. That’s a long way down. The better places were: India, China, Malaysia, Egypt, Indonesia, Mexico, Thailand and Vietnam. Indonesia and Egypt were behind the Philippines in 2005, Vietnam trailed us in 2009, now they’re heading up. The Philippine is heading in the wrong direction. Someone might want to do some research into why, so the Philippines can rise through the ranking instead of falling.

Complacency leads to ruin. I wonder if anyone is focusing on El Salvador where Craig (the friend I mentioned above) is looking. Where they have high technical competence, strong English capability, an incredible work ethic — and it costs less. It costs less in Egypt too, and Guatemala, Ghana, Kenya, Rwanda, all are the new challengers. Egypt, once its destabilization activities are resolved (and they will be), is a very attractive option. They have smaller populations but much higher percentages of educated English-speaking and (importantly) comprehending people—up to 50 percent in some cases versus the Philippines’ 5—10 percent.

I’ve badgered on this for years. I wonder what it takes to get the message: Education must be in English. The jobs of the world today require English. Some 8-million-plus Filipinos earn good wages overseas speaking mostly English. No one is there because they speak Tagalog: Actually we’d better start learning Chinese too given the power it will exert on this region, and the world. Don’t you find it a little strange that the Philippines which (now erroneously) prides itself on being an English-speaking nation falls sadly behind countries that were never thought to be such. Some 300,000 Filipinos have good, well-paying jobs here because they speak English.

So I’m delighted the President agreed to 12 years to learn, and has put greater priority on more schools and classrooms, but has yet to give English the priority it must have. I just wish the politicians would spend their pork barrel on schools. And Churches would open their doors to kids huddled under a tree or rusty tin roof trying to make something of their lives.

Craig came back to look at putting more call center work here—now as a client, not a call center operator. So he knows what he needs, and what countries can provide. He came back with his partner excited to look at new opportunities. On the way, in Tokyo, he was raving about now landing at this exciting new terminal that was just about to be opened when he left. Instead he entered this “crappy old building”. He felt betrayed. And President Aquino wants to put it back in the courts all over again. What on earth does it take to get some common sense here? Get the building valued, pay it and drop everything else. Then open NAIA-3 if you want to impress foreign investors.

Craig had expected progress in improving the environment here, but nothing had changed. He’s invested in South Africa where he has a large call center operation. The Philippines was to be next, now he’s not so sure much as he loves this country. He must go where it’s competitive. The Philippines is beginning not to be.

I had introduced the idea of a Department of Information and Communication Technology to President Arroyo back in her early years. A bill was filed and has sat in Congress ever since. Now President Aquino says he doesn’t think it necessary. I beg to disagree, as I’ve argued endlessly. IT is it for this century, it’s the most dynamic, most rapidly developing sector that is expanding into all kinds of previously unimagined areas. So I’m pleased to hear that Congress agrees with me and will give it the priority it should have. The President needs to re-think his position on this.

The entire BPO sector already accounts for 5-7 percent of GDP with its predicted growth rate of some 22 percent in an economy growing around 5-6 percent. It has the potential to be the dominant sector within the next few years IF the proper attention is given to it. A properly funded and equipped (people and equipment) Department will give it to you. A CICT won’t. Let me hasten to say I am not denigrating the CICT under Secretary Ivan Uy—they do a great job. They’d just do it a whole lot better if they were properly funded and given the power an independent department provides. The CICT becomes the core of the Department.

The President might want to re-think his stand that a Department of ICT isn’t necessary given that Cambodia and Laos are the only two other countries that don’t have one. Not the most illustrious comparison. It can be the Philippines’ biggest sector if it gets the full attention it needs. Or it can continue its trend and slowly sink into the background as more enlightened countries see the potential and set up to entice it into their economies.

The Philippines will be history if it gloats on history; it bested India on call centers, do you know Interactive Voice Response now exists? Machines are replacing humans. The Philippines had better be moving up scale into the other services, and developing the educational curriculum to support it. So can we get Craig to invest more, or is that one lost already?

The world is going high tech; the Philippines had better make more effort to be a part of it.

He mentioned several times, cost. Cost dominates decisions; you go where it’s cheaper, that’s what drove this outsourcing business. Getting the highest price you can in renting an office might seem like smart business practice, but what if there’s no one to occupy that office—they’re in Egypt. Having everyone pay tax on everything might seem like a good idea, but what if El Salvador, Egypt and other emerging BPO hubs don’t tax BPO for export and the Philippines does? Where will you go? I suggest Congress research very carefully before rationalizing incentives as they propose to do.

But to finish on a positive note, another study I read praised the Philippines for its ability to handle problems. Complainants to a call center in the Philippines are satisfied after one or two calls. In India, it takes six or seven attempts. Another area of advantage is the professional services, where development is only really just beginning to develop. Doctors, lawyers, writers, accountants, etc…the Philippines has large numbers trained to international level.

You need a package of all inputs—salaries, rent, taxes, power and water, etc, etc — that is cheaper than elsewhere (national and local) who, I wonder, is thinking the package, thinking what is needed for long term prosperity, not just instant gratification. But I’ve argued all this endlessly — with no effect. So I expect none now.

And expect quite sadly to watch the Philippines begin to slip here, too.

President Aquino, please prove me wrong. Act now.–Manila Standard Today