European Chamber of Commerce Magazine
of the Expat
Richard Mills, Chairman
the past number of years, the expatriate in the Philippines has been a
species in decline. Companies that employed 50 or 60 expatriates 4 years
ago, now have only a handful. This has been the trend for most countries in
the region — with the
notable exception of China.
Boyden Manila is once again
receiving requests for expatriates. The demand is coming from the fast
growing sunrise industries as well as a few traditional ones. Trend is
To get some idea of the numbers
involved let’s look at some simple figures. The outsourcing sector alone
will add roughly 2500 to 3500 new local positions per month over the next
year. Each 1000 call center agents require one senior manager with 7
to 10 years experience. For sectors entailing higher skill levels like IT,
design engineering, and sometimes HR and accounting, the numbers of senior
people required are often 3 to 5 times higher per thousand people. Given the
current growth rates, there will not be enough time to develop adequate
numbers of senior management talent locally. Many will have to be brought
from offshore. Further, in some traditional sectors we should see a moderate
increase in demand for expatriates. This is the typical situation in an
improving economic environment such as we have today. We have already seen
some de-localization occurring in the IT sector lately. Others will follow.
All of these developments
indicate that roughly 15 to 25 new senior level expatriates will be needed
on a monthly basis over the next 12 months.
Philippines Still Better Than
There are now strong positive
comments from senior outsourcing management people comparing the Philippines
to India. They say “If we had known what we now know about
the Philippines, we would never have gone to India first.
”According to John Crews of
ICT Group, both countries have advantages but the Philippines was the
hands-down overall winner. Some of the key advantages of the Philippines
were said to be:
1. Its people - English
communication skills, cultural affinity and customer service mind-set are
2. Its infrastructure - telecommunications, office space and (surprisingly)
electrical power supplies are more reliable and technologically current.
3. Its expatriate life-style — India is a hell-hole compared the to
The Philippines is currently
perceived to be a minor player in the global outsourcing industry.
Logically, this perception should change over time as the truth is slowly
Bigger is Better in
Over the past few years, many
people founded outsourcing companies in Philippines. Many of these
investor-owned companies have remained small and unprofitable, not being
able to maintain or attract quality relationships with blue-chip clients.
Many will sell out, close down or otherwise disappear over the next year or
The future of the industry will
be in the hands of the large multinational organizations that already have
developed quality processes, experienced management and solid client
relationships over many years in the industry.
Moving Up (or Moving Out) of
the Value Chain
For a nation to improve or
maintain its standard of living, its industries must constantly work to
increase the value of the products and services they provide to the rest of
There are more than a few people
in the region who feel the semiconductor industry is beginning to slip away
from Philippines. Assembly is most at risk since it employs large
numbers of low skilled workers. Today, this work can be done in China at
lower cost, and production has started to drift in that direction.
Companies in the Philippines
have been increasing their test capacity (higher value work) to compensate
and attempting to move into other more skill intensive areas as well. If the
industry is successful with this transformation up the value
chain, then it will maintain (and maybe improve) its relative position. But
we should not forget that the Chinese are also quickly improving the value
of their services and they have a reputation for being relentless
Business Process Outsourcing is
the current sunrise industry in the Philippines and it is providing a good
foundation on which to build higher-value services. But, a bewildering
number of developing countries are now clamoring to offer the same
back-office services to multinational companies that we are. All of this
will mean that the movement to
higher value services will resemble a frantic stampede rather than the
leisurely progressions we have seen in the past. The Philippines will soon
find itself under serious threat from lower cost competitors.
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