Philippine Leader Aims to Lure More Outsourcing

by Hiawatha Bray
The Boston Globe

NEW YORK - Move over, India. There's a new player in the global outsourcing business. Philippine President Gloria Macapagal Arroyo, who visited with President Bush and was feted at a White House state dinner Monday, came to the nation's financial capital yesterday to pitch US companies on the benefits of moving some of their key business and technology tasks to her island nation. After years of watching countries like India, Ireland, and Russia attract foreign outsourcing business, the Philippines is on an aggressive drive to win a larger share of this growing market. And Arroyo told about 200 guests at a Philippine outsourcing seminar at the Waldorf Astoria Hotel that her low-cost country is one of the best destinations for US firms in Asia. "We're a very open economy," said Arroyo, "and our culture is very well adapted to Western business practices."

For example, Philippine officials said, their firms use the same accounting standards expected of US companies. The majority of the country's 90 million citizens speak English, and about 350,000 Filipinos graduate from colleges and universities each year. And the Philippines has a highly developed telecommunications infrastructure, including a nationwide fiber-optic backbone and multiple undersea cables to every region of the world.

The Philippine government and business community hope such factors will lead American firms to choose their country as an outsourcing destination over India. But they don't expect the Philippines to rival India's strength in high-tech areas such as software engineering. "To take on India in software development is ludicrous," said Roberto Romulo, senior adviser to Arroyo and former president of IBM Corp.'s Philippine operations. "No way we can catch up." Romulo's great hope is that his nation can become a power in the larger field of "business process outsourcing," such as medical transcription, accounting, tax preparation, and customer service call centers. Already major US companies, such as Internet provider America Online, use Filipino call centers to provide customer service, while US hospitals purchase transcription services from Medi-Type Transcription Services Corp. This Yorktown Heights, N.Y., company lets doctors dictate medical information by phone, then electronically sends the recording to be transcribed by clerical workers in the Philippines and double-checked by Filipino doctors.

In these fields, Romulo said, the Philippines have a big advantage over India and other outsourcing rivals. For instance, because many Filipino doctors and nurses have studied and worked in the United States, they are familiar with the US healthcare system. And a study by the research group Gartner Inc. found that Americans find it easier to understand Filipino English speakers than citizens of India or even Ireland. "In business process outsourcing, you need CPAs, you need doctors, you need lawyers," said Ramon Dimacali, chairman of the business association Outsource Philippines. He said that his country's educational system produces many well-trained experts in these fields, while lagging behind India in the training of engineers and computer programmers. Even so, Dimacali said his own company, Software Ventures International, has 800 employees doing outsourced software development. And William Ferguson, Asian marketing executive for US financial giant Citibank, said his company has about 200 programmers in the Philippines designing software for use by Citibank's retail customers. Citibank has been doing business in the Philippines since 1902, and Ferguson said the country still has vast untapped potential as a destination for outsourcing.

"While India is viewed as having the lead," Ferguson said, "the Philippines is clearly in the group of the leading challengers." And more challengers are still emerging. Among the guests at yesterday's seminar were Yaw Owusu, chief executive of Ghana Cyber Group Inc., a New Jersey firm that hopes to develop business process outsourcing opportunities in the West African nation of Ghana. Ghana is already becoming an African leader in outsourcing, with Dallas- based Affiliated Computer Services Inc. employing more than 1,300 workers at a data entry site in Accra.

Owusu says that's just the beginning. "We can't compete with the Philippines in terms of infrastructure," Owusu said. "But give us time. We'll get there." Hiawatha Bray can be reached at bray@globe.com.

 

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