THE world economy has become a smaller global community influencing different markets in different parts of the world.  One country’s economic downturn has a speedy impact on another—some to a big extent, others in a smaller way, but nevertheless in one way or another is being affected by the whole global economy.

In the Philippines, the service sector, particularly the outsourcing industry, is considered as one of the main drivers toward economic growth. According to Wikipedia, the Philippines is the second-largest call-center market next to India, based on a June 2008 study released by Oracle Corp.

The majority of the top 10 business process outsourcing (BPO) firms of the United States have set up operations in the country. The jobs provided by the outsourcing industry grew to 100,000 with total revenues placed at $960 million for 2005. Metro Manila and Cebu City are the locations of these BPO companies, although other cities  are now fast becoming ideal destinations for offshore operations such as Baguio City, Bacolod City, Cagayan de Oro, Tacloban City, Clark (Angeles City), Dagupan City, Davao City, Dumaguete City, Lipa City, Iloilo City and Legazpi City.

With this influx of the top outsourcing firms in the United States setting up offices in the Philippines, the local service providers should learn to ride on  the popularity gained by the country as a favorite destination of multinational companies.

For one, most of our local providers should find ways to effectively compete with the big potential market out there worldwide looking for experienced, cost-efficient, excellent customer service and technologically capable providers.

One area, though, which I recently observed lacking in most of our local providers (particularly on finance and accounting outsourcing) is the absence of a global network (I am referring to local providers with no international big firm affiliations).   

While our service capability could be on a par if not better with those of foreign providers with the same size, we cannot compete in the area of having a global presence.

I even learned that certain foreign providers with just 40 or so employees can even bag the bid for an RFP (request for proposal) for the same service-level requirements over a local provider with the same size or even with a bigger number of employees.  This is mainly due to the lack of global presence and the experience needed in providing such services.  This is an area which our local providers should look into if they want to grow and compete globally with the other foreign firms.

Since it is impossible to set up offices in different parts of the world, the next best thing  local providers should do to have global presence  is to establish affiliations or networks with similar local providers in these countries.

Certainly, it is hard to compete with the big multinational providers, but there is a big potential market out there for small and medium-size providers.  And the way to become globally competitive is to find creative ways to do business with local providers in other countries while, at the same time, not neglecting the quality of service that these global clients need.  Remember, there are also global clients who do not want to spend much by hiring the big multinational firms—o they are looking for good providers who can meet their requirements.

While it is true that we have sufficient clients locally needing our services, in this global economy we cannot just sit back and allow foreign competitors to grab the opportunities for outsourcing in the global market.  In a JP Morgan article written by Nicolas Havouti, there are qualities in an outsourcing firm a client should be looking for.  These qualities are outlined for treasury outsourcing, but I revised it a little and selected just the relevant ones to make it applicable to outsourcing as a whole, and these are:  1) makes a commitment to fostering a partnership;  2) maintains a market presence in outsourcing; 3) invests in the latest technology;  4) takes a consultative and creative approach to complex structures;  5) aligns strategic direction with your  business objectives; 6) employs an efficient operations and implementation team with a proven performance record;  7) maintains a controlled environment with segregated duties and comprehensive contingency plans; and 8) provides best-in-class client service.

The aforementioned qualities seem to be a tall order and more of an ideal thing, but at least our local providers can aim for even just a majority of these qualities to be globally competitive.   The local outsourcing industry, too, should unite and work together to help each other gain global competitiveness. 

In the Outsourcing Forum sponsored by the public-affairs committee of the Financial Executives Institute of the Philippines (Finex), the forum aims to bring together in one venue both the providers, clients and potential clients to discuss issues and concerns affecting both sides.  Hopefully, this will help both sides improve their respective companies and businesses either as a provider or a client looking for the right provider.  This will be held at the Renaissance Makati City Hotel at 2 p.m. on August 19.  For more information, contact our Secretariat, Myla, 811-4052 or 811-4107.

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(Wilma Miranda is the chairperson of the publications committee of Finex, chairperson for the Outsourcing Forum and at present a partner of Inventor, Miranda & Associates, CPAs (web site: www.inventormiranda.com).  For further comments, you can e-mail her at This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).

Free Enterprise is a rotating column of members of the Financial Executives Institute of the Philippines (Finex), appearing every Wednesday and Friday.