ING Business Shared Services (IBSS), the only shared services hub in Asia of Dutch financial giant ING Bank, renewed its vote of confidence in the Philippines as a “captive offshoring” market for global companies.
This was amid concerns that the country’s business-process outsourcing (BPO) industry is expected to slow down due to many headwinds in both the domestic and global markets.
In its latest market report, ING Bank Manila branch senior economist Joey Cuyegkeng forecast that revenues from outsourcing are expected to slow to less than 10 percent this year and would likely slow further in the coming years. These revenues account for around 47 percent of the Philippines’s structural inflows in 2016 and, thus, have a huge impact on the strength of the local currency.
Cuyegkeng said investment pledges in the outsourcing industry already contracted by 22 percent year-on-year and can be attributed to “competition from other Asian economies, onshoring threats for US companies, security concerns and uncertainties over incentives”.
Despite the headwinds, ING remains deeply invested in the country’s potential growth, particularly as a market for captive offshoring.
“The trend for captive shared services centers is to move more knowledge- and skill-based operations to countries where labor is not only available, but also adaptable. So the Philippines continues to be a good location for many global companies,” said Hans B. Sicat, incoming country manager of ING Bank’s Manila branch.
Unlike the typical business model in the Philippines where a BPO serves third-party vendors, IBSS, as a captive shared services center, caters to ING’s in-house processing requirements in its Asia, Europe and North America businesses. This business model also enables ING to keep its staff attrition low, as well as expose its staff to global practices and standards.
“Being a captive shared services center allows IBSS to develop a corporate culture and build employee loyalty and pride,” IBSS Country Manager Cees Ovelgonne said. “In fact, more than 40 percent of the people we hired were referred by our employees. This means our employees love working at ING that they would even ask their friends and family members to join them.”
There is a vast amount of Filipino talent with knowledge and skills that can fuel the growth of captive offshoring companies like ours,” Ovelgonne added.
He cited as proof the continued growth of IBSS’ local operations that prompted its transfer to a new and bigger office at the newly built World Plaza of Daiichi Properties on 5th Avenue corner 30th Street on a Philippine Economic Zone Authority-registered information-technology site in Taguig City to accommodate more in-house processing from ING’s global business.
From the current four floors, IBSS expects to double its office-space occupancy over the next few years. In addition to financial markets, trade- finance services, lending services and client due diligence/onboarding activities, the shared services center now also handles the back-end processing needs of ING’s corporate audit, legal, risk management and financial services, among others.
The Dutch financial giant, which was recently named “Global Bank of the Year” by international publications The Banker and Global Finance, set up shared services hubs to provide a seamless and consistently high-quality service to its customers across the globe.