The Business Environment

The Business Environment

The Philippines is competing to become the preferred location for global outsourced service provision.

As a country, it is strategically located and the time zone allows a 24-hour work shift compliment to the U.S. with its 12-hour time zone difference. It is a gateway of international shipping and airlines such as FedEx and UPS. It is accessible as well by air within four hours to any Asia capital such as Japan, Korea, and Singapore. Companies that have partners or location in the Philippines can maintain round-the-clock work progress. The country is very democratic and most liberal in terms of press freedom in Asia.

The most important asset that the Philippines has to showcase to the rest of the world is its people and is the 3rd largest English-speaking country in the world. For the US market, the Filipino entrepreneur and knowledge worker speaks the same language, “American English”, allowing efficient work communication. The educational system of the country was set up by the Americans when the Philippines was still a colony from 1898 up to 1945. From entering kindergarten to college, the medium of educational instruction is American English. This resulted to the Filipinos excellent grasp of the English language that has remained the medium of instruction from pre-school up to post-graduate university.

The country produces 380,000 college graduates a year where close to 100,000 thousand are in the information and communications technology field. The educational institutions in the country as well strives to remain updated with the latest technologies in order to produce competent work force.

The Filipino worker is a seeker of job security and puts such on its top priority. He/she puts high importance as well to career growth, has excellent work ethic, is loyal, polite, and respectful to its superiors, flexible in working hours and views responsibility as an opportunity to enhance knowledge.

The Filipino entrepreneur and professional is widely exposed to US culture, business practices and style of management. Many US companies like Citibank and IBM, among others have been operating in the country.

The government also has various initiatives and incentives to attract US companies to put their offshore offices in the country. Cost of operating business in the Philippines can contribute 35% to 50% cost savings compared to US business operations cost. Although the country may not necessarily be the cheapest in the world but offers high quality that can be relied upon. Expatriates also finds the Philippines quality of life to be very attractive where at present, more than 100,000 of them are living here.

Value of labor in the Philippines is not the cheapest in the region but with the Filipino’s inherent cultural advantage, it has become the preferred choice.

Telecommunications Infrastructure

The country’s liberalization of its telecommunications infrastructure also paved the way for affordable cost of Internet access and similar facilities. T1 fiber optic lines are available from the US to the Philippines at rates ranging from US$10,000 to US$14,0000 and DSL lines for US$600 with a connection time from 2-4 weeks.

There are at present 9 international carriers, 5 nationwide cellular operators, 5 nationwide long-distance providers. The country has a capacity of 10 million phone lines where 3.5 million of such is in use. 13 million cellular phone capacity whereas 9 million is presently in use. To add, the Philippines is presently dubbed as the SMS text messaging capital of the world whose volume of messages remains unsurpassed. The two largest cellular phone companies in the Philippines are GLOBE Telecommunications and SMART Communications. For US carrier subscribers roaming in the Philippines, T-Mobile and AT&T are both supported by the major carriers, except for Cingular network, which is only operational within the SMART network.

Digital microwave radio system, digital fiber optic network, broadband network is also laid out to cover almost every major city in the country. Various access infrastructures are also available from dial-up, ISDN, TDM, frame relay, DSL, cable modem, satellite, and cellular GPRS.

Call Centers

The Philippines is emerging as a specific alternative to India, due to historical and cultural factors according to IDC Call Center Forecast and Analysis Report (2001-2002).

Call center services done in the Philippines cover both inbound (inquiries, help desk, technical support, payment authorization, order taking, complaints handling, directory assistance, among others) and outbound (telemarketing, telesurvey, telecollection, sales verification, sales dispatch, reactivation of lapsed accounts, among others). Solutions offered include customer relation management, partner relationship management, quality management systems, and loyalty management programs. These are all done via phone, fax, email, chat, and web collaboration tools.

Call center work are considered as careers by Filipinos who are now working in these facilities. A majority of them came from prominent educational institutions in the country and are all college graduates. The attrition rate is less than 5% where an average call center worker last for no less 2 and a half years compared to 8 to 9 months in the US.

Outsourcing Record

More than 8,000 companies have been outsourcing knowledge based work to the Philippines such as America Online, Andersen Consulting, Barnes and Noble, Caltex, Citibank, Fluor Daniel, Manulife, Morgan Stanley, Northwest Airlines, Procter and Gamble, People Support, to name a few.

The country has always been utilized as well for business process outsourcing where you’ll find companies doing litigation support, scholarly publishing, content conversion, shared services, such as Elsevier Science, Blackwell Science, Microsoft, Nature Publishing, Lexis-Nexis, AIG, International Red Cross, AlItalia, Great Plains Software, Fujitsu, Accenture, Headstrong, NEC, Simteria, Trend Micro Labs, Sea Land, among others.

Creative cartoon work are also done in the Philippines such as Flintstones, Hanna Barbera, Disney, Atlantis, Cartoon Network, Iron Giant, among others.

Software Development

The Philippines is also a significant alternative choice for software development. Its IT professionals are diverse in terms of skills covering Cobol, DB2, CICS, VMS, Oracle, Visual Basic, C++, UML, Java, J2EE, J2ME, EJB, EDI, XML, among other technologies. The country has more than 200 companies specializing in software, web, and wireless application development.

Office Space Cost

The rate per square meter per month in Makati, which is the central business district of the Philippines ranges from Php300 to Php600 exclusive of value-added tax. Parking slot rental is Php3000 per month.

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