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How the Philippines can keep its position in the outsourcing industry through shared services

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How the Philippines can keep its position in the outsourcing industry through shared services
Shey Paurillo
by Shey Paurillo
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The Philippines has been on a quest to maintain or better its current position in the outsourcing world as the top provider in voice services and the second to India in nonvoice services. A large chunk of these outsourced services are what are known as shared services. The Philippines getting more of the shared services outsourcing (SSO) market will help solidify its top rank in the world.

What is shared services outsourcing?

Shared services are functions required across an enterprise that are consolidated to be performed by a particular unit. When the shared services are provided by a third party outside the company, then the shared services are being outsourced by the company to an external provider. When the corporate shared services are provided by a third party outside the company’s country, then the shared services are offshored to an outsourcing provider.

Among the common shared services are back office functions. Moreover, the provision of shared services may be a component of the comprehensive outsourcing delivery model. The wide variety of shared services includes the following:

  • Finance and accounting. Bookkeeping, treasury, merger and acquisition (M&A), tax reporting, financial statutory reporting and forecasting, finance administration and secretarial support, account maintenance, accounts receivable collection, accounts payable administration, payroll processing, asset management, financial analysis and auditing, management consulting, inventory control and purchasing, expense and revenue reporting, financial leasing, credit card administration, stock broking, and more.
  • Human Resources (HR) and employee services. Performance management, career planning, benefits advisory, recognition and rewards, redundancy management, recruitment process outsourcing (including ramp-up management, sourcing, screening, interviewing, pooling), and more.
  • Information Technology (IT) support. The full stack of IT and network support services including issue resolution, maintenance of equipment and infrastructure, development and maintenance of software applications, and more.
  • Facilities and real estate management. Workspace management and support services such as security, janitorial, medical clinic services, sanitation, space leasing, and more.
  • Customer support. These can be functions within the spectrum of customer or client contact – from marketing, sales, customer relationship management, and more.
  • Operations. Many administrative and clerical functions such as operational monitoring, quality assurance, data processing and data entry, supplies logistics, keyboard operations, and more.
  • Legal and regulatory services. Application for licenses and permits, registrations, regulatory and tax compliance, and more.

How the Philippines can keep its lead

The Philippines is faced by strong competition from countries from all over: countries as close by as India, Malaysia and China in Asia Pacific, to Eastern European countries. To beat the competition, the Philippines must further improve on its current advantages and make changes to the way it is doing things. There are many ways the Philippines, led by the government and industry associations (primary of which is the Information Technology and Business Process Association of the Philippines or IBPAP), can maintain its position. The following are some of them:

  • Continuing to ensure a quickly deployable, well-trained and educated workforce. Though the Philippines’ workforce is known for facility with English and a high level of skills, the talent pool must widen even further and scale up through an established talent development process. Some industries, such as the big and lucrative healthcare industry, need well trained people. Again, in the healthcare industry, this would require people familiar with the medical field for shared support services such as medical transcription and validation. Other fields such as legal services, IT, and creative services (animation) also require specific, high-level skills.
  • Improving infrastructure. Metro Manila and other popular hubs such as Cebu have infrastructure that can match other countries. But this may not be enough to stay at the cutting edge. Rapid technological development is needed to stay abreast of the competition. Also, the Philippines is nurturing its Next Wave Cities™ (cities such as Baguio, Lipa, Dumaguete, Iloilo, Davao) that have the potential to be globally preferred outsourcing destinations – even for shared services outsourcing – due to factors such as available talent, accessibility, connectivity, etc.
  • Promoting the country as the choice outsourcing provider of many services for particular industries, and targeting more countries. Despite our success on the global stage, gaps still exist in the Philippines’ image as an outsourcing provider. Many corporations still have the perception that the Philippines is only strong in providing voice services. The outsourcing industry is not yet sufficiently promoted in the U.S. midmarket, the UK, and other European countries. The Philippines can make more inroads into sectors such as banking, healthcare, media and knowledge process outsourcing (KPO).
  • Improving cost competitiveness. Though the ability to provide lower costs in wages, real estate, and other costs, is one of the outsourcing industry’s current strengths, factors such as the peso’s surging value have blunted cost competitiveness. The industry must aggressively protect its cost position through the government maintaining or improving incentives, and greater capital infusions from both the public and private sectors.

By continuing to expand its shared services and other types of outsourcing through the measures discussed in the preceding paragraphs, the Philippines’ outsourcing industry hopes to hit the lofty targets set by the government and governing bodies, and plans to be the undisputed global leader in both voice and nonvoice services in the future.

Dynamic outsourcing. Exceptional outcomes.