Saturday, 19 December 2009

BPO phenomenon

WHO hasn’t heard of BPO? No, I am not talking of Banco De Oro. That would be BDO, although I am certain that most people know all about BDO and its current domination of the Philippine banking scene.

I am talking about BPO as in business process outsourcing. I would imagine that as many people who have heard about BDO would have also come across a BPO, in some way or other.

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It is hard to miss the ubiquitous structures where these companies are located. In many places where they are, the buildings housing them are prominently clustered together, making them visible for all to see.

In Metro Manila, there are four centers where these BPOs are mostly situated—Makati, Alabang, Eastwood (Quezon City) and Ortigas. Cubao and the area around UP Diliman are also fast becoming magnets for these companies to locate in, thanks to generous incentives from the site’s developers. There are also many centers outside of Manila, like Clark (Pampanga), Cebu, Davao, Baguio and Iloilo.
Or, if someone has not noticed (a bit difficult to believe) these places, perhaps one has a relative or a friend who happens to be connected with a BPO organization. After all, apart from nursing and leaving for abroad, going into a BPO seems to be the career of choice for many of our young graduates.

Generically called call centers (although believe it or not, there are many types of BPOs, and call centers are only a segment of the industry), these companies have attracted a large number of our young working population. By the Business Processing Association of the Philippines’ own estimates, one million of them will have been working in some type of BPO within five years’ time. Had it not been for the global financial crisis, the five years would have even been shorter.

But just what does a BPO do? Well, everything really that a business organization does can be outsourced, or done by a third-party organization. For example, to answer calls from its customers, an American utility company may choose to have those calls answered in the Philippines, instead of in the United States. The advantage is obvious. Each customer service representative in the US probably earns the equivalent of about four or five customer service representatives in the Philippines. So obviously, as long as it takes less than four or five Filipinos to do the job of one American, it makes sense to locate the process here.

The even better thing, of course, is that it does not take four or five Filipinos to do the job. In some cases, it even takes less than one.

How does this happen? Well, by the simple phenomenon called underemployment. Let me qualify this statement by calling it “relative underemployment.”

Why relative? Because in the United States, a customer service representative does not need to have graduated from college to do the job. A simple high school leaver will be fine, thank you very much. Here in the Philippines, however, it is a slightly different story.

People who work in BPOs here have all invariably completed some kind of college degree. For the most part, they would have done something like a business-related, or perhaps communications-related, course. That is a minimum requirement for acceptance to the job.

Happy Christmas to all our readers, and their families and loved ones. May this holiday season be truly blessed for us all!

More next week...
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Published in the Sun.Star Cebu newspaper on December 19, 2009

Monday, 14 December 2009

Future expectations

WE all remember the dotcom boom.

Who doesn’t have any memory of those heady times, when share prices of heretofore unknown companies rose to stratospheric levels? When any company with a dotcom after their name could simply do an IPO and their shares would just sell like the proverbial hotcakes?

All to do with future expectations, as we know. Everyone who bought any of those overvalued (as we now know them to be today) shares were of the same mind that at some point, what they were buying would be worth far more than what they paid for.

After all, no one invests in anything to make a loss. The rationale for any investor in buying any asset is always that at some point in the future, that asset is going to make a return for the investor.

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Question is, how far off into the future will those expectations hold? How far off is the investor’s horizon in deciding whether what seems not to be too valuable today, would suddenly turn and become very valuable in the future?

The answer is – it depends.

On what, might we ask, does the answer depend?

Well, mainly on how long those expectations remain positive.

A bit of an evasive answer, right?

Well, not really.

Witness the current financial crisis. For a number of years, asset-backed securities, securitized by American mortgages, seemed to be bullet-proof. As the popular belief went, who does not need a house to live in? And if this were to be true, then surely mortgages would be an eternal fountain from where untold wealth for all would spring.

And spring it did, until late 2008. For when the whole world collectively realized that although everyone needed a home, they still had to be able to afford to buy one and pay for it (and it seemed that many Americans had become unable to do the latter), then, the whole myth of high expectations collapsed.

Which brings me to the issue of President Barrack Obama’s Nobel Peace Prize.

Even in his very own acceptance speech, Obama was humble enough to admit that by any stretch of the imagination, he was not deserving of the award – or at least not yet. He had not done enough to spread the word of peace across the world, and therefore had no business being in that podium, at that point in time.

Obama, more than most American presidents who came before him, has benefited greatly from future expectations. And understandably so. As his country’s first non-white president, many of his countrymen – white and non-white alike – look to him to be able to do almost superhuman things, and right many of the wrongs that all of his collective predecessors could not.

But the weight of future expectations is a heavy burden to carry. Many of the dotcom companies who enjoyed the heady days of yore know this only too well.

A large number of financial institutions that made a killing packaging and selling mortgage-backed securities are also only too aware of its perils.

Which is why Obama must do all he can to be able to deliver on his future promises. Or risk falling on his own sword, and be impaled by the weight of unfulfilled expectations.

(Belated greetings to my son, Jacob Anthony, and sister, Aleli, who celebrated their birthdays on the 26th of November and the 6th of December, respectively).
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Published in the Sun.Star Cebu newspaper on December 14, 2009.