Ang Kalatas March 2017 Issue | Page 14

14 BUISINESS

THE MESSAGE . BRINGING INTO FOCUS FILIPINO PRESENCE IN AUSTRALIA www . kalatas . com . au | Volume 7 Number 6 | MARCH 2017

PHOTO : teleserv . ph

Australian firms favor Philippines as BPO destination — PIDS study

MANILA . Most Australian firms prefer the Philippines to explore offshoring opportunities , as opposed to other rival potential business process outsourcing ( BPO ) destinations in the region , such as India , according to a study by government think tank Philippine Institute for Development Studies .

Favorable geographical time zone , highly literate workforce , and competitive labor rates are among the reasons Australian firms are attracted to the Philippines for their offshoring needs , according to former PIDS visiting research fellow Peter K . Ross and businessman Mike O ’ Hagan .

“ The time zone in the Philippines favors Australian firms . It is the same as Perth , Western Australia , while there is only a two-hour difference to the Australian Eastern Standard time . This allows Australia-based managers to work with their Philippine-based staff in real time ,” they explained .

Likewise , they noted that Australian shifts are also popular with Metro Manila-based BPO workers , as the time difference allows them to arrive and leave work two hours before Metro Manila ’ s main peak traffic times . In terms of geography , the two countries ’ proximity makes it easier for Australian managers to commute to and from the Philippines with less resources .

“ Philippines also has a highly literate and well-educated workforce currently increasing by around 600,000 tertiary graduates , including more than 3,000 public accountants annually . The variety of Filipino tertiary graduates also provides the varied skills that Australian SMEs need , such as the ability to speak in English fluently ,” Ross and O ’ Hagan added .

Meanwhile , offshoring to the Philippines also gives Australian firms huge savings , which the authors approximated to be around 70 percent in terms of labor costs . Based on their estimates , median labor rates in the Philippines for call center type of work is about eight times lower than in Australia .

“ While BPO rates are confidential and vary depending on client requirements and the employee ’ s role and experience , evidence from this research suggests that the full cost of an administrative or customer service worker would be around AUD 15,000 to AUD 20,000 per year , less than half of the Australian salary for an equivalent job ,” they explained .

However , despite these advantages , the authors cited a number of challenges that the Philippine BPO sector needs to address . Government red tape , conflicting government requirements , poor infrastructure , traffic congestion , expensive and unreliable utilities , and biased adjudication of labor cases are among the red flags identified .

“ Many respondents said incorporating a subsidiary in the Philippines takes a lot longer than the target period of government agencies . They further spend a long time queuing in government offices to get recurring requirements approved . Many respondents also expressed disapproval about the overlapping and sometimes conflicting requirements from different levels of government ,” the PIDS study stated . The lack of transport infrastructure and the high traffic congestion can also discourage potential investors in the Philippines . The study noted that commuting around Metro Manila is time consuming , with many workers spending three to four hours per day traveling to and from their workplace .

On top of these , utilities in the Philippines are expensive and not always reliable , according to Ross and O ’ Hagan . They noted that most BPOs in Metro Manila have to operate with back-up electricity generators to cover breaks in the electricity supply . They added that firms also pay higher Internet and electricity fees relative to what they would pay for similar services in Australia .

Another stumbling block identified by the study is the extensive labor law provisions in the Philippines that are strictly enforced in the BPO sector . They noted that adjudication of some labor cases tends to be biased in favor of employees .

In conclusion , Ross and O ’ Hagan said Australian firms represent an important and growing BPO market for the Philippines . Specifically , they noted that the Australian small and medium enterprise ( SME ) sector provides a relatively large market for the kind of microoffshoring services offered by Philippine BPOs . ( PIDS ) / Philippine Information Agency .

The time zone in the Philippines favors Australian firms . It is the same as Perth , Western Australia , while there is only a two-hour difference to the Australian Eastern Standard time . This allows Australia-based managers to work with their Philippine-based staff in real time .

Government red tape , conflicting government requirements , poor infrastructure , traffic congestion , expensive and unreliable utilities , and biased adjudication of labor cases are among the red flags identified .