A Brief History of BPO in the Philippines
Business Process Outsourcing started (meaningfully) in the Philippines with Accenture in 1992, thanks to Frank Holz,
A brief overview we developed for a long-ago engagement — 2007 to be exact:
Business Process Outsourcing started (meaningfully) in the Philippines with Accenture in 1992, thanks to Frank Holz, the Partner responsible for developing and marketing the first Global Resource Center in Manila. Currently, its main facility (one of eight) is located at Robinson’s Cybergate 2 Tower in Mandaluyong City, the facility houses around 5,000 seats of a total of 10,000 seats currently in the country.
With 15 years of operations, Accenture expects to have a total of around 15,000 Philippines employees by the end of its current fiscal year in August. The majority of these are IT professionals performing system design and software application development, as well as application management and maintenance. The Company has recently built out a teleservices group to support clients with voice requirements.
SPI, recently acquired by ePLDT, entered the picture in 1983 and was founded by New Zealand expatriate Alan Fraser. The Company confined its activities to simple data entry work until 1997 when the new CEO Ernest Cu started making acquisitions and increasing SPi’s service portfolio. Cu is by far and away the sharpest operator on the Philippines BPO scene.
The firm provides Content Editorial and Production; Content Coding, Abstracting and Indexing, and Electronic Data Discovery; Content Transcription; and Transaction Processing for the Healthcare, Legal, Publishing, and Transaction markets. SPi’s software development is dedicated to creating common platforms for its other practices.
Acquired in July 2006 for $158.8 million by the call center unit of the Philippines PTT, PLDT, the combined subsidiary placed ePLDT Ventus at the forefront of the local BPO game with 11,000 employees distributed across 26 locations in North America, Europe, and Asia.
The Company formerly had a stake in one of the early call center players, eTelecare Global Solutions, which it subsequently divested itself from in April 2004 as a publicly listed company (with SPI holding a majority share). eTelecare was founded in November 1999 by Jim Franke and Derek Holley, two McKinsey alumni of its call center practice. Currently, the Ayala Corp owns 11% of eTelecare. Ayala is the leading conglomerate in the Philippines and controls Ayala Land Corp, Globe Telecom, Bank of the Philippines Islands, Manila Water, and Integrated Microelectronics Inc. Ayala and its subsidiaries account for a third of the Philippine Stock Exchange’s Index.
eTelecare launched its first program in Q3 2000 and currently focuses on complex transactions for American Express, AOL, Cingular Wireless, Dell, Intuit, Sprint Nextel Corporation, and Vonage delivered from four delivery centers in the Philippines and seven in the United States, with approximately 9,800 employees.
With revenue of $195.1 million and an operating margin of 9.9% eTelecare is considered one of the founding call centers in the Philippines, and its vice president and general manager Benedict Hernandez is widely respected and credited with the firm’s operational success. Hernandez is also on the Board of the Contact Center Association of the Philippines (CCAP) and has been an articulate advocate of BPO growth in the RP.
In 1995, President Fidel Ramos signed legislation creating the Philippine Economic Zone Authority to promote “the establishment of world-class, environment-friendly economic zones (ecozones) all over the country to respond to demands for ready-to-occupy locations for foreign investments.”
At the heart of the legislation lies fiscal and non-fiscal incentives to developers of economic zones, export producers, and I.T. service exporters. The focus is on developing “ready-to-occupy locations to foreign investors who are export producers or IT service exporters in world-class and environment-friendly Economic Zones and I.T. Parks / Buildings. “
SYKES entered the Philippines two years before eTelecare, in 1997, and is considered the first multinational BPO player to enter the Philippines. SYKES’ entrance was the result of its acquisition of 19 seats from McQueen LTD. Prior to its acquisition, McQueen was headquartered in Galashiels, Scotland, focusing on inbound call centre support, software fulfillment and customer service application, and foreign language translation and localization.
Another early mover was PeopleSupport, co-founded in 1998 by David Nash and Lance Rosenzweig. The model was very similar to 24/7 Customer’s — email and chat support for dot-com clients. After struggling with their Los Angeles outsourcing center PeopleSupport, in 2000 and 2001, restructured its business by relocating outsourcing operations first to St. Louis, Missouri, and then to the Philippines. Subsequently, the company closed operations in St. Louis and completed the migration of operations to the Philippines. and closed their facility in St. Louis. Essentially the move to the Philippines not only rescued the Company, but invigorated them into a significant “local” player with eight outsourcing facilities and, roughly 8,400 personnel in the Philippines, 400 people in Costa Rica and over 150 in the U.S.
At the outset of operations in the Philippines, PeopleSupport employed 40 employees. This move was executed at the behest of Rainerio (“Bong”) Borja President of PeopleSupport Philippines and Vice President of Global Operations since May 2000. Bong is widely regarded as the most articulate and consistent voice of the Philippines BPO industry and the architect of much of the industry’s growth.