Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017



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Biggest of the Big Winners

           There is consensus among the foreign chambers of commerce in the Philippines that the Information Technology and Business Process Outsourcing sector is one of the biggest of the big winners among the industries that have helped to earn investment grade for the Philippines.  The Second Anniversary Assessment made by the Arangkada Philippines, an initiative of the foreign chambers, cited the major reasons for the many benefits conferred on the economy by this sector:  large size, high growth rate and long-term potential to provide millions of quality jobs and earn high service export revenues.  It is a perfect complement to the other employment generating and foreign exchange earning sector which is represented by the Overseas Filipino workers (OFWs).  It retains Filipino talents in the country and has a much higher multiplier effect through its more powerful linkages with other high-growth sectors like real estate, retailing, education, and health services.

          The foreign chambers have specified the factors conferring on the Philippines  a distinctive competitive advantage in this globalized industry:  a large workforce of educated, English-speaking talent with a strong customer-service orientation and cultural affinity to North America (the largest market in the world for BPO and KPO services); highly reliable low-cost international telecommunications; diverse and inexpensive site locations (e.g. in such secondary cities as Dumaguete, Iloilo, Tacloban, Dagupan, Baguio); and strong government support (such as the ease with which IT zones can be established under the PEZA regulations).  The Second Anniversary Assessment of the Arangkada document has come out with ways of sustaining the growth of this sector:  "A better industry legal framework requires retaining fiscal incentives, fixing labor legislation that makes it more difficult to compete in the global market, and reducing the high number of paid holidays, which cost industry tens of millions of dollars of unbudgeted expenses for every new holiday declared.  The Labor Code should be amended to allow subcontracting and to make it easier to terminate employees."

          Consonant with the very high priority given to this sector by the Arangkada advocacy, there are as many as thirty recommendations that will be monitored throughout the whole of 2013 and will be assessed in next year's Third Anniversary Report.  For this article, I have picked those recommendations which have to do with the upgrading of the human resources so that, if necessary, we can double the number of people working for the industry in the next five years, i.e. from about 700,000 today to 1.5 million by 2016.  Recommendation 15 states "Adopt the National Competency Test at a regional (if not national) level." In 2012, 3,000 graduating students were assessed with BPAP's Global Competitiveness Assessment Tool (GCAT), bringing the total of GCAT-assessed students to 20,000.  DOST-Science Education Institute (SEI) provided funding to assess 10,000 students and testing will continue to 2013.  BPAP has driven more awareness on GCAT as an assessment tool for work readiness and continues to work with the IT-BPO companies to adopt GCAT for assessment or to prioritize the hiring of applicants with good GCAT scores.  BPAP also participated in the discussions of the National Basic Education Competency Assessment for Kindergarten to Grade 12.  Through a close partnership between educational institutions and the industry, the move to K + 12 in the next three to five years can increase the number of qualified workers for this industry.  Curricula in the last two years of high school (Grades 11 and 12) can be tailored to the needs of the industry in a number of cooperating high schools.

          As the industry shifts to more non-voice knowledge process outsourcing activities, some technical institutes and colleges can also closely cooperate with IT-BPO enterprises to produce the right knowledge-oriented skills.  Recommendation 16 stipulates for the adoption of an industry-wide technical and leadership management certification.  The program for technical and leadership management certification will be continued in 2013.  BPAP prioritized the entry-level program (Service Management Program or Service Management Specialization Track), which was approved by the  Commission on Higher Education (CHED) under CHED Memorandum Order (CMO) No. 6 series of 2012 for the Business Administration courses and CMO no. 34 series of 2012 for the Computer Science, Information Science, and Information Technology courses.

          A serious human resource bottleneck is the limited number of qualified supervisors in the IT-BPO industry.  Recommendation 17 is all about accelerating the development of local managers for the industry.  There should be a college degree course on Service Science Management Engineering, especially in business schools.  As a matter of fact, my own university, the University of Asia and the Pacific, is seriously considering a specialization in this area in the School of Management.  A Master of Science of Management, major in service science management, could be offered in the near future.  The Arangkada assessment referred to an initiative of John Clements Consulting, Inc. that will use Harvard Business Publishing services and methodology.  In addition, BPAP will work with the Asian Institute of Management in 2013 to develop the program for management and executive levels. Instead of the management engineering option, the BPAP is considering to focus on a service management specialization track for undergraduates.

          The BPAP signed a Memorandum of Cooperation with CHED in November 2011, which allows BPAP to make recommendations on curriculum, assessments, and faculty development.  This helped fast-track the approval and roleout of the Service Management Specialization Track.  The program was launched in four schools (three in higher education and one in high school) starting Academic Year 2012-2113 and is being rolled out in 13 state universities and colleges nationwide in Academic Year 2013-2014. This very close cooperation among the BPO industry, the Department of Education and the Commission on Higher Education can guarantee a better matching of the demand for and supply of skills for one of the biggest winners in the ongoing rapid growth of the Philippine economy.  For comments, my email address is bernardo.villegas@uap.asia