Strategic Outsourcing Professionals

Within the last six weeks, there have been three serious events in Manila that cause concern for the Outsourcing community facilitating operations in The Philippines. While operating in Manila for two years, this is the first time that a series of dramatic events has occurred in such a short span of time.

On Friday, October 19^th, there was an explosion at the Glorietta mall that killed eight people. The Australian Federal Police, who assisted with the investigation, concluded that there was “no evidence to suggest that the explosion had been caused or initiated by an improvised explosive device.” However, after being in Manila a few weeks ago, the general consensus amongst the people was that it was more than likely a deliberate terrorist attack.

On Tuesday, November 13^th, I was having dinner on top of the Citi building in Makati when a blast went off at the Philippine House of Representatives. This explosion killed three people and wounded several others in the area. This was the first historical attack against the Philippine government building.

Today, November 29^th, there was a resistance movement staged at the Peninsula hotel in Makati (across the street from the Shangri-La where I stay), which was comprised of former government officials and a small military force. The renegade group was demanding the resignation of President Gloria Macapagal Arroyo and calling for a popular uprising against the President. Philippine military forces surrounded the hotel. Approximately 400 hotel guests were evacuated during the siege. Warning shots had finally been fired and tear gas was used to thwart and disrupt the uprising. While this ended with no casualties, it seems far from peaceful.

We have been extremely pleased with our Manila Operations, but it does make you think twice about business continuity and general sourcing strategy. Now, I just need to prevent my wife, or heaven forbid, my mom from seeing this post. The travel would be the least of my worries.

I have been published in a book entitled, Mutlisourcing – Concepts and Applications, edited by Jaya S Krishna. The book was published and released by ICFAI Books, which is a branch of Icfai University in Hyderabad, India.

I was contacted back in February to see if I would like to donate my work to the Institute of Chartered Financial Analysts of India, which is a non-profit organization established to impart quality education in Management and Finance. Besides generating original articles and books, they aim to accommodate a plurality of views and multiplicity of ideas for the benefit of learning. For this reason, I welcomed their request to include my thoughts and viewpoints for their publication.

The book is a compilation of articles and white-papers written by industry experts. For this particular book, I wrote the article outlined in Chapter 8, Three Keys to Managing Multi-vendor Environments for Success.

Recently, we have undergone an evaluation of Emerging Markets to explore alternative outsourcing destinations. One of those markets, Guatemala, is extremely appealing when you look at the labor resources available, the price points of services provided, and how the government is setting up the infrastructure to win U.S. based business. Below is a quick snapshot of our findings with regards to Guatemalan vendors offering BPO and customer care services.

Guatemala is trying to establish itself as the premiere Central American country offering Nearshore business process outsourcing and call center services. The country provides the largest population in Central America with 14 million people.  Guatemala also provides 40% of the total GDP for the entire region – the economy is strong and growing. For BPO and call center services specifically, the industry is virtually untapped; approximately 1-2% of the entire Guatemalan labor force works in the BPO industry. 

When looking at the Guatemalan infrastructure to support U.S. business, there are several initiatives underway that promote the growth of the BPO industry. The largest and most compelling initiative is the establishment of the ‘Cluster’ or Guatemalan Call Center Commission. This commission was established by the government to prepare, standardize and regulate companies seeking U.S. clients. The Guatemalan government is trying to ensure that the industry remains healthy and that companies in the commission represent the country well. Call centers must undergo a standardization process, similar to ISO, before they can be granted membership into the commission. The commission also seeks to protect the labor force by enforcing laws around age requirements, employee benefits, fair working conditions and promoting competitive compensation packages.

The main benefits for seeking BPO services in Guatemala are as follows:

• Low Attrition Rates – The Call Center commission tracks employees in a centralized database as a check and balance against employee poaching. Once an individual works for a call center, the individual is not eligible to work for another call center for 6 months. This combats high turnover rates that are present in highly saturated markets like India, Costa Rica and the Philippines.
• Low Pricing – The rates in Guatemala are highly competitive in comparison to other markets. There are American companies who sub-contract through Guatemala, but pricing for American based vendors seem to be 20-30% higher. By going directly to the Guatemalan providers, costs will be lower because there is not a ‘pass through’ provider trying to make their margin.
• Strong English – While Spanish is the primary language, Guatemala has a large English speaking population; this is especially true throughout the Universities. The English capability is far better then India, Panama, Costa Rica and the Philippines.
• High Quality – While we have not yet employed a Guatemalan vendor, our dealings with them have been terrific. They really understand the business and know what clients want in a relationship. Each vendor seems to have the capability to provide a fully-loaded solution that includes data/voice recording for quality management, Work Force Management, ICM integration, favorable personnel ratios and seem very willing to take on aggressive SLAs.
• Strong Connectivity – Telecom response times have been noted at .065 milliseconds. The redundancy in fiber is 99.99% with some major carriers. T1 rates are also some of the lowest in the region.

The benefits for moving operations into Guatemala are compelling. My only advice when researching Guatemala as a future outsourcing destination - ignore the crime rates.