Philippines Average Overall Salary Increase Budget from 7.2% to 8.6%

Asia's markets have demonstrated further growth in the last year, which has impacted salaries throughout the region. Many employers are reporting pay increases in 2005 and this trend looks likely to continue in 2006. In addition, fewer companies are implementing pay freezes, according to the annual Asia-Pacific Salary Increase Survey conducted by Hewitt Associates, a global human resources services firm.

This year, India once again reported the highest average salary increaseat 13.9%, and employees in the Indian IT-enabled industry received the highest increase across all five groups surveyed at 17.9%.

The Philippines recorded an impressive average overall salary increase of 8.2%, which was closely followed by China at 8.1%. As Thailand's economy continues to strengthen, employees enjoyed average salary increases of 6.3%.

Meanwhile, Malaysia's salary increase budget ranged from 5.4% to 6.1%, andSingapore saw increases ranging from 3.4% to 4.3%. Salaries also rose inAustralia, Japan, Hong Kong and Taiwan.

Further Increases Likely in 2006
Asia looks set for slow but steady economic growth in 2006, and many employers are demonstrating their faith in the region by projecting similar salary increases next year.

Fewer companies reported salary freezes for 2005 than 2004, and on the whole this improvement looks set to continue into 2006. In Korea, 5% of survey participants say they expect a salary freeze, compared to 4% in China and 3% in the Philippines. Meanwhile, 2.6% of employers in India and 2% inHong Kong say they expect a salary freeze in 2006. None of the participating companies in Australia, Malaysia, Taiwan or Thailand expect salary freezes next year.

Variable Pay
Linking objectives to performance continues to be popular in Asia, and the ratio between variable and fixed pay will likely continue to increase in most countries except Singapore next year. Stock options remain the favored long-term incentive. Fixed bonuses were also popular this year. Leading the way, 81% of participating companies in Taiwan offered fixed bonuses to employees in 2005, closely followed by 72% in Singapore, and 67% in Thailand.

Rising Attrition
Attrition is a growing concern in Asia, and rates rose in most markets.The highest employee turnover rate was recorded in the Philippines at 18.1%. Other markets with high turnover rates include Taiwan at 17.7%, China at14.4%, Thailand at 13.4%, India at 13.1%, and Singapore at 13%. Attrition in Malaysia remained almost static at 12.5% up from 12.4%, while in Australia the rate dropped down to 13.3% from 15.1% in 2004.

Hewitt surveyed more than 1,500 foreign, locally-owned, and joint-venture companies this year, recording a 50% increase in participation over 2004 and making this the most comprehensive salary study in Asia Pacific to date. The survey covered 11 markets including Australia, China, Hong Kong, India, Japan,Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand. It measured actual and projected salary increases, and compensation practices for five specific job categories, namely senior/top management, manager, professional/supervisor/technical, clerical/support, and manual workers.

Hospital may use typists in Asia

Addenbrooke's Hospital in Cambridge said it was struggling to recruit medical secretaries locally and was considering "outsourcing" typing to countries such as the Philippines.

Read The Independent Online Edition for the full story.

Philippines moved to 4th as an attractive location for offshoring of service activities

The Philippines, despite continuing political instability and infrastructure weaknesses, continues to benefit from the global exposure and English language skills of its workforce. This is stated A.T. Kearney's Annual Global Services Location Index report where the Philippines jumped from the sixth to fourth position.

While India, China and Southeast Asia continue to dominate A.T. Kearney's annual ranking of the most attractive locations for "offshoring" of service activities such as IT, business processes and call centers, the United States ranks surprisingly well in a new version of the index released last November 22.

For 2005, the global management consulting firm added four lower-cost cities in the United States, United Kingdom, Germany and France to determine how they compare to more traditional offshore locations across the 40 measurements analyzed to create the Global Services Location Index (previously known as the Offshore Location Attractiveness Index). The U.S., represented by San Antonio, ranked 11th out of the 40 countries evaluated.

Additional findings from this year's Index include:

India and China: still dominating
India still leads by a wide margin. The gap between India and the second-ranked country, China, is larger than the gap between the next nine countries combined. Nevertheless, India's lead has shrunk slightly compared to 2004. This is mainly due to a slight reduction in India's financial attractiveness, the result of wage inflation in India and the emergence of new even lower-cost contenders such as Ghana and Vietnam.

China maintains its second place ranking and partially closes the gap with India, thanks largely to continued improvement in its infrastructure quality and the availability of relevant people skills. For example, the number of development centers in China with CMM or CMMI certifications (an industry standard for rating the process-quality of IT development centers) showed the largest increase of any country in the Index, jumping from 108 in 2004 to more than 277 in 2005. For a growing number of Asian and Western multinationals, China remains the best choice for serving their growing operations throughout the East Asia region - the logical location for IT and back-office support and call centers for China itself, but also a low-cost option for servicing established markets in Japan, Korea, Taiwan, Hong Kong and Singapore.

ASEAN: still rising
As a region, Southeast Asia is the biggest winner in this year's Index. Malaysia maintains its 3rd position Singapore stays at 5th, the Philippines rises from 6th to 4th, Thailand jumps from 13th to 6th, and Indonesia leaps into the Index at 13th. Even Vietnam, at 26th in this year's Index, sees its ranking rise from 20th to 16th position among the original 25 countries included in both the 2004 and 2005 Indices.

In Malaysia and Singapore, government promotion policies continue to pay off. Given its high-wage levels, Singapore has deliberately positioned itself as a safe location for sensitive high-end activities, with a particular emphasis on business continuity, IP protection and data privacy. Malaysia has augmented continued investment in world-class infrastructure along the Multimedia Super-Corridor, with further incentives for corporations choosing to locate in Malaysia and additional policies to open up the labor pool and deepen English language and technical skills throughout the population.

Thailand enjoys the biggest rise in this year's Index. This seems to be due largely to improvements in educational outputs, plus some improvements in infrastructure quality and the overall business environment. While still challenged by weak English-language capabilities, Thailand has the potential to emerge as key low-cost challenger to the Philippines in South East Asia.

At 13th, Indonesia is the third-highest new entrant in this year's Index, benefiting from competitive wages, rent and electricity costs, a relatively low tax burden and a very large workforce. However, weaknesses in the business environment, education quality, and language skills continue to be a concern. While Vietnam ranks low in the Index compared to the other ASEAN participants (due largely to its weak infrastructure and business environment ratings), it is still attracting attention both as an IT-development location for US-based firms and as a low-cost alternate to China for Asian language back-office and call-center operations.

Central and Eastern Europe: ever eastward
Offshore attractiveness in Europe continues to migrate eastward, strong performances by three new entrants in the Index (Bulgaria at 15th, Slovakia at 16th and Romania at 24th) reflect what many on the ground have observed - as costs in the most advanced Central European countries converge toward EU-levels, companies are moving farther East in their search for high-skill, low-cost solutions.

Despite continuing improvements in people skills, infrastructure and business environment, the Czech Republic slipped from 4th to 7th position, largely because of the rise of Thailand and the Philippines, but also because of increasing wages and other costs in the Czech Republic. Poland and Hungary also slipped from 10th and 11th to 18th and 19th, respectively, for similar reasons. Russia actually improved its position among the original 25 countries (from 21st to 17th), but dropped in the overall rankings to 27th, due to rising wages. Moreover, despite improvements, Russia still ranked 39th out of 40 on business environment metrics.

Latin America: improving, but still challenged by new contenders
While Chile improves its ranking by one position, rising from 9th to 8th, Brazil, Mexico, Costa Rica and Argentina all drop in the rankings, largely due to the rise of other countries. Brazil actually maintains the same score as in 2004, but drops from 7th to 10th place, as it is overtaken by Thailand, Chile and Canada. Brazil continues to score well on people skills as graduation and certification rates rise, but its financial attractiveness suffers from the entry into the Index of new lower-cost countries and its business environment continues to be disadvantaged by the relative inflexibility of its labor laws. Mexico and Costa Rica both improve their rankings (from 14th to 11th for Mexico and from 16th to 14th for Costa Rica) and Argentina holds steady at 15th among the original 25 countries, but they all drop in the overall rankings (to 17th, 21st and 23rd respectively), largely because of new Eastern European and Middle Eastern entrants.

Middle East and Africa: the next frontier
Perhaps the biggest surprise in this year's index is the strong performance by several countries in the Middle East and Africa - Egypt jumps into the Index at 12th, Jordan at 14th, the United Arab Emirates at 20th, Ghana at 22nd and Tunisia at 30th.

While security and stability concerns may be too much for some, a large number of global companies (like Alcatel, Dell, GE, IBM and Microsoft) have already established call center, IT and BPO operations in markets like Tunisia, Morocco and Egypt.

Egypt and other North African nations stress their unique combination of European language skills, technical proficiency and low wages, while others in the region are developing alternate value-propositions. Authorities in Dubai (and to some extent, the other Emirates and neighboring gulf states) are pushing the region as a low-risk alternative to India, offering all the advantages of a workforce imported from South Asia, in combination with unbeatable infrastructure and very attractive tax and regulatory regimes. High-cost compared to others in the Index, Israel is promoting itself as an ideal location for upper-end R&D, as well as multilingual support centers, drawing on the strengths of its education system and the diversity of its population originating from all over Europe and the Middle East.

Two countries perform surprisingly poorly in the Index, despite their emerging success as offshore destinations: Turkey and South Africa. Both countries have succeeded in attracting significant offshore investments (such as Siemens' large operations center in Turkey, and a large Lufthansa call center in South Africa), but they perform poorly in the published Index, since their high costs relative to other emerging markets are not offset by correspondingly higher education levels or business environment ratings.

About The 2005 Global Services Location Index

1. India
2. China
3. Malaysia
4. Philippines
5. Singapore
6. Thailand
7. Czech
8. Chile
9. Canada
10. Brazil
11. U.S.*
12. Egypt
13. Indonesia
14. Jordan
15. Bulgaria
16. Slovakia
17. Mexico
18. Poland
19. Hungary
20. UAE
21. Costa Rica
22. Ghana
23. Argentina
24. Romania
25. Jamaica
26. Vietnam
27. Russia
28. U.K.*
29. Australia
30. Tunisia
31. Germany*
32. South Africa
33. Israel
34. New Zealand
35. France*
36. Panama
37. Portugal
38. Spain
39. Ireland
40. Turkey

*Based on lower-cost locations in each country: San Antonio (U.S.), Belfast (UK), Leipzig (Germany) and Marseilles (France).

The A.T. Kearney Global Services Location Index analyzes the top 40 services locations worldwide against 40 measurements in three major categories: cost, people skills and availability, and business environment.

The Index assigns weightings reflecting the drivers of offshoring decisions based on A.T. Kearney research and engagement experience. Because cost advantages have been the primary impetus behind offshoring, financial factors constitute 40 percent of the total index weight. People skills and availability and business environment each receive a 30 percent weighting.

WEBWORKS OS Acquires IP Rights to Agora Management Suite

Philippine-based WEBWORKS OS (WWOS) has acquired the IP rights to the Agora suite of management software products developed by Florida-based Techwerks. WWOS will develop a next-generation version of the suite, which will be distributed globally by a WWOS affiliate, Gurango Software.

The Agora management suite is a series of industry-specific solutions that manage memberships, subscriptions, events, and training activities. The solutions tightly integrate with the Microsoft Great Plains suite of enterprise applications to offer small- and medium-size organizations a variety of interconnected business tools for automating enterprise accounting, human resource management and manufacturing planning, according to WEBWORKS OS president Joey Gurango.

The Agora management suite has been implemented in over 200 companies worldwide, including the Wharton School of Business, KABC TV in Los Angeles, Burger King, and a number of US banks.

The terms of the acquisition include the right to develop the next-generation version of the applications. WWOS affiliate Gurango Software (GSC) will distribute the suite. GSC plans to rebrand the new version of the suite before its official launch, planned for March 2006 during Convergence, an annual event sponsored by Microsoft.

GSC is a Philippine-based global company that offers a full range of software sales, distribution and support services. As part of its value proposition, GSC’s unique business model offers three pillars of services: software development, global distribution, and professional staff support. In the Philippines, Gurango Software aspires to be the dominant value-add reseller (VAR) of MBS packaged applications. Gurango Software's team members are proficient in the Great Plains, Navision and Axapta product labels, as well as carefully selected vertical applications.

Harte-Hanks Establishes Office in the Philippines to Focus on Marketing Operations

Harte-Hanks, Inc., a worldwide, direct and targeted marketing company, announced today that it will open a marketing operations center in Manila, the Philippines, that will provide contact center, data entry, mail tracking and data management services supporting primarily North American and other English-speaking markets.

Harte-Hanks has conducted business in Manila since 2002 via a partnership, and will begin to move equipment to its new facility there by year's end, with operation to commence soon thereafter. Initially, it is expected that there will be 475 customer service agents in Manila -- and a capacity of up to 700 work stations. Specifically, Harte-Hanks will provide technical and product support for client engagements, and will conduct various back-office functions for clients.

The Manila operation also will perform data collection and verification for the Harte-Hanks CI Technology Database (CITDB), a telephone-built database of information technology (IT) and enterprise market intelligence on 680,000 business sites in North America, South America and Europe. Currently, Harte-Hanks-owned facilities conduct CITDB data gathering in the United States, Brazil, Ireland and Spain, and operations will continue in these nations.

The company also announced that it has promoted Jason Cavo to the position of managing director, direct marketing, who is charged with management of the Manila operation. He has been a Harte-Hanks employee since 2000, serving as a senior account manager for technical markets working in the company's Austin, TX, office.

Harte-Hanks, Inc., San Antonio, TX, is a worldwide, direct and targeted marketing company that provides direct marketing services and shopper advertising opportunities to a wide range of local, regional, national and international consumer and business-to-business marketers.

TeleTech Acquires Philippines-based BPO company

TeleTech Holdings, Inc. announced the acquisition of FinSource Inc., an emerging Philippines-based business process outsourcing company.

FinSource, founded in 2003, is a global provider of end-to-end consumer products processing on behalf of leading international financial services firms. FinSource has domain expertise and practical business experience in designing and implementing back offices processes that meet the unique needs of its clients.

TeleTech is a global business services company that provides a full range of front-to-back office outsourced solutions including customer management, BPO, and database marketing services to measurably enhance clients' core customer management processes. TeleTech's products and services, standardized processes, and recognized capabilities to implement complex global projects make the Company a valued partner for clients that include Global 1000 businesses and governments. TeleTech partners with clients to offer 150 languages, through its more than 40,000 employees, in 17 countries.

Sykes, Siemens Business Services, and the Philippines experience

Sykes Global Services recently reported a revenue growth of £7.6m for last year and doubling of staff. It is interesting to find out that Sykes conversion to a call center service provider took place as it fulfilled the need of Adobe, the software company. This prime client call center needs is being fulfilled by Sykes call centers in the Philippines. (The Herald)

Siemens Business Services (SBS) reported revenues of €5.37bn but losses of €690m. Over-capacity is deemed as one of the reasons for its lost. To resolve, the company shall cut additional 3,000 jobs worldwide, outside of Germany's 2,400 job cuts. Half of the €1.5bn cost savings shall be attributed to the job cut while the other for offshoring to countries such as the Philippines. SBS has set up an offshoring center in the Philippines that will act as a call center, for Asia and the US. (Ovum)

Research initiatives
Alsbridge, a global sourcing advisory firm began their Fall 2005 Offshore, Outsourcing, and Shared Services tour with visits across Asia to the Philippines, Thailand and India. The Asian tour was preceded by trips to Canada and will be followed by visits to Romania, Bulgaria, Czech Republic and Poland in Europe. The purpose of the Fall 2005 Tour is to gather the most up to date information on the cost, quality, and risk of delivery of services – independent of service provider and local authority influence – from viable offshore locations.

Companies and newswriters are encouraged in helping write-up the Business Process Outsourcing entry in Wikipedia.

Cincinnati Bell contracts Excell for outsourced directory-assistance service

Cincinnati Bell will outsource its directory assistance service to Excell Services starting this December. This move is part of the company's restructuring program that intends to generate US$20-25 million cost savings. Excell will perform the service in one of its call center in the US, Canada, and the Philippines. (The Enquirer)

Qualified workers and competitive managers

Call center Paxys Inc. net profit from January to September 2005 has reached P206.80 compared to P85.26 million last year. By year-end, the company is expecting to generate P270 to P300 million revenue. (Yahoo)

ePLDT's call center business is growing too. At end-September, the company had 3,315 seats, compared with 1,736 a year earlier. (Inq7)

Call center revenue in the Philippines in 2005 is expected to reach more than P1 billion.

The business process outsourcing sector is certainly booming. Much of its growth is attributed to our English speaking professionals. Today, knowledge of foreign languages, other than English, is becoming an important factor as well.

For instance IBM Business Solutions hired 470 workers whose personnel are knowledgable of more than one foreign language. (Inq7.net) This also creates the need for Filipinos to acquire language skills, other than English, to become more competitive in the workplace.

Filipino knowledge and skilled workers are much in demand overseas. For the past 3 days, 138 foreign employers joined the Department of Labor and Employment's First International Labor Mart where work opportunities from dairy farm workers to IT workers are being offered.

Efforts in improving the education system is ongoing and even allotting funds to target the marginalized sectors and areas in the country. Congressman Rolando Andaya Jr., House of Representatives Chairman of the appropriations committee, has allotted P100 million in improving the madrassas curriculum, through the Department of Education.

However, the challenge as well is to help our existing knowledge workers gain advanced education further. This way, we can also eye in becoming a management giant as a potential direction, in the future. Companies are encouraged in providing this incentive to employees, in the form of a loan or incentive, should be explored.

Flight attendants for outsourcing

Northwest Airlines, in an effort to reduce their cost of operations, will be getting more flight attendants from Asia as it pushes to cut down the number of US senior flight attendants in Japan and Asia routes from two to one. If this pushes through, Northwest will be able to achieve a cost saving of US$195 million a year. (AZCentral) It has the potential as well of generating 2,600 foreign flight attendant jobs out of the US.

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