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Exploiting
the U.S. Outsourcing Market
By Michael Alan Hamlin
December 1, 2003
Some genuinely positive news last
week received a lot less attention than it ordinarily should have.
The Philippine economy grew respectably in the third quarter, at
4.4 percent, principally on the strength of the services and agricultural
sectors. The U.S. economy grew a blistering 8.7 percent, indicating
that the thirst of American consumers for Philippine goods and services
will continue. And foreign investment approved by the Philippines
Economic Zone Authority rose 20 percent on the year, in large part
due to outsourced e-Services by U.S. companies.
All this good news, of course, was overshadowed by the announcement
of aging action movie star Fernando Poe, Jr. of his intention to
run for president next year. The announcement promptly sent the
already weakened peso into a tailspin and to an all-time low. Given
the record of the last movie star elected president and his premature
and unceremonious ejection from office, the overwhelmingly negative
reaction to the announcement by investors, business, and the tax-paying
middle class was of little surprise.
However, as long as the lights stay on and the data communication
links are working, who becomes president next year is likely to
matter less and less, at least in terms of the economic momentum
we are seeing now. Happily, or not, government's surge toward increasing
irrelevancy has accelerated because the successes the Philippines
does enjoy have virtually nothing to do with anything government
does - with a few exceptions.
One of those exceptions is the work that the Department of Trade
& Industry (DTI) and two of its attached agencies - the Board
of Investment and the Center for International Trade Expositions
and Missions (CITEM) - have done to market the Philippines as a
center for e-Services. The results of the effort have been dramatic.
Undersecretary Gregory Domingo says that 120,000 jobs have been
created in the e-Services sectors over the past two years. And these
are quality, value added jobs that come with starting salaries about
twice the average elsewhere.
One of the latest efforts by the DTI and CITEM involves two programs
designed to help Filipino firms exploit the U.S. market. The first
program involves linking Philippine and U.S. firms, and facilitating
the development of business partnerships. The second program accelerates
the process by which local software companies can attain Capability
Maturity Model (CMM) certification.
CMM certification provides assurance to potential clients that a
software firm employs global business process standards in the development
and deployment of software products and services. Both the linking
and CMM certification initiatives are products of a partnership
between DTI-CITEM, the Information Technology & E-Commerce Council
(ITECC), the United States Agency for International Development
(USAID), and the Economic Governance Technical Assistance (EGTA).
You are probably wondering what EGTA is. There's actually a simple
solution. EGTA is an entity created to do the work of Agile, which
became a political hot potato when its consultants beamed with a
little too much pride about their work in some government institutions,
such as the Central Bank and the Department of Finance. The consultants
- all Filipinos - were accused of being U.S. spies. Agile was actually
responsible for distributing strategic U.S. aid and monitoring its
use.
Rather than refute the politically charged allegations, USAID simply
created another entity to continue to carry out its work. This was
a smart move, coming after a series of public relations booboos
by Agile itself. It's also a good thing because the Philippines
continues to receive meaningful assistance by USAID with nary a
skipped beat.
The linking program "will provide assistance to Filipino IT
companies through workshops on developing effective marketing strategies,
business plans, and presentations," ITECC undersecretary Ver
Peña said in announcing the two programs last week. "Companies
with the most potential to make it in the US IT market will also
have the opportunity to visit the U.S. as part of a business development
tour."
U.S. based venture capitalist Abhishek Jain, who is CEO of Washington
Technology Partners, Inc., will conduct the program. Approximately
15 companies are expected to join the tour to the U.S., which must
be undertaken at their expense. The workshop, which is open to all
IT companies interested in exploiting the U.S. market, is being
underwritten by USAID.
The CMM certification program actually involves a CMM readiness
assessment also underwritten by USAID, for six pre-selected firms.
The smallest firm has less than 25 employees, and the largest, several
thousand. All are export oriented, with specific fields of specialization.
Webworks OS concentrates on building Microsoft .Net applications.
Jupiter Systems builds sophisticated enterprise systems. Leverage
Systems Technology creates customized applications.
WeServe is a systems integrator, Big Foot Global Solutions provides
web products, and Software Ventures International spans three IT
sectors, software development, business process outsourcing, and
contact center services.
These two programs taken individually may not seem that big, or
significant. But they do address the two biggest hurdles local IT
companies face in exploiting the U.S. market. The first hurdle is,
simply, how? The second is how to communicate credibility. The linkage
program will equip astute technology companies with the practical
marketing and communications tools they need to connect meaningfully
with potential clients. The CMM certification program will show
that they are worth listening to.
And both will eventually catalyze more good news.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001), and he is currently
at work on High Visibility: The Making and Marketing of Asian Professionals
into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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