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Tuesday, January 22, 2008

RP named one of top 10 outsourcing, shared services sites

By Lawrence Casiraya (

MANILA, Philippines -- The Philippines has been cited by Frost and Sullivan as among the top 10 destination countries for shared services outsourcing alongside India and Malaysia.

In its most recent global study on Shared Services and Outsourcing (SSO), Frost and Sullivan estimates the global SSO market to be worth $930 billion and predicted that number to grow 15 percent by 2009.

Rounding up the top 10 countries are China, Ireland, Singapore, Mexico, Czech Republic, Poland and Canada.

Shared services have become a sub-segment of business process outsourcing or BPO wherein a global company sets up outsourcing operations in one country to take advantage of local skills and other cost advantages.

In the Philippines, several companies like HSBC, CitiGroup, Dell Computer and Safeway have set up shared services centers.

Others like IBM and Sykes have moved their SSO operations from India to the Philippines, according to Frost and Sullivan.

The Philippines already specializes in back-office operations for IT and IT-related services, making it an attractive destination for shared services.

According to Frost and Sullivan’s estimates, the Philippine back-office industry generated revenues of $180 million in 2005.

India has always figured prominently as a top destination although the study reveals that factors like high attrition rates, rising wages and poor infrastructure are forcing investors to look into other countries like the Philippines and even China.

Malaysia was also cited as an ideal shared services hub because of its excellent infrastructure and low attrition rates. Dell, IBM and India's Satyam have invested in delivery centers in Malaysia.

In a previous interview, Gerry Clark, regional head for BPI consulting firm TPI, noted that Malaysia's government has been doing well in "incentivizing" investors.
"Malaysia, however, is attracting end-users and not (third-party) service providers like those in the Philippines, " Clark said.

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