Family first approach works when setting up business in the Philippines

Two Australian entrepreneurs say that creating a family atmosphere at their outsourcing and information processing businesses in the Philippines has been one of the keys to success.

Andrew Inwood and Lloyd Ernst have separately built businesses in the Philippines over the past decade that mostly serve Australian customers but also have varied client bases in the US, Britain and parts of Asia.

Inwood, a former marketing executive in Australia and Britain, now employees more than 70 people in Manila for his Sydney-based CoreData Research, which he emphasises is a knowledge processing firm rather than a traditional Business Process Outsourcing (BPO) operation.

Ernst, a former IT executive in Sydney, has scaled up in the Philippines even faster to having about 1000 employees spread across six offices in three cities in what he calls a “virtual BPO”.

Both of these serial entrepreneurs had dabbled in establishing outsourcing or information processing businesses in China about a decade ago, partly due to following clients to what was the region’s booming economy. They have also looked at the operating landscape in India.

Inwood tested the water in the Philippines in the early 2000s offering jobs to two of the best statistics students at the University of the Philippines, which has continued to be a source of employees.

Two years later he decided to start turning the Philippines into the operational hub of CoreData, which employs statisticians, coders, designers and research analysts to do qualitative and quantitative research.

“We are trying to run an Australian-style business there. So we are looking for people who are a bit different,” he says.

Ernst arrived in the Philippines more recently in 2010 when he decided it was too difficult to run software quality assurance testing out of China. But his “virtual BPO” Cloudstaff now allows mid-sized Australian companies to scale up or down various aspects of their operations with access to dedicated Filipino employees.

His spread of offices means he can provide treasury operations out of the financial centre in Makati, high-end graphics out of Cebu in the country’s centre and specialist developers in Clark, the free-trade zone north of Manila.

“With our virtual BPO it doesn’t matter where you hub the content. We can spread work around where our people are.”

The ASEAN Connected report says the old BPO call centre focus in the Philippines is shifting to Business Process Management (BPM) underlining how service sector opportunities are emerging in many parts of the region.

Australian companies are estimated to employ about 30,000 staff in the Philippines generating about $2 billion in output in an industry which has been growing 15-18 per cent a year for a decade.

Both Inwood and Ernst say one of their big challenges is to hold on to staff in an environment where wage costs are rising and some BPO businesses employ tens of thousands of staff.

They say their positioning in the knowledge work part of the sector rather than the call centre end makes it possible to offer more talented employees the opportunity to advance.

Ernst is particularly happy that five of his first seven employees are still at Cloudstaff and Inwood has two Filipino staff working in his British office and one due to move to the US.

CoreData provides healthcare, including vaccinations for staff families, financial literacy training and an education program after three years of employment. “You find you have to act in loco parentis for some staff,” he says.

“But Filipino’s will stay for the team. If you operate as part of a family and build that environment they stay,” he says in contrast to the turnover some parallel employers find in India and China.

Cloudstaff operates with the corporate mantra of becoming the Number One Workplace in the Philippines, with Ernst supporting free lunches, various sports and entertainment clubs, two internal radio stations and a $150,000 Christmas party modelled on a rock festival.

“Retention will be harder and harder. We put a lot of effort into retention,” he says.

Max Tennant, who has helped several Australian companies shift back-office operations to the Philippines and now heads the Australia Philippines Business Council IT and business process management committee, says the industry is very focused on whether it could be wiped out by new automation.

He says it is also shifting operations out of Manila to regional cities to reduce costs.

CoreData still focuses its recruitment on a couple of top universities, while Cloudstaff, with its much greater need for staff, has embarked on training programs with universities and can have up to 100 trainees on board at any one time.

With their bases in the Philippines and mostly focused on servicing companies outside the region, these two businesses are not dependent on the gradual economic integration of Southeast Asia for future growth.

But Ernst says he is doing more work for Australian companies wanting to expand into the Southeast Asian region by providing them with flexible back-office facilities to test out their expansion. He has put some staff into Malaysia for one client and has staff in China.

Some clients are serviced by as few as three Cloudstaff workers but others use more than 150, and some now have more staff in the Philippines than at home in Australia.

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Published 26 September 2016
By Greg Earl


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