Strategic Global Outsourcing and Offshoring

Next week…

Be prepared to present your answers to country attractiveness exercise (questions can be found on Blackboard under Teaching Resources tab)

Readings:

Hallikainen, P., Bekkhus, R., & Pan, S. L. (2018). How OpusCapita Used Internal RPA Capabilities to Offer Services to Clients. MIS Quarterly Executive, 17(1).

Lacity, M. C., & Willcocks, L. P. (2016). Robotic Process Automation at Telefónica O2. MIS Quarterly Executive, 15(1).

Wilson, H. J., & Daugherty, P. R. (2018). Collaborative Intelligence: Humans and AI Are Joining Forces. Harvard Business Review.

ACCELERATE PH: FUTURE-READY 2022 18

The Philippine Global In-house Center Subsector Roadmap 2022

1.1.5 COMPETITIVE ANALYSIS Exhibit 7 provides a summary of the background and key competencies of the GIC subsector in the leading destinations globally. India and the Philippines are the market leaders, with China, Malaysia, and Poland also beginning to make headway in this domain.8 Exhibit 7: Snapshot of Major GIC Destinations Country Description Country Description

India

India is a leading destination for

GICs.

Tier II destinations, such as

Hyderabad and Pune, and Tier III

destinations, such as Indore and

Trivandrum, are becoming

hotspots for GICs.

Philippines

The Global In-house Center Council

(GICC) aims to promote the

Philippines as the preferred location

for GICs.

GICs have been growing rapidly,

driven by a large talent pool and

stronger engagement within the

business.

China

The government encourages

global companies and privately-

owned ventures to set up GICs.

State-owned Assets Supervision

and Administration Commission

(SASAC) facilitates the setting up

of finance GICs.

Thailand

There is a growing use of shared

services for cost reduction and

management efficiency.

The government provides tax and

non-tax benefits to set up GICs in

Thailand.

Malaysia

Malaysia is a lower-cost location

compared to Western countries or

neighboring countries such as

Singapore.

It receives strong support from the

government and several

organizations.

Mexico

Mexico has a large pool of

resources equipped with IT

knowledge.

It is also an ideal location for US

companies due to its close proximity

and lower operating costs.

Brazil

Brazil possesses modern

infrastructure and IT specialists,

which can enable technology

innovation.

However,  Brazil’s  labor  cost,  

import tax, and service tax are

high.

Chile

Chile is equipped with excellent

infrastructure and has a skilled

workforce, especially for the IT

sector.

However,  Chile’s  population  is  

relatively small.

Indonesia

The government is actively

improving infrastructure and the

ICT landscape.

The government is encouraging

foreign investment as well as

cooperation between local and

international companies.

Poland

Poland is often chosen due to its

convenient location, stable

economic condition, low labor costs,

and availability of well-educated

resources.

Vietnam

Vietnam is still in its infancy, with mostly smaller setups.

It has predominantly single-function delivery centers focusing on areas in BPM such as HR or

finance and accounting.

Source: SSON; KPMG; Frost & Sullivan

8

http://www.ssonetwork.com/sourcing-models-strategy/articles/global-locations-trends-2014-report/;

http://www.everestgrp.com/2013-12-malaysia-the-emerging-asian-tiger-for-global-shared-services-sherpas-in-blue-shirts-

12510.html; http://forbesindonesia.com/berita-773-enterprise-services-the-next-big-wave.html;

http://www.nationmultimedia.com/business/Next-move-Thailand-as-HQ-and-trading-hub-of-Asean-30249545.html;

https://www.kpmg.com/BR/en/Estudos_Analises/artigosepublicacoes/Documents/Advisory/global-outsourcing-business.pdf;

https://www.kpmg.com/PL/en/IssuesAndInsights/ArticlesPublications/Documents/Poland-as-The-Destination-for-Shared-

Services-Centers.pdf; https://www.kpmg.com/PL/en/IssuesAndInsights/ArticlesPublications/Documents/Poland-as-The-

Destination-for-Shared-Services-Centers.pdf;

https://www.kpmg.com/BR/en/Estudos_Analises/artigosepublicacoes/Documents/Advisory/global-outsourcing-business.pdf;

http://www.ssonetwork.com/vertical-industry-insight/columns/asean-for-shared-services-costs-taxes-and-talent

ACCELERATE PH: FUTURE-READY 2022 19

The Philippine Global In-house Center Subsector Roadmap 2022

Analyzing the overall supply perspective of GICs from a FTE standpoint, APAC is clearly, by far, the

largest region in terms of delivery capabilities, accounting for more than 70% of the market. This is

followed by Europe and Latin America.

Exhibit 8 illustrates shared service centers by delivery location.

Exhibit 8: FTEs in GICs by Delivery Location (2014)

Source: Frost & Sullivan Analysis

India and the Philippines are the top two GIC locations globally, as these countries are already mature

outsourcing destinations. India and the Philippines have a proven track record of having a large talent

pool required to cater to the needs of the GIC market.

1.1.6 LEARNINGS FOR THE PHILIPPINES

The GIC subsector is set to continue growing as more companies look at setting up their own

operations across the globe to streamline cost and drive innovation across the enterprise. Listed

below are some global learnings applicable to the Philippine GIC subsector.

i. Inclusive to all industries to set up GICs

In the global GIC setup, companies originate from a diversified range of industries. A similar trend can

be seen in the Philippines, where one GIC is from the petrochemical industry while another is from the

BFSI or automotive industry. As the Philippines is already one of the leading hubs for GICs globally

(besides GICs being an industry-neutral setup), theoretically, companies from every industry or

business can set up their own delivery center in the country. To further expand the local GIC market,

the Philippines can market itself as a GIC destination for all industries first, rather than promoting the

types of GICs already set up here. It can also develop internal advisory capabilities by focusing on

different industry working groups to help new companies without GIC experience to set up their

operations in the country.

ii. Conduct more dialogues with Corporate HQs

RoW

11%

Brazil

Argentina

Chile

Mexico

Czech Republic

Slovakia

Hungary

Bulgaria

Egypt

South Africa

Singapore

Legend

Key Locations

Emerging Locations

Costa Rica

(2%)

Ireland

(7%)

Poland

(6%)

Romania

(1.5%)

India

(50%)

Malaysia

(4%)

Philippines

(13.5%)

China

(5%)