24 Aug 2002

Circulation: 10021

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Repositioning for Global Competitiveness

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Dear Friends,

This is from a speech delivered by Mr.Gil V. Guanio, President of
Software Ventures International, in a business conference jointly
sponsored by PricewaterhouseCoopers Philippines and Six Sigma
Consulting.

I recommend it for all MTSO's - a very relevant appraisal!

"I want to share with you this afternoon some insights on how we
pursued the IT and the IT enabled service sector in the global
market. And to put things in perspective let me briefly explain
what we do.

Software Ventures International is an employee owned Filipino
company that was organized in 1987 to pursue the global IT computer
services market. With minimal capital but a lot of hard work, it
pursued the ASEAN market in the late eighties and the USA computer
services market in the early nineties. From the original 55
employees, SVI has grown to almost 3,000 people in three service
lines today. Examples are medical transcription work, financial
reconciliation, scanning and indexing of documents to help
corporations go paperless and managing the corporate knowledge
repository.

Our three service lines have a common thread. Majority of the
clients are American companies with global operations. Most of the
work is performed remotely from the Philippines. We are therefore
dependent on communication lines of the telecom companies. We
developed our own tool sets and methodologies to become competitive
in our space. Remote processing from a third world in a different
time zone from the client has its unique problems and puts us in a
unique situation. Because we cannot acquire off the shelf tool
sets, we are forced to develop them internally.

The three services rely on Filipinos who are in ample supply.
Computer literate English speaking college graduates are the source
of our software personnel. All of the English-speaking college
graduates are potential call center agents. And the thousands of
accountants who graduate every year can easily adapt to backroom
operations work. All three service lines are needed by most of
corporations. For example, financial reconciliation is a natural
extension of the software maintenance service of the financial
systems. Whereas call center work is now the customer service mode
needed by the new economy or processes brought about by the
Internet revolution.

But my message today is not earthshaking. For those in the IT and
IT enabled services, consider these three points:

1. Technology is the key and not cheap labor
2. Market presence is as expensive as the production facility
3. IT enabled services is the opportunity

The Philippines is not the only source of inexpensive labor in the
world. I do not need to elaborate on China and India. The cheap
labor must be augmented with good management processes, work
processes and tools, which are state of the art. The technology
platform has to be consistent and compatible with those of the
clients. Technology is therefore crucial and can be very
problematic. Most of the Philippine companies cannot afford to use
the very expensive technology platforms of the big American
companies. I believe that the key to profits and success are long
term contracts wherein we have to exhibit an acceptable technology
behind the service offerings.

For example, in the inbound call center business for applications
like customer service, application software can cost as much as
$9000/seat dwarfing the cost of the PC hardware. Or the
telecommunications cost can be as high as $1,000/month per voice
line to the USA or as low as $150/month. The telecom and technology
costs are much bigger than the labor costs. Hence, cheap labor
alone will not ensure the success of an offshore call center
offering.

Now, I want to share with you some insights on the marketing front.


The global service market is very fast paced and very competitive.
It is very different from the Philippine business setting and many
Filipino businessmen will have difficulty adjusting to it. A major
hurdle to success is the track record. American companies check
credentials by looking at track records and client references.
Projects in an American setting are of course, preferred. Building
a track record takes time. And it is a necessary requirement to
penetrate the market.

One cannot just build a field of dreams. Build the production site,
and work will come in, because the demand is huge. No. The work and
the contracts have to be worked on, to come in. An effective
marketing organization will cost as much as the production facility
in the Philippines. The marketing investment has to be made and
cannot be ignored. Sending a Filipino marketing executive to the
USA has its pitfalls. The adjustment to the American way of doing
business is so difficult that hiring an American with an
established marketing network is more cost effective. The marketing
effort is expensive. One cannot ignore this cost. Only a good
marketing organization will ensure sustainability in the service
sector.

The pursuit of IT and IT enabled services put us right in the
middle of the battle for the knowledge based services in the world.
Information technology is an enabling technology to become
competitive in any field. The proper use of the corporate knowledge
is the challenge for most companies. Therein lies the opportunity.
The IT enabled services is also referred to as the business process
outsourcing. Computer processing will not always result in full
automation. People are still involved in opening envelopes,
answering phone complaints or requests processing claims and
reconciling discrepancies. This is the area that Philippine
companies can focus on. The field is new. It can utilize our
workforce fast. And it is an export service line we can excel in.
The audiences today are all businessmen. You know your business
processes and how to streamline them. Why not do the same thing for
some Fortune 500 company and generate some needed dollars for the
country in the process?

Let me summarize then the points that I raised. Business process
outsourcing is an opportunity even with the recession in the USA
economy. But cheap labor alone will not ensure success because the
technology cost is even much bigger than the labor component. One
needs to understand the underlying technology in the business
process. Penetrating the USA market requires a track record and a
good marketing presence."

QED? :)

And you are invited to the Medical Billing and Coding FAQs:
http://www.mtindia.org/faq/faqquestion.cfm?secid=6

Do shoot us your comments. And have a great weekend!

Cheers!!! :)

Maj (Dr.) Amit Chatterjee, SM
Strategist/Founder ~ amit@...
MTIndia ~ www.mtindia.org - not non-profit on purpose....

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NEWS AND VIEWS :
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1) Firms urged to explore medical transcription market

Pakistani software companies have been suggested to adopt a
pragmatic approach in exploring the $12 billion medical
transcription American market, particularly since the recent
friendly overtures between the two countries.

http://lists.isb.sdnpk.org/pipermail/comp-list/2001-October/000373.
html

2) Boost for infotech-enabled services

"Though we had a late start, the IT sector in Bengal has registered
a 115 per cent compounded average growth rate between 1996 and
2001," the chief minister said. "Now the IT policy needs updating,
and that will be done soon. But before that, we need to focus on
the short-term, where IT-enabled services is an important factor."

The services include back office operations, call centres, content
development and animation, data processing, medical transcription,
payroll processing and website services among other things. The
sector is expected to grow by 75 per cent and generate Rs 7,100
crore by 2002-end, says Nasscom. IT services, on the other hand, is
expected to grow by only 23 per cent. A recent Nasscom study on the
prospects of nine cities as destinations for IT-enabled services
has ranked Calcutta fourth.

http://in.news.yahoo.com/020819/58/1tzwt.html

3) IT sector has great job opportunities: Experts

Prominent wizards of information technology claimed that
there were ample job opportunities in the IT-enabled services
especially in the upcoming profession of call centres and medical
transcriptions in the country. Secretary of Indus Entrepreneur
(TIE) Gopal Sutwalaha said that there were massive job
opportunities in the field of call centres and medical
transcription and exhorted students to avail of these
opportunities. He also said that Indian youths need not go abroad
to pursue their career in the field of IT.

http://timesofindia.indiatimes.com/articleshow.asp?art_id=10203911&
sType=1

4) MT manager gets bus driver suspended

Anjana DS, a medical transcription manager, can't sleep at night.
She keeps recalling her bus ride on May 5. Travelling from BTM
Layout in bus KA01 530 was the mistake she made. The driver refused
to acknowledge her signed bus pass, "just because I hadn't written
my name and address," she says angrily. He yelled, called her names
and asked her to get off.

"I still avoid that route," she says. However, just two days ago,
Anjana, spotted the same driver in the bus. "He has no right to
harass the public. I ended up being a bundle of nerves. It was a
mental torture and an embarrassment for no fault of mine."

To save face, Bangalore Metropolitan Transport Corporation (BMTC)
chief traffic manager Dastagir Sharieff has suspended the driver.

http://timesofindia.indiatimes.com/articleshow.asp?art_id=10881362&
sType=1

5) Enter media transcription...

While a medical transcriptionist is a 'medical language specialist'
who assists physicians and specialty surgeons by transcribing and
proofreading the reports dictated by them, a media transcriptionist
transcribes news and special reports and documentaries. Feature
stories, publicity interviews, testimonials, ``as broadcast''
scripts, and interviews with project personnel for documentary
purposes; they all are covered within the ambit of media
transcription.

Though the media transcription industry in the USA is growing at a
fairly well annual rate, its work force is reducing at the rate of
8% annually, creating thus a vast opportunity for trained
transcriptionists in India to fill this gap. India is preferred for
outsourcing because of our large English literate population and
the 12-hour time difference, which enables firms to transcribe
reports and make them available as per the deadline. This has
created encouraging employment opportunities for those trained in
the area.

http://www.hinduonnet.com/thehindu/jobs/0204/05030091.htm
&sType=1

6) It helps to be in touch with what's in demand

NOT too many manufacturing industries seem to be kick starting into
production. The job-seekers' market multiplies by the day and you,
the fresh graduate, the MCA or the new doc on the bloc are ready to
brave the world.

While placement is no longer the word that's being used - it's
search and staffing solutions - what they're doing is locating the
"hungry sectors."

And as Rachna explains, the fields that need people are "IT, ITES
(IT enabled sectors - call centres, medical transcriptions and so
on) and telecom. Life sciences, health and insurance are seeing a
huge surge as is retail marketing and fast moving consumer goods."

http://timesofindia.indiatimes.com/articleshow.asp?artid=18792357&s
Type=1

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All original contents of this newsletter is copyright 2002 Mediweb
Infotech Pvt. Ltd. All cited articles are copyright of their
authors and/or respective publications. Please feel free to share
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as it is left intact with all links unchanged and this notice.

Thank you for your interest in MT India!

The MTIndia Team
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