So Much Labor, So Little Skills

It's a common refrain from those locating backroom offices in the Philippines. Lots of college graduates, not enough qualified. WNS , whose clients include T-Mobile, Intercontinental Hotels and SITA, complains that its hit rate in hiring is 10%.
That "skills gap" will disappear. The BPO industry is growing at such a rate and to such a critical mass that its gravitational pull will bring more and more of Philippines into its orbit; schools and society will respond. But maybe not as fast as employers wish.

Keshav R. Murugesh, group chief executive officer of BPO firm WNS Philippines Inc., told reporters in a briefing on Friday the employability rate in the country needs to be improved.

"In our case, we get only one out of 10 applicants," he said.

Mr. Murugesh said his office has been closely coordinating with the Business Processing Association of the Philippines (BPAP) to conduct training and special courses.

"However, the challenge is to produce skilled graduates who are employable once they apply for the job. It should be that when there are 10 applicants, all 10 get accepted," he said.

Converging on the Mall

Somebody forgot to give the folks at Convergys the memo about the global economic slowdown. OK, so maybe the decision to build the outsourcing company's biggest facility in the Philippines was made in better times. But now CVG's got room to add another 2,050 employees when it already is one of the largest BPO employers in the country.

And it goes to show that the outsourcing model remains intact: serve First World companies' needs using labor from Third World countries. But the modern day equivalent of the sweatshop involves having your workers report for work at one of the country's swankiest malls.

Convergys Corp., a customer relationship management company, will open its 12th and the largest facility in the Philippines.

President Gloria Arroyo will lead the dedication of the new facility on Thursday, Oct. 22. The facility encompasses over 17,000 square meters located in Glorietta 5 along Ayala Avenue in Makati City and can hold 2,050 employees.

It is the first Convergys site to offer the convenience of a shopping mall on its lower floors and includes executive and administrative offices, training rooms, conference rooms, and employee lounges.

Convergys has experienced an unprecedented growth in its six years of operations in the Philippines. From 200 employees upon opening just six years ago, it now counts over 17,500 employees on sites across Metro Manila, Cebu, Bacolod and Sta. Rosa, Laguna.

Convergys employs more than 70,000 people across its facilities.

Convergys is now the largest BPO provider in Cebu City with over 3,300 employees throughout three contact center facilities.

Within five years, Convergys has established 12 contact centers in the Philippines - seven located in Metro Manila, three in Cebu City, one in Bacolod City, and one in Santa Rosa, Laguna.

Dispersing to the Periphery

One thousand new jobs in a city of 12 million may not be too exciting. One thousand jobs in a city of half a million is something to write home about. In the Philippines' Visayas region, Iloilo is fast becoming a favored destination. It's no surprise that a city with six universities and thousands of fresh graduates a year would become a viable location for outsourcing companies. Other wannabee cities looking to boost development need remember that besides the available labor pool, another ingredient is necessary -- reliable telecommunication links to the rest of the world -- before they prepare the powerpoint presentations to lure companies to their neck of the woods.

Transcom, touted to be Europe's largest business process outsourcing (BPO) firm, will open a call center in Iloilo in 2009, and will hire from 1,000 to 2,000 employees.

The investment is expected to cement the city's place among the top new wave international BPO sites.

Iloilo City Mayor Jerry Treñas said Transcom has set the hiring of around 1,060 employees in October. It is planning to double its work force after it starts its operations, according to Treñas.

Transcom has 75 sites in 29 countries worldwide and has expertise in various industries including telecommunications, the financial industry, travel and leisure, utilities and retail/consumer goods. It has around 20,000 employees serving over 120 major clients in more than 30 languages.

The investment has also affirmed the city as among the top new BPO investment sites in the world.

The city already hosts nine BPOs with more than 4,000 workers. These include Teletech, ePLDT Ventus, Callbox Customer Contact Center, Global Mega Communications Inc., Techno Call Corp., Interactive Voice Call Center, Medlink Trans Services, Eversun Software Philippines Corp., and Savant Technologies.

BPO Slowdown

The red-hot BPO industry is declaring that 2009 will be a slower growth year after the torrid expansion in the past few years. The blame is put not just on the global recession but the rising protectionist sentiment in the U.S., the Philippines' largest market.

Half-full-glass analysts will tell you this is the welcome pause that refreshes. No industry can sustain big jumps in production without bumping up against constraints. And for the longest time, the constraint has not been external demand. The problem has been mostly internal: the country's ability to provide labor. Or rather, we should say labor is not a problem, as any recruiting agency will tell you; it's the limited supply of labor with the right skills that has limited growth.

Now that external demand is slackening, the industry can turn more attention to those internal problems, those what managers will call "variables we can control." There's nothing we can do to influence the U.S. recession; there's everything we can do to make sure Philippine schools are turning out qualified graduates, training seminars are truly training employees, and programs to upgrade technical skills are implemented.

CICT Commissioner Monchito Ibrahim said that despite the setback, the industry is still expecting 30-percent growth this year to some $8 billion, and plans to increase the number of new jobs by a fifth or 75,000 jobs. He said the BPO industry ended 2008 with 372,000 jobs.

The revenue projection was taken from the Business Processing Association of the Philippines (Bpap) Roadmap 2010, a three-year plan that aims to double the country’s worldwide market share and achieve $13 billion in revenues, as well as provide direct employment to 1 million people.

Ibrahim said the slowdown was due to a number of factors, including the global financial crisis which has hurt the US, the country’s only major partner in the BPO industry. The lack of workers with necessary skills was also a key constraint.

Retiring the PSPT Ticker

So People Support, after seeing its stock drop to $8 in July, agreed to be bought by Aegis BPO, for $12.25 a share. The $250 million transaction is supposed to close this October, when the Philippine-based company becomes another part of India's sprawling Essar Group, which is into such businesses as steel, oil, and mobile phones.

Whatever happened to creating "shareholder value" when PSPT rejected the $15 per share offer of IPVG?

ACt 2: PeopleSupport

The dance has entered its next phase. After PeopleSupport (PSPT) rejected a bid by IPVG for $15 a share, it is now on the receiving end of a revised $17 all-cash counter offer. PSPT can no longer treat this bid in the same way it treated the first -- a brush off with a curt letter.

A copy of the IPVG (IP) letter to Mr. Rosenzweig available here.

It is unfortunate that the Board of Directors of the Company has not engaged us in serious discussions despite repeated attempts to have confidential dialogues regarding our proposal. We are also disappointed that the directors do not see the merit of our proposal despite the fact that it is directly beneficial to the shareholders of the Company.

However, upon careful deliberation of the recent initiatives, revised earnings guidance, and new strategic planning the Company announced in its statement of December 12, 2007, we are prepared to make a revised proposal to acquire the Company at a purchase price of $17.00/share. This new proposal represents approximately 34.81% premium to the Company’s 60-day weighted average closing price of $12.61/share including the close of market yesterday, January 10, 2008.

As the major shareholder of PSPT, much rests on how Chairman & CEO Lance Rosenzweig wants to finish this. If he is truly ready to give up PSPT, then he merely needs to extract as much cash as possible, and the best way to maximize the final price is to get another dance partner.

If he wants to hang on, he'll need to bring lots more ammunition vs IPVG, rather than just PowerPoints and press releases about how rosy the picture is for PSPT remaining an independent company. Many PSPT shareholders with lawyers on speed dial won't hesitate to sue if he gives up this opportunity to cash out. No need to bet what Galleon (24% owners of PSPT) are advising Lance to do.

It's been more than a month since IPVG made its first unsolicited offer, ample time for any other interested party to emerge from the woodworks. Our call: we are coming close to a final price.

Medical Fallout

There's always a downside. Here's one view of the human cost not carried on the balance sheets of India's mighty BPO industry.

There's mounting medical evidence that if people are forced to stay up night after night their biorhythms are disrupted and they are liable to pay a cost in terms of both physical and psychological health. Elevated pay isn't sufficient compensation for a heart attack brought on at 30. We can't drive young people into the BPO industry by painting a superficially alluring image of its rewards, then shrug and turn away when they face serious health issues. Experts are concerned that the brewing crisis could undermine India's economic boom, which has been driven to a large extent by the services sector. A study by the Indian Council for Research on International Economic Relations estimated that heart diseases, strokes and diabetes cost India $9 billion in lost productivity in 2005. They forecast this figure to grow to a whopping $200 billion in the next decade, with the IT sector predicted to be among the hardest-hit.

I won't be a pied piper singing the praises of the capitalism system, but the long-term view argues for us to have faith. When an industry's health woes become a big enough problem, the solutions will come. If entrepreneurs have set up bars catering to the graveyard shift workers -- blackened windows to simulate night even though it's noontime -- why can't a whole city be transformed? Interiors of buildings are now made to follow the daylight hours of countries halfway around the globe; why can't the district where the building belongs also follow those same hours? If the human body can't evolve to cope with altered circadian rhythms, why the environment will have to be reshaped. If we all live on borrowed time, why can't we advance that clock +12 hours?

Getting to 20% With Ayala

As eTelecare's (ETEL) shares tumbled, the Philippines' oldest conglomerate and owner of the country's biggest bank and biggest real-estate company made good on its intentions to boost its stake.

According to information reported by Ayala Corp. to US regulators, the conglomerate now owns 6.39 million ETEL shares, or 22.22% of the BPO. Ayala first bought into ETEL in June 2006, when press reports said it paid about 800 million pesos for 11% of the company, using LiveIt Solutions Inc. as its investment vehicle.

The shares may have just been transferred from one Ayala pocket to another. Check out Ayala Corp.'s US SEC filing. There are more layers in this than a wedding cake: Ayala wholly owns Azalea International Venture Partners Ltd., which wholly owns LiveIt Investments Ltd., which in turn wholly owns Newbridge International Investment Ltd. Newbridge, after all, was an original investor in eTelecare. In an early November filing, Ayala said additional investments in eTelecare were for "investment purposes."

Ayala Corporation currently intends, depending on market and other conditions, and in its sole discretion, to consider acquiring additional Shares of the Issuer and thereby increase its total beneficial ownership interest to 20% of total outstanding Shares on a fully diluted basis (or approximately 22% of the Issuer’s total current outstanding Shares on an undiluted basis), in order, among other things, to allow Ayala Corporation to account for its Shares under the equity method of accounting.

Even then, it's usually a good sign when a major shareholder puts it on record that it is the shareholder on record, instead of burying it in an offshore vehicle domiciled in some balmy tax haven. After all, Ayala will not want to get above the 20% threshold if it's expecting poor performance from ETEL going forward.

People Say The Price Isn't Right

On the same day that it rejected a cash bid from IPVG Corp. to buy the company for $15 a share, PeopleSupport came out with a bullish forecast, saying it would generate more revenue and earnings than analysts had expected.

LOS ANGELES (AP) -- PeopleSupport Inc., an offshore business process outsourcing provider, said Wednesday it expects its fiscal 2008 profit to beat Wall Street's expectations. The company forecast income between 65 cents and 81 cents per share in 2008, with revenue of $180 million to $190 million. Analysts polled by Thomson Financial predict earnings of 57 cents per share on revenue of $170.8 million.

Not all the pieces of the unfolding drama are visible on the board. The unsolicited IPVG bid, in the parlance of bankers, put PSPT "into play." Now the usual drill in this scenario is to reject the first buyout offer and holdout for more; from the shadows other bidders will emerge. You can be sure that teams from other BPOs are now crunching numbers with their favorite investment bankers to see if they should battle for PSPT and top IPVG's $15/share offer.

In the PSPT's press release, PSPT quoted its independent director Frank Perna as saying, “We have carefully reviewed the proposal and believe it to be inadequate and not to merit further attention. We have also reviewed the strategic plans in place for the Company and believe that the implementation of those plans is the best way to enhance shareholder value at this time."

The translation: we have a price at which we will sell.

eTelecare Loses It

How would you like to be the relationship manager at eTelecare Global Solutions who just lost a major account? The Manila-based company, which debuted on the Nasdaq just a few months ago, saw its shares drop below its IPO price after it disclosed that the "significant client" cancelled a program that brought in $15.6 million in revenue during the first half of 2007.

Customer churn is part and parcel of the BPO business, but when you are a newbie company touting the superiority of your outsourcing practices, losing a major customer deals a body blow to your reputation.

eTelecare expects 2007 annual revenues to be in the range of $240 million to $250 million, with net income of $19.2 million to $21.5 million, or $0.63 to $0.71 per diluted ADS. This compares to the previous guidance for 2007 annual revenues in the range of $250 million to $260 million, with net income of $22 million to $25 million, or $0.72 to $0.82 per diluted ADS.

Which customer did the BPO lose? From ETEL's prospectus:

As of December 31, 2006, we had 21 active clients for which we had performed 51 different programs since January 2006. We have a particular expertise in communications, technology and financial services. We also serve clients in the travel and hospitality, media and retail industries. Our largest clients in terms of revenue are American Express, AOL, Cingular, Dell, Intuit, Sprint and Vonage.

Buy Now

Short items from Indian press reports that Infosys will buy the BPO operations of Philips Electronics NV. When it closes, it will be another item in the on-going rejigging of the BPO industry. Captive operations become part of independents. And operations that managers once thought vital or contained too many secrets to let outsiders peek at them now become outsource-able. What was it I heard at a cocktail party recently? In rapidly-changing businesses, there are no secrets. Just speed of execution.

India's second-biggest software-maker will be taking over all the costs of this acquisition, similar to the manner in which rival Tata Consultancy Services bought the operations of UK's Pearl Group insurers, the website reported. The acquisition will add to Infosys current BPO unit, which has close to 11,000 employees, providing the company with round-the-clock processing, the report
added.

Here's Times of India's take:

Infosys Technologies is said to be close to acquiring the finance and accounting BPO arm of Philips Global. The Philips arm has an employee strength of 1,500 globally, including a 500 strong force in Chennai. The other facilities are in Warsaw and Bangkok. The BPO arm is said to have assured revenues of $200 million spread over five years.

Half a Million Jobs

The Contact Center Association of the Philippines (CCAP) has a target: 500,000 gainfully employed in the industry by 2010. If this target is achieved, what will it do to the ecosystem that serves this industry? More Manila bars, open at noon, with dark curtains to shield the sun, so that graveyard shift workers can still feel like they're going out at night? More 7-11 and Ministop convenience stores with dine in facilities? More "We will give your accent an American twang" ESL (English as second language) centers? More healthcare workers trained to diagnose and treat "graveyard disease"?

Raffy David, CCAP director, said in a phone interview that industry estimates peg the total current industry workforce at around 200,000 workers.

Since call centers began setting up around the early part of the decade, the industry has been doubling its workforce annually but has tapered off in recent years due to concerns in the supply of skilled labor.

This is one of the perennial issues CCAP wants to address in an industry roadmap currently in development. CCAP plans to unveil this roadmap, basically detailing a strategy for the industry until 2010, in its annual conference this July.

"Since 2001, we've been trying to address perennial issues like HR, including poaching of agents, and promoting the Philippines abroad," said David, who also serves as CCAP director for membership.

Blackstone Flag to Fly in Philippines

A Reuters news story in the NYTimes website says Blackstone Group has bought Intelenet Global Services of India, teaming up with its management in an 80-20 venture. The buyout price was in the region of $200 million.

This marks the first foray in the industry for Blackstone. And such big boys with deep pockets don't usually stop at one deal. Rollup strategy, anyone?

The British bank Barclays and an Indian mortgage firm, the Housing Development Finance Corporation, said separately that they each were selling their holdings in Intelenet, without disclosing the price.

Intelenet plans to expand its operations in Britain and begin services out of the Philippines and Mauritius, said its chief executive, Susir Kumar.

Manila's Construction Boom

There was a time when property developers had to rely on a "build it, and they will come" strategy. Now the world has turned -- all the big boys with capital and spare land are being approached by BPOs, i.e. "we have come, please build it." The larger BPOs are ready, willing, and eager to take up entire buildings and sign long-term leases in their rush to expand. Which goes to show that the constraint for the Philippine economy's growth engine isn't the ability to sell its services abroad. BPOs with U.S.-facing businesses are so confident of demand that they are snapping up any sizeable office space that comes onto the market. What's holding back the boom are domestic capacity constraints, be it buildings with the right cabling, or qualified managers to manage the pell-mell growth. But have faith -- the capitalist system is responding to remove those constraints . . .

SM Investments Corporation, one of the Philippines’ largest conglomerates, broke ground on its latest built-to-suit project in Makati City.
The firm disclosed to the Philippine Stock Exchange (PSE) yesterday that the project, to be called SM Makati Cybezone, is a 4- storey building at Sen. Gil Puyat Avenue, due for completion in Q2 2008. Located at the heart of the Metro’s business district, SM Makati Cyberzone will have a gross floor area of 18,700 square meters and will be occupied by eTelecare Global Solutions, Inc.
"With the growing presence of the BPO industry comes also the growing need for spaces and integrated office facilities," said SMIC vice chairman Henry Sy, Jr.
He added that "the SM Group is more than prepared to answer those needs, as we have aligned with the market demands of this growing industry to provide well-planned and integrated office facilities to BPOs and Contact Centers in strategic locations.". . . .SMIC also broke ground for its second business process outsourcing (BPO) building for PeopleSupport at the SM Baguio Cyberzone recently.

RPO

We now live in the age of the derivative acronym. First there was BPO (business process outsourcing). Then there came KPO (knowledge process outsourcing). The new acronym popping up is RPO (recruitment process outsourcing), in which the person who interviews you is not even employed by the corporation that is hiring you.

Corporations have always used head hunters to find executive-level employees.
But now the search for lower-level workers has been outsourced as well. Companies are desperate for talent, and they can't always find it on their own. Staffing firms like Spherion (NYSE: SFN) and Korn/Ferry, along with consultancies like IBM and Accenture (NYSE: ACN), have all moved into the recruitment process outsourcing (RPO) business. They find candidates, root through résumés, do background checks and even conduct initial job interviews for jobs paying anywhere from $30,000 to $200,000 a year. And the candidates often don't even know that an outsourcer, rather than the company itself, is running the show. . . .According to research firm Gartner, the RPO business was worth $1.2 billion in 2006 and is growing about 8.6% a year. Some outsourcers, however, are seeing much faster growth. At staffing firm Spherion, the RPO business has tripled in the last 18 months and now tops $50 million annually. At 4-year-old firm The Right Thing business has been tripling every year. And the deals are getting bigger. Three years ago, the biggest recruitment process outsourcing contracts were worth $5 million, according to Jason Corsello, an analyst with the Yankee Group. Now, deals are often worth more than $30 million a year. That means someone at a call center in Manila might be interviewing you for your next job. Even if the recruiter is based in the U.S. or Canada, the entire process, until the final interview, may now be conducted over the phone and online. "Face time is not part of this business," says Lowell Williams, head of the human resources practice at EquaTerra, a firm that connects corporations with outsourcing partners. "You could definitely have a job interview with someone in India or China. It's going on all the time."

If Citi Can Do It, So Can HSBC

HSBC , according to this press report, will add a few thousand more jobs in the Philippines to serve its US and UK customers. As more and more financial bigwigs such as AIG and Citibank cluster their in-house operations in the Philippines, you can say the Philippines is becoming the center of backroom operations -- the contradictory terms intended.

...the visiting bank official said HSBC is committed to the country in terms of expanding its banking services and its support group by increasing its Business
Processing Outsourcing (BPO) operations.
A third BPO is scheduled to open this coming year, which will increase the total employees of the bank on a consolidated basis to roughly 11,000, disclosed HSBC Philippines Chief Executive Officer Mark Watkinson. Specifically, its banking operations employs a total of 2,500 and 5,500 for BPOs.
At present, the bank has a couple of BPOs, one in Ayala-Alabang and another in PBCom Tower at the heart of the Central Makati Business District. These two service HSBC’s clients in the United States and United Kingdom.
It was explained the Philippines has an edge to service the bank’s US and UK customer base because of the natural talent of locals to speak English as a second language.

300? No 3,000

With money in the bank after selling shares to the public for the first time, eTelecare says it's busy adding capacity in the Philippines with plans to open a new 13,000 square meter site, its 13th office, in a few months. Triskaidekaphobians need not apply for any of the new jobs opening up, which will boost eTelecare's Philippine headcount past 10,000.

eTelecare Global Solutions, Inc. (NASDAQ:ETEL), a leading provider of business process outsourcing solutions, today announced it will invest in its sixth delivery center in the Philippines. The new center, located in the Annex@Shaw facility in Mandaluyong City, Metro Manila, will open in the third quarter of 2007 and employ more than 3,000 employees when fully deployed.
Funding for the new center comes from eTelecare’s recently completed initial public offering of American Depository Shares.
eTelecare is the first Philippine-incorporated business process outsourcing (BPO) company, and the second Filipino company overall, to trade on the NASDAQ stock exchange.
“Our successful U.S. IPO affirms that the Philippines is one of the top outsourcing delivery locations in the world, and that there is strong market demand for a high-quality multi-shore provider such as eTelecare,” says John Harris, eTelecare President and Chief Executive Officer.
“We plan to invest a significant portion of the proceeds from our IPO in further expansion in the Philippines,” added Fred Ayala, Chairman of eTelecare.

WaMu Chooses Cebu

Washington Mutual (stock symbol: WM) is putting in a captive operation in Cebu, the Philippines' second-largest metropolitan area.

Joel Mari Yu, Cebu Investment Promotions Center managing director, announced the entry of Washington Mutual Inc., one of US’ leading retailers of financial services catering to consumers and small business banks. He said WaMu will be among the locators of a 12-story building that will be constructed in the Asiatown IT Park (AITP).

While WaMu's entry into the Philippines will mean an addition of 1,500 jobs to the country's burgeoning BPO industry, what happens to PeopleSupport?

A Low Attrition Rate for BPO

Pop quiz. Genpact, which had US$613 million of revenue in 2006, had what attrition rate that year?

A. 15%
B. 24%
C. 32%
D. 43%
E. 55%
F. 61%

Before you answer, let's hear from Genpact, which is planning to sell shares to the public for the first time. Genpact's DNA comes from General Electric, the company that gave us Jack Welch and the mantra to either be No. 1 or No. 2 industry or get out, i.e. it was a "captive" serving the needs of GE Capital before becoming an independent company. Excerpts from its draft prospectus filed with U.S. regulators:

We have an experienced and cohesive leadership team and a culture that emphasizes teamwork, constant improvement of our processes and, most importantly, dedication to the client. Many members of our leadership team developed their management skills working within GE and many of them were involved in the founding of our business. As of March 31, 2007, we have more than 28,000 employees including over 5,500 Six Sigma trained green-belts, 300 Six Sigma trained black-belts and 60 Six Sigma trained master black-belts, as well as more than 4,500 Lean trained employees.

A key determinant of our success, especially as we continue to increase the scale of our business, is our ability to attract, train and retain employees in highly competitive labor markets. We manage this challenge through innovative human resources practices. These include broadening the employee pool by opening Delivery Centers in diverse locations, using creative recruiting techniques to attract the best talent, emphasizing ongoing training, instilling a vibrant and distinctive culture and providing well-defined long term career paths. We monitor and manage our attrition rate very closely, and believe our attrition rate is one of the lowest in the industry.

Ready?

The answer is C.

More info from Genpact:

Our attrition rate for all employees who have been employed by us for one day or more was 32% in 2006. A number of our competitors calculate employee attrition rates for their Indian employees who have been employed for six months or more. On this basis our Indian employee attrition rate for 2006 was approximately 21%, which we believe is relatively low for our industry based on statistics published by third parties such as NASSCOM. We attribute this low attrition rate to a number of factors including our effective recruiting measures, our extensive training and our strong culture.

Powering the Expansion

For the Philippine economy to grow at the 7-8% clip, it needs to continue to attract investments in manufacturing, preferably in sunrise industries. The BPO engine, while significant, won't always be able to pull the wagon.

Here's one kind of industry -- manufacturing solar cells -- that the Philippines would do well to create a cluster around. The interesting portion of the article is the last line -- that as big-scale manufacturers discover the Philippines as a production site , they also discover it as a BPO destination.

Greg Reichow, SunPower Philippines Manufacturing Ltd plant manager, said in the report that the U.S.-based company's expansion was underway, with the first phase scheduled to be completed by Q3 of this year. He said that the capacity of the SunPower plant in the country would be increased from 110mW to 400mW worth of solar cells within the year, and that workforce will also increase from 1,400 to 3,400 by 2008.
The company's production plant in the Philippines serves as its "hub of high-tech manufacturing," with the solar cells produced in the facility exported to the U.S., Europe and Japan. Reichow said that the new plant will produce solar cells for the export market but may also produce for local market if there will be enough domestic demand.
The SunPower official explained that the company chose the archipelago as location
for its plant because of the investment climate and available workforce. He said that the country has a strong engineering industry infrastructure, manufacturing 20 percent of the world's semiconductors. Another factor is having a low-cost but highly educated labor pool. According to Reichow, most SunPower employees in the country are engineers or other degree-holders that is why the company hired Filipinos not only for its plant but also for its back-office functions and R&D.

Philippine-centered backroom operations for multinationals, called "captives" in the preferred jargon of the industry, arleady include such names as oil companies Chevron Texaco and Shell; financial heavyweights AIG, Citibank, Deutsche Bank, HSBC, Henkel and Manulife; techies AOL, Dell and Hewlett Packard; plus other biggies such as Proctor & Gamble, Fluor Daniel, and Watson Wyatt.