Chevron proves the Philippines is up to the task of being a leading provider of support services for the world
By Ton C. Reyes
For countries in the vanguard of the world economy, the balance between knowledge and resources has shifted so far towards the former that knowledge has become perhaps the most important factor determining the standard of living—more than land, than tools, than labour. Today’s most technologically advanced economies are truly knowledge-based.
—The World Bank, World Development Report 1998/99
In today’s global village, knowledge and technology have become the most important factors of production. Labor and machines, the erstwhile engines that moved the world, have since been displaced by knowledge as the most basic and most important form of capital.
In the new knowledge-driven economy, the generation and exploitation of knowledge play a major part in the creation of wealth. Accelerated by information technology, knowledge has diminished the importance of geography and wealth in the global race towards competitiveness. Very quickly, intellectual capital has become a country’s and a firm’s foremost source of competitive advantage.
Thanks to the depth of its intellectual capital, the Philippines is again establishing a name for itself and its people as a provider of support services for the world. Multinational companies that used to ignore the country for its perceived dearth of opportunities have started seeing it in a different light and are looking to the Philippines to provide the backbone support for their operations. Consequently, we are witnessing the rapid growth of the country’s business process outsourcing industry.
Industry estimates project that BPOs in the country will generate over US$12 billion in annual revenues and employ 920,000 workers by 2010. These figures were US$3.5 billion and 237,000 jobs, respectively, in 2006. In the last five years, the BPO sector has been growing by more than 50% on average, boosting demand for office spaces and telecommunications services in the process.
singled out
It was on the strength of the country’s intellectual capital that Chevron dramatically transformed its Philippine operations into a strategic hub of its global business. Until 1998, Chevron’s operations here were just another cog in the wheel of its global operations. Its Philippine operations did not leverage much on existing resources to contribute to the company’s quest to make its global operations more cost-effective.
However, Chevron’s global headquarters was already exploring offshoring as a means to streamline operations for greater competitiveness. The objective was to centralize some business processes in a manner that was reliable and cost-effective. Chevron scanned its operations in various countries and singled out the Philippine office for its surfeit of professionals with outstanding communication skills, customer focus, and friendly ways. Buttressed by the country’s reliable infrastructure, as well as the government’s fiscal incentives, the Philippines was chosen to provide backroom support for the whole of Chevron’s global operations.
Kee Teek Hong, general manager of Chevron Holdings Inc.’s Manila Shared Services Center, recounts how Chevron went about transforming its operations. “We already had a sizeable presence in the Philippines,” he explains. They had downstream operations with a network of over 800 service stations, upstream operations, and a geothermal company. Still, the then-pioneering move of offshoring and the unusual choice of the Philippines were initially met with a lot of skepticism, with many regional officials wondering if the Manila office could deliver the services they needed. “Our customers were not used to receiving services from outside their countries,” he recalls. The Manila group quickly established, however, that it was more than up to the task.
At first, the Philippine office provided services to Southeast Asia only; it later expanded its scope to the rest of Asia and, eventually, the U.S. Now, Chevron Holdings employs over 700 employees who work 24/5, providing services in the fields of finance, human resources, marketing, and information technology to other Chevron business units worldwide. “Our footprint is big. We are still growing in terms of size, and we are now ready to cross the thousand mark,” shares Kee.
Chevron’s Manila Shared Services Center supports SAP, JDE, and Ariba systems concurrently, and is the only Chevron office outside of the U.S. selected to deliver the services globally. As it grows, it is adapting to the needs of its global clients and expanding its range of services. “We are improving our services to cover more countries with more demanding skill sets. These are in the higher-value areas, such as more complex accounting and finance activities, better customer-facing marketing support, transformational information technology projects, centralized HR information management systems, and regional logistics initiatives,” Kee continues.
While the Philippine office has proven its worth, however, it is not just sitting on its laurels, knowing that there is much more that its people can do if they are primed to be at their best. Realizing the importance of human capital in its operations, Chevron Holdings makes sure it provides its employees with a thorough knowledge of Chevron’s business.
Training programs that address technical and leadership skills are run by both in-house and outside consultants. “Different tools are in place for our people. We have multiple functions so people can move across multiple businesses,” Kee points out. Chevron also sends its people to various parts of the world, not only to train them, but to also to train their counterparts. The exchange of technology and skills is a two-way process.
Judging from the many multinationals that have looked at Chevron’s regional operations, Kee is confident about the growth prospects not only of Chevron’s Manila Shared Services Center but also of the local BPO industry. “The general trend is towards outsourcing. Even smaller companies are leveraging on this successful model. People are embracing this change,” he says. Moreover, the population of other countries is aging; the lack of labor in these places will see to the continued growth of outsourcing. “The Philippines is well-positioned for growth,” contends Kee.
As in any emerging industry, however, there are a number of issues that have to be addressed in order for the growth to continue. “New segments are cropping up,” Kee notes. “It’s important for the Philippines to stay ahead.” For instance, the private sector has to address the real estate, infrastructure, and labor requirements needed to support growth. Education needs to be prioritized as well. Kee explains, “The graduates we produce should be equipped to work in the industry. Competition for skills will intensify. Hopefully, people will see this industry as a long-term career and companies will try to capture higher-value activities.”
For Chevron Holdings, Kee is confident that Chevron worldwide will continue to recognize the key role the Philippine office has assumed in the context of the company’s global business. “Our skill sets are in demand. We are providing people as our resource. We are also improving our operations and staying cost-competitive,” sums up Kee. “It is a happy marriage of our people and the company.”
