SWOT: The Philippine outsourcing and offshoring industry

WE TALKED about SWOT analysis in my last post—assessing your Strengths, Weaknesses, Opportunities and Threats. A careful evaluation of your business’s SWOT can greatly help map out strategies so you can take your business to the next level.

To illustrate the SWOT analysis technique, let’s take a look at the Philippine outsourcing and offshoring (O & O) industry. In Bayan B2Biz O & O, a formal study on the industry conducted in 2007 by Bayan Telecommunications together with the Institute for Development and Economic Analysis Inc. (IDEA) headed by former National Economic and Development Authority (NEDA) director general Dr. Cayetano Paderanga, Jr., Mr. Tunde Fafunwa, Bayan’s chief executive consultant, says the O & O industry has “unlimited potential not only to stimulate our economy, but to dramatically change our perspective on where the greener pastures are.”

The study also says that the O & O industry may be the answer to brain drain by providing job opportunities for more than 35 million Filipinos.

Briefly now, outsourcing is having third party service providers in other locations perform some of your business processes. In offshoring, offices are set up in other countries with no delegation of processes and serving only the mother company.

In this study, here’s a SWOT analysis of the Philippine O & O industry:

Strengths:
1. Strategic location in Asia
2. Infrastructure—well developed infrastructure, redundant and cost-effective telecommunications, and centrally located IT parks
3. Highly skilled labor force
4. Ample support from government and industry associations

Weaknesses:
1. Scarcity of labor
2. Commoditization of services—non-core processes are easily learned and replicated by others
3. Disorganization of some sectors
4. High cost of power
5. International perception—political instability, red tape/bureaucracy, unclear policies on labor and land ownership

Opportunities:
1. Infrastructure—building capacity outside established hubs, or in emerging O & O centers, providing adequate and competent training, refining and enacting policies on data security and intellectual property rights
2. Emerging O & O segments—in particular, the knowledge process outsourcing
3. Globalization

Threats:
1. Labor migration and attrition
2. Emerging O & O providers

With this SWOT analysis, O & O businesses can plot out their strategies, such as setting up marketing arms in overseas markets, building niche markets especially for skill-intensive segments, and focusing on training efforts, to name a few.

Have you done your SWOT analysis? Take the time to work on it.

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