IT Outsourcing to the Philippines

Date: Wednesday, April 30, 2003 11:53 AM

JOB DESTRUCTION NEWSLETTER

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http://www.internetworldnews.com/news.php?inc=outsrc/04282003a.html

April 28, 2003

IT Outsourcing to the Philippines

By John Zipperer

Is the Philippines on your radar for IT outsourcing locations? When one
thinks of overseas outsourcing for IT projects, India probably comes
first to mind, and that's no surprise. India has done a great job at
promoting itself as a location for highly skilled information
technology expertise (and at a cost desirable to U.S. firms). "In
looking at the overall offshore marketplace, a lot of our customers
already have a relationship with an Indian firm," says Rachelle McLure,
national practice director of offshore delivery services for IT
consultancy RCG IT (http://www.rcgit.com). "But they're looking at the
Philippines to diversify."

A desire to mitigate some of the geopolitical risk inherent in having
too many eggs in one overseas basket is one of the reasons companies
might consider the Philippines. But McLure says the Philippines is an
area with good technical skills and something else that is not to be
discounted: language affinity with the U.S.

RCG IT has 12 offices in the U.S., but it also has an offshore delivery
center in Manila, the capital of the Philippines. Intelligent
Outsourcing Strategies spoke with McLure about what attracted RCG IT to
that country, what its clients get out of sending work over there, and
what role offshore outsourcing plays in today's IT world.

INTELLIGENT OUTSOURCING STRATEGIES: What does your Offshore Delivery
Center in the Philippines offer?

RACHELLE McLURE: We had been recruiting from the Philippines for a
number of years, and found a lot of really good, talented resources,
and so we put together a good team of folks and were very impressed.
Based on that experience, and [because] a number of our customers had
locations in the Asia-Pacific area, in 1997 we opened up an office in
the Philippines. When we opened up, we had four projects for local
offices of U.S. clients. We run that office the same way we run any of
our regional offices. When we do an offshore office, it's through a
regional office, and it works with our Manila office on the project.

IOS: What IT projects or services are companies most looking to
outsource?

RM: We're seeing a lot of migration and conversion projects from one
technology to another technology. We're seeing things going from, say,
an AS/400 to more of Web applications using either .Net or J2EE
frameworks. We're seeing upgrades [in which they are] refreshing their
office environment and realizing they have some applications that don't
function well in that new environment, so we're doing some quick
migration for some customers. "We've got to get this done, and we
didn't budget for it, and we've got to get it done quick and cheaply."
Another strength of the Philippines is call centers. This isn't an area
we offer specifically, but it's one of the areas that's growing in the
Philippines right now, and it has a lot to do with them being fluent in
U.S. English.

IOS: How important are language skills or affinities for a successful
offshore IT outsourcing relationship?

RM: There are probably different opinions. It's important to be able to
talk to the team leads, whether they be in the same city you are or
offshore. You need to be able to have good written communications and
also have those periodic phone calls. For the more-focused developers
and programmers, it may not be as important. But as they are working
through issues and they have questions, it is nice to have that
relationship. The bigger the team, the less important it becomes for
everyone to be able to communicate with the client. But I think there's
still benefit for everyone to be able to hear from the client what the
requirements are.

Especially for application development -- I think if you only have one
person, you lose some of the team-think benefits. Application
maintenance -- when you're doing bug fixes -- to be able to really
understand what needs changing is very important. And you have to have
proper documentation, and you can't have documentation [written] with
the idea that you've got this application and you're going to keep it
for life. You have to do it with the understanding that you have the
application, but the customers can pull it back in-house when they need
to.

IOS: What does the Philippines have to offer in the way of skills for
American-based companies?

RM: In the late 1990s when we were looking for Y2K solutions, we were
looking for people with legacy skills. Our clients in the last two or
three years are looking for the newer technologies, and we've been able
to find and train on the newer technologies such as J2EE, .Net,
messaging integration tools. We've also done some SAP work from our
Manila facility. Web-based applications are very big and fairly easy to
do offshore, by the nature of the technology.

IOS: Do you have any tips or guidance for companies taking their first
steps with an offshore outsourced IT services provider?

RM: If you look at Gartner or META Group, they take two different
stances. Gartner will look at the country first and the alignment of
the culture with the company. META Group looks at processes and
methodologies. We take a blended approach. We like the Philippines,
because they have the U.S.-based education system, the adherence to
U.S. accounting practices, and those things. We're very comfortable
with our employees in the Philippines. The English they speak is
American English, and it's the English they speak in the office.

Make sure you have a comfort with the organization you're working with,
that you have good communication with the personnel you're working with
both locally and offshore. The communication is really the key to
success in any type of these relationships -- both onshore and
offshore. Another recommendation is to start small with a pilot
project, to start developing a relationship and those comfort factors.
Start with something fairly well defined, where you understand what
your requirements are so you're not changing them every third or fourth
day. And understand what your organization's security requirements are
going to be for allowing an offshore organization to hook up or
transfer information back and forth.

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