I have friends in various sectors of Shared Services (Citi, DKS, Shell), two of whom hold higher positions (region/cluster heads) who were my former staff and who I continue to mentor. In the course of discussions with them, I have some thoughts that a new entrant into shared services / bpo in the Philippines might consider.
The fundamentals of sound management have changed very little.
- 40 years ago, we called it sub-contracting. Today it’s called outsourcing / off-shoring.
- Before, we were told to measure improvements. Today, it’s called metrics, benchmarks and performance management.
- Before, we developed structures, methods, policies and procedures. Now, it’s called frameworks and methodologies.
- Today’s shared services industry is much like captive manufacturing extended to back office services operations especially for those who are head-quartered in the US or Europe and establish their back-office operations here in Manila (e.g, Citibank, Deutsche Bank, Chevron, Shell etc). I have heard of many in the younger organizations approach their off-shored shared services as outsourcing businesses, not realizing that there is a huge difference in the two.
But, we must recognize that, indeed, some things have changed –
- Shared services now often leads one to think of off-shoring, which involves cultural management / HR issues that, before, used to not be present.
- The workforce, Gen Y, who now compose much of the lower ranks (called processors in some outsourcing companies) have different priorities. Therefore, traditional human capital motivators may not be the most efficient, especially with regards to cash compensation. There remains a number of levers that can be shifted to motivate, incentivize the employee.
- Accountability has done a 360. In a straight-forward company, accountability lay with top management. During the beginnings of sub-contracting and the establishment of off-shore services / outsourced services, we saw some of the responsibility being transferred to these off-shore entities. SOX fixed much of that, responding to changes in the industry dependencies structures that were evolving, resulting in the clear return of accountability and responsibility to head office top management.
- Performance management which used to be given by someone’s immediate superior in the Philippines, now is being given by the client based in another country – 360-degree feedback. This includes feedback from manager, peer, subordinate and client off-shore, i.e., outside of the Philippines. So, we are seeing global organizations begin to fold-in the off-shored back office / shared services into the global community. This is more apparent in the more mature organizations (Citi, Shell, Chevron, for example), and less apparent for the newly off-shored organizations. Looking at the two, there is a striking difference in the corporate cultures as the younger organizations learn (sometimes painfully) what off-shoring / shared services means and how best to effect the changes on-shore and off-shore.
The challenges –
- Pressure continues to deliver efficiencies that will drive bottom line growth.
- There exists today tight competition for qualified professionals exists amongst multi-national companies establishing their back-office here in the Philippines. This competition, unfortunately, has led many organizations to enter into what I see as unnecessary salary wars, and poaching tactics that may result in short-term benefits, but in the long term will result in a lower value proposition to off-shoring as profit margins tighten.
- Embracing a common goal for the cross-cultural, multi-time-zone organizations with competing internal performance metrics.
Take-away…
- Off-shoring / outsourcing / shared services does and will contribute to bottom line profits for the global organization.
- Successful proponents will be those that can integrate on-shore, head office vision with off-shore vision.
- This can best be achieved through quick response generated from a culture of transparency between on-shore and off-shore.
- Off-shore hiring have to realize that the basics of sound management remains the same, regardless of actual experience. Much of the local talent pool remains untapped specifically because off the outsourcing experience qualification. But, an examination of the core skills required to perform the job will often not require those qualifications by which candidates are being short listed. Alternatively, the more important qualifications such as critical thinking, job fit with personal goals, independent attitude, maturity are not being measured in the hiring process. Interestingly, much of the attrition points specifically to these factors, and yet, organizations and hiring managers are not “testing” for it in the hiring process.
- For the Philippines in particular, a large portion of the talent pool educated and experienced off-shore exists, most of whom remain untapped. Remember that there will always be qualified Filipinos abroad who will want to come home, and vice-versa.
The off-shoring / shared services / outsourcing industries still have much to learn. We have to begin to challenge our old paradigms and begin to look at these challenges through different lenses. But, that’s not a bad thing. Continuous learning is necessary to respond to changes. This is essential to progress.
