AOL to expand RP operations

America On Line (AOL) is planning to expand its presence in the Philippines by transferring its support services in the United Kingdom, Australia and Hong Kong and centralizing them in its facility at the Clark Ecozone.

The plan was disclosed by Trade and Industry Secretary Manuel Roxas II who is currently in San Francisco to meet with top officials of several large US-based information technology (IT) firms in an effort to promote the country as an ideal site for IT services outsourcing in Asia.

Roxas who leads an IT mission to the US, met with AOL international vice president for planning and operations Mike Ritonia who cited cost effective and quality labor as the main reasons for the company's continued presence in the Philippines.

During his meeting with Roxas, Ritonia said cost-effective labor is a big boost to AOL especially since labor accounts for almost 70 percent of the company's total operating cost.

In the Philippines, AOL employs a total of 800 Filipinos in its electronic customer support center at the former US air base in Clark that links AOL subscribers to operators in an interactive chat over the Internet.

According to Ritonia, the cost of handling AOL mail in the Philippines is 40 percent cheaper than in the US.

With the tough competition for jobs in the country, foreign-owned businesses have often commended the low employee turnover in the Philippines rated at 10 percent compared to 35 percent in the US. This indicates that Filipinos are willing to sacrifice better pay and benefits for job security.

"Filipino workers are dedicated to their work, they would go to work faithfully despite having to commute on three different modes of transportation to go to and from the AOL facility (in Clark)," Ritonia said.

During the meeting with Roxas, Complete Business Solutions Inc. (CBSI) country manager Tony Strange also noted the improvements in infrastructure over the past decade. "Seven years ago, no one could get a phone line let alone multiple lines for office use," he said. "The story is very different now, we were able to set up all the telecommunications requirement of CBSI's Manila office in 10 weeks."

Strange said the Philippines also has a large pool of senior IT professionals who have substantial work experience with multinationals in the country and broad CBS's turnover is also low for the company, about seven to eight percent.

"Filipino IT professionals who set up CBSI's Manila office are still with me in the firm," Strange said.

Government has been aggressively promoting the Philippines as an IT hub, sending various IT missions to developed countries where IT companies are on the look-out for service outsourcing and locations for their backroom operations. Last year, the Board of Investment (BOI) headed a mission to Japan which led to the doubling of Japanese companies with backroom operations for such shared services as accounting, mail services, designing and even transaction processing.

The BOI admitted that the country is lagging behind in terms of infrastructure but these factors are easily evened out by the quality of manpower and investment incentives provided by government.

The Philippines is already host to a number of backroom operations such as the 600-man workforce employed by America On Line to operate its e-mail response system from the Clark Special Economic Zone. This staff answers e-mails for AOL from all over the globe on a 24-hour basis.

Another prominent locator is Andersen Consulting which employs about 700 programmers and computer professionals to handle its development and software customization operations. Companies such as Caltex and Procter & Gamble have Philippine-based staff that handle their accounting services and transaction processing.