Top US bank sets up BPO in the Philippines

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Wells Fargo in Taguig to create 120K jobs this year

By Daxim L. Lucas, Philip C. Tubeza
Philippine Daily Inquirer

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Despite moves by US President Barack Obama and the United States Congress to discourage outsourcing, one of the biggest US banks has decided to locate some of its non-core business support activities in the Philippines.

Wells Fargo & Co., the second largest US bank in deposits, home mortgage servicing and debit cards with $1.3 trillion in assets, is setting up a business support center in Manila as the country’s booming business process outsourcing (BPO) industry is projected to produce more than 120,000 new jobs this year.

Company officials did not disclose the value of the investment neither the number of BPO workers the operations would employ.

“We selected the Philippines to be part of Wells Fargo’s international footprint based on the country’s reputation for strong customer service, a large English-speaking population and a cultural affinity to the United States,” said David Caldwell, managing director of Wells Fargo Philippines Solutions, the local subsidiary of the US banking giant.

The new investment is also good news for property developer Megaworld Corp. on whose McKinley Hill Cyberpark project will rise a new building to serve the outsourcing needs of the US banking giant.

“Our location in McKinley Hill gives us a strong foothold as we are among our peers in the industry,” Caldwell said.

Wells Fargo joins other high-profile BPO locators at the 14-hectare McKinley Hill Cyberpark, including Accenture, HP and Thomson Reuters.

Wells Fargo Philippines Solutions already occupies two floors of buildings 8 and 10 Upper McKinley Road, and it will also lease a campus-type building currently being constructed in McKinley Hill Cyberpark.

PH reputation enhanced

The US bank’s launch of an in-house business support center here was welcomed by labor leader and former Sen. Ernesto Herrera, saying it has reinforced the Philippines’ reputation as “an exceptional global hub for labor-intensive and information technology-enabled outsourcing services.”

“We are counting on Wells Fargo’s new center to help provide gainful employment to our college-educated, fluent English-speaking professionals, many of whom remain idle,” said Herrera.

Variety of functions

He said Wells Fargo’s new Philippine center deals with a variety of functions, including customer service and back office support.

Herrera, who is locked in a struggle for leadership of the Trade Union Congress of the Philippines (TUCP), said his labor group’s new members include VOICE, a labor federation of contact center employees.

According to Herrera, the country’s booming BPO industry, which fully employs some 630,000 Filipinos, produced $11 billion in revenues in 2011.

The Business Processing Association of the Philippines sees industry revenues jumping 18 percent to $13 billion this year, he said.

Based on the projected incremental revenues of $2 billion, Herrera said the industry could create around 126,000 new jobs this year.

Worries over US bill

According to Herrera, Wells Fargo’s decision to shift more jobs offshore comes amid worries in the Philippines over an anti-outsourcing bill in the US Congress.

Herrera said the proposed US Call Center and Consumer Protection Act, introduced by New York Rep. Tim Bishop, would require the US Department of Labor to track firms that shift contact center jobs overseas. Those firms would be ineligible for any direct or indirect US federal loans or loan guarantees for five years.

Boost for cyberpark

The bill would also require contact center staff to disclose their location to US consumers, who would be given the right to be routed to a US-based call hub upon request, Herrera said.

However, Herrera said he does not expect the US Congress to pass the bill, which he said is being opposed by US corporations that are benefiting from outsourcing.

Megaworld said the entry of Wells Fargo was a big boost to the McKinley Hill Cyberpark, which is on a rapid expansion mode, with the ongoing construction of the four-tower Science Hub beside the Venice Piazza commercial and retail area.

As an IT park accredited by the Philippine Economic Zone Authority, McKinley Hill Cyberpark offers locators income tax holidays and other perks, including the duty-free importation of office equipment.

“We are proud that one of the United States’ top four banks, Wells Fargo, has chosen McKinley Hill Cyberpark to set up their new Philippine service center,” said Jericho Go, Megaworld’s first vice president for business development.

“This move highlights the attractiveness of the Philippines as an investment destination and its human resource capabilities,” Go said.

One of US Big 4

Founded in 1929, the San Francisco, California-based Wells Fargo is one of the so-called Big 4 US banks regarded as “too big to fail” at the height of the 2008 global financial crisis. The three others are Bank of America, Citigroup and JP Morgan.

JP Morgan and Citigroup have long existing in-house back offices in Manila through JP Morgan Chase Bank N.A. Philippine Customer Care Center and Citigroup Business Process Solutions Pte. Ltd.

Bigger franchise

Although Bank of America does not yet have in-house back offices here, Herrera said the Charlotte, North Carolina-based lender is known to have outsourced some of its customer support activities to an independent BPO provider with extensive Philippine operations.

Wells Fargo is emerging from the 2008 financial crisis with a bigger franchise, after it acquired rival banking giant Wachovia Corp., which had been weakened by mounting bad loans, Herrera said.

A highly diversified financial services company with more than 80 different business lines, Wells Fargo has 6,335 branches, 12,094 ATMs, 70 million customers and 264,000 employees, he said.

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Philippine economy seen heading toward high-growth path

CLSA study sees start of private investment cycle

By: Doris C. Dumlao
Philippine Daily Inquirer

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The Philippines is undergoing a renaissance that looks all set to bring the economy to a higher trend growth and power stocks to new heights, according to regional investment house CLSA Asia-Pacific.

In a research titled “The Eagle Flies Again” dated February 20, the CLSA report written by analyst Mitzi de Dios said that like the rare endangered Philippine eagle, a private sector investment cycle was a rare sighting in the country. But now, it said the country was on the cusp of another investment cycle for the first time in 15 years driven by political stability, rising business confidence, low interest rates, robust balance sheet and the country’s long-term demographic potentials.

“The Philippines soars like an eagle, again,” the research said, adding, however, that this time around, there was hope that this nascent recovery would not be as endangered as that rare eagle.

After years of false starts and missed opportunity, there was a real sense of optimism building in the business community, the research said, suggesting the time was right for the Philippines to shed the stigma of being the “sick man of Asia.” Beyond the huge remittances from overseas Filipinos, CLSA said the country could now count on other major growth drivers.

“The transformation continues for Asia’s once most promising. The service sector continues to grow with the BPO [business process outsourcing] segment underpinning rising employment and per capita spend. Tourism and gaming are other drivers,” the research said.

Well known globally for the Philippines’ quality service sector, CLSA said the BPO sector would likely see its employment doubling to 1.2 million and generating revenues of $25 billion by 2016. The employment opportunities will keep more locals at home while per capita income should improve and the middle class continue to grow, the research said.

The country’s middle class was growing at 9 percent a year and by 2015 could well represent a fifth of the Philippines’ population, the research said.

“For sure the country’s middle class is still nascent, especially in areas such as investment. Most have their savings in fixed income and have yet to invest in equities in a big way,” it said.

CLSA recounted that the last investment cycle in the Philippines took place in the early 1990s under President Ramos, who deregulated the telecom and banking sector, which coincidentally laid the foundations for the growth and development of the BPO industry over the past decade.

In the past 12 years, the country’s gross domestic product growth averaged 4.54 percent with population growth of 2.6 percent in the past 10 years. CLSA said trend GDP growth should be higher starting 2013.

“The country’s economic growth has lagged its regional peers. But, without much fanfare, the economy has transformed itself into an emerging services center, laying the foundations for today’s growth,” it said.

What all this meant for stock market investors, CLSA said, was that old reliable names and upcoming companies would be the ones investors should own. By sector, it said conglomerates, banks, construction and infrastructure firms would likely outperform.

CLSA has recommended a “conviction buy” on Ayala Corp., Metro Pacific Investments Corp., Cebu Air, Philippine National Bank, Security Bank and Robinsons Land Corp.

For specific infrastructure play, CLSA also has “buy” ratings on construction firms Megawide Corp. and EEI Corp. and a buy rating on Metrobank.

Bonifacio Global City was cited as a “microcosm” of the change afoot in the broader economy. “Fifteen years ago it was a military camp most famous for the incarceration of Sen. [Benigno “Ninoy”] Aquino. Today, it is home to high offices, luxury residential towers and upmarket shopping centers catering to the emerging middle class,” the research said.

The CLSA report also noted that total tourist arrivals hit an all-time high of 3.9 million in 2011 and was forecast to grow at double-digit rates over the next few years, eventually hitting more than eight million by 2016. The tourism industry employs 3.7 million people and tourism receipts accounts for 2 percent of GDP.

Philippines to shine in global community soon, says finance guru Suze Orman

By: Doris C. Dumlao
Philippine Daily Inquirer

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SUZE ORMAN: Build on cash and you could never collapse. Photo by Arnold Almacen

MANILA, Philippines—Visiting personal finance guru Suze Orman sees the Philippines soon shining in the global community as an investment hub and having more of its households emancipated out of their dependence on overseas remittances.

Orman, who was once described by USA Today as a “one-woman financial advice powerhouse,” said, however, that Filipino consumers should avoid going the way of the US, which had allowed its economy to grow on credit card and lending to people who could not afford homes and have been grappling with more people “on a highway to poverty.”

“Build this country on cash so that it could never collapse, then you can change your lives,” said Orman, who was raised in an unruly Chicago neighborhood and who used to wait on tables and sleep in her car before transcending poverty as a broker at American investment house Merrill Lynch.

The host of the award-winning Suze Orman Show, which airs every Saturday night on CNBC, is in town to fulfill a promise made for the last five years to her friend Doris Magsaysay-Ho, chairwoman of Asia Society Philippines, to help inspire Filipinos in their quest for financial freedom.

Orman, who earns around $190,000 on speaking engagements in the United States, agreed to speak before Filipinos pro bono and expressed interest in coming back and helping draft financial literacy programs for the country. In a speech before the employees of the Ayala-led Bank of the Philippine Islands, Orman said the Philippines would likely shine in the global arena.

“You’re going to be taken note of in other countries, see investment money come to and you’ll see that the time for the Philippines has just about arrived. The question is, will you be able to hold on to the gifts that are about to come your way?” she said.

The American personal finance guru spoke strongly against incurring debt to purchase non-essential things, noting she had watched her own country fall apart because of this.  She said consumers must distinguish between good and bad debt, good debt being amortizing to one day own a home. On the other hand, she said that credit card debt was “very bad debt.”

“If you have credit card debt, what that says about you is that you are buying things that you can’t afford,” she said, urging banks to issue credit cards only to those who could responsibly use credit.  Ideally, credit card users should use their card all they want but pay everything when the bill arrives, according to Orman.

In the US, she said it was a common mistake for banks to even increase the credit limit when somebody had maxed out his ceiling and was only paying the minimum due.  The best way to help these people would be to stop charging interest and as the borrowers pay off, reduce their credit limit.

For overseas Filipinos, Orman said her advice would be to consider whether sending money to adult brothers or relatives would only be encouraging dependence. “Is it possible that it’s hurting them rather than helping them?,” she said, adding that some people may not reach their potential or may not be driven into making contingency plans because they have remittances to fall back on.

But she stressed that for parents, it’s a whole different light, as she herself would want to take care of her mother.

For young people, they should realize that their best commodity is time and that by starting to regularly save a portion of their earnings regularly, they will accumulate more wealth with the help of compounding, which means earnings from an initial investment are reinvested over and over, according to Orman.

With the help of compounding, she said a person who would set aside $100 a month starting the age of 20 would end up with $1 million upon reaching 60.  But if one waits until age 30 to start setting aside, the same person will end up with only $300,000 at age 60. This 10-year delay in starting an investment plan has thus cost the person $700,000, she noted.

Before becoming a prominent personal finance expert and inspirational speaker, Orman used to earn $400 a month as a waitress. She waited on table for seven years until the age of 30, when she dreamt of opening her own restaurant. She asked her mother for $20,000 to open her restaurant but her mother was unable to help her. One of her regular customers took a pity on Orman and pooled $50,000 from other customers to lend to her for 10 years without interest. She brought the money to Merrill Lynch but the broker convinced the then naive Orman to invest everything by speculating in the stock market. She said she was made to sign papers to make it appear that she was a sophisticated investor who was qualified to invest in stock options. Within three months, she lost all the money.

“If I hadn’t lost that money, I won’t be standing here today. Nothing ever goes wrong, everything happens for the best,” she said.

Realizing she still owed $50,000 to her customers, she thought of getting a job as a broker at Merrill, which at that time never hired female brokers. She was hired but with a caveat that she would be fired in six months.

One Merrill Lynch executive took a liking at Orman and advised her to sue Merrill Lynch for the bad handling on her $50,000 even when she was still an employee. This she did and because of the ongoing case, Merrill Lynch could not fire her.

As the case dragged on, she said she became one of Merrill Lynch’s top producers and realizing that the firm was earning more money than Orman’s $50,000-suit, the brokerage gave back her money plus interest.

Orman said this only showed that any wealth that she had made was something she had worked for.  Even as she has gone a long way since then, Orman is not fond of splurging on jewelry, clothes or purses and has chosen to live in a tiny apartment in New York even if she can afford a penthouse.

“Every single person in this world has the ability to be more and have more and it’s the choices that we make about ourselves that become our net worth,” she said.