Although India and the Philippines are the top two countries (leaders) among the 11 countries evaluated on the spot, they are both considered weak in terms of business environment compared to other criteria such as Iffinancial attractiveness, human skills and availability factors. India was seen as one of the world’s leading service destinations and scored the highest among the 11 countries. The country is aFAffordable investment cost and large pool of talent attract global companies to establish or outsource their business to India resulting in higher ranking for Iffinancial attractiveness, human skills and availability. India, however, ranks lowest in terms of business environment among the 11 countries. Similarly, despite its second place in the global outsourcing market, the Philippines only ranks 7and in the Global Services Location Index due to its relatively poor business environment.
The weaknesses of the countries’ business environment are particularly monitored by two international organisations, the World Bank and the Institute for Management Development (IMD). When the Frost & Sullivan study was conducted in 2015 (“Accelerate PH (Future Ready) Roadmap 2022”, conducted in association with the IT & Business Process Association of the Philippines or IBPAP), in the Ease of Doing Business Index of the World Bank, the Philippines ranked 8and and India last among the 11 countries considered for IT-BPM (Information Technology-Business Process Management) sites. The most business-friendly countries among the 11 were Malaysia, Poland and Mexico in that order. According to the IMD Global Competitiveness Index, the Philippines also ranks 8and and India penultimate. In 2019 – the last time the World Bank published the index since it decided to discontinue the series on September 16, 2021 and replace it in the future with what will be called the Enabling Business Environment (BEE) – The Philippines ranked second to last among the 11 countries. The 2019 ranking was as follows: Malaysia (12), Thailand (21), China (32), Poland (40), Chile (59), Mexico (60), India (62), Vietnam (70), Indonesia (73 ), Philippines (95) and Brazil (124).
The administration to be elected in May 2022 will have a great challenge to repair the damage done under the Duterte administration to our ease of doing business. To be fair, however, a lot has been done after 2019, despite the pandemic, to improve the business environment, the remarkable achievements among which are the much improved infrastructure resulting from the Build, Build, Build program, greater competition in the sector Telecommunications, and the adoption of the Civil Service Law which liberalized the entry of foreign direct investment.
Regarding the IMD World Competitive Index, the latest ranking is from 2021. The IMD Competitiveness Ranking analyzes and ranks countries based on how well they manage their skills to create value at long term. It is based on the assumption that economic progress cannot be reduced solely to GDP and productivity because companies must also deal with political, social and cultural dimensions. Governments have an obligation to provide an environment characterized by effective infrastructure, institutions and policies that encourage the creation of sustainable value by business. The yearbook offers extensive coverage of 64 countries (which does not include Vietnam), based on the availability of comparable international statistics and collaboration with local partner institutes. For 2021, the ranking of the 10 countries (excluding Vietnam) in our list of top destinations for IT-BPM outsourcing companies is as follows: China (16), Malaysia (25), Thailand (28), Indonesia (37) , India (43), Chile (44), Poland (47), Philippines (52), Mexico (55) and Brazil (57). Those who will govern the Philippines in the next administration are advised to carefully consider the criteria used by the IMD to calculate rankings that go far beyond physical infrastructure, institutions and policies and include innovation, digitization, benefitsIfts and social cohesion.
In fact, IBPAP President Jack Madrid recently shared his expectations of the kinds of help and assistance he would like to get from the next administration. He said the next administration should continue to improve the country’s digital infrastructure to enable further expansion in other parts of the country. There are other regions (Tier 2 and Tier 3) where there are excess pools of highly qualified professionals due to the high quality education, especially in English, available at their universities. Examples of these are Baguio, Puerto Princesa, Tuguegarao, Dumaguete City, Iloilo City, Cagayan de Oro, Naga, and others that can complement Metro Manila’s human resource supply. In fact, in some municipalities, university graduates speak better English than those in Metro Manila. Unfortunately, these cities leave a lot to be desired in terms of digital infrastructure. The government should actively encourage foreign telecommunications and other related companies to take advantage of the Civil Service Act which now allows up to 100% foreign ownership in telecommunications and other public services related to digital infrastructure. As Mr Madrid was quoted by Business world (March 3) saying, “A lot of progress has been made during the COVID-19 pandemic, but there is still work to be done to enable our telecom partners, private sector and government to give us more incentives to make internet connectivity more cost-effectiveIfeffective and available throughout the campaign.
Madrid also said the next administration can help implement a permanent work-from-home (WFH) law after such a working arrangement was in place for about two years during the pandemic. IBPAP can help the government enact a more permanent long-term telework law, effectively a work from anywhere law. This would be essential to maintain the competitiveness of our country. We need to be ready for WFH or hybrid working to be adopted by countries around the world. To maintain our competitiveness, we must be at the forefront by developing a plan to make it easier for BPO companies to transition to these new ways of working. Mr Madrid said their association is developing a plan to give their member companies a smoother and longer track because, after all, a large number of workers in various sectors have already worked from home in the past two years. The IT-BPM industry just needs a little more time to ensure a healthy and well-organized transition to what will be a hybrid working environment. The next government must be quick and ready to provide the necessary legislation and policy, especially on labor and social security issues.
There is also a need to modify existing school curricula to provide the skills required for digital work. As Mr. Madrid said, “Our work is increasingly complex and increasingly digital and we need to match our customers’ expectations with industry needs for more digital work. The more complex tasks that are required must correspond to what our universities offer in their respective programs.
As I had discussed in my series of articles on “A Strategic Plan for Education in the Philippines,” we need to get rid of the obsession with college degrees among parents and young people in our country. It is true that there are high levels of skills in the digital industry, such as those of data scientists, which can only be produced in traditional bachelor’s and master’s degree programs at universities. But there is a need for a variety of non-university programs, more along the TESDA or tech/voc pathway, to train skilled workers for other jobs in the digital sector. In the IfIn the field of Big Data alone, the many encoders and data analysts who will be employed do not need a college degree. In fact, the hundreds of thousands of people who have been employed in call centers could have been better trained in short programs focusing on pro verbal English.Ifcacity. Filipino talent in the animation industry does not require a college degree, but could have been trained more cost-effectively through short refresher, retraining, or retooling programs in the visual arts. As AI and robotics increasingly replace humans in customer support departments or call centers, the IT-BPM industry, together with government and academia, must be ready with development, retraining and retooling programs that will improve our call center agents. to higher knowledge-based skills such as application development and maintenance (ADM), finance and accounting (F&A), health services, animation, and game development. Again, our educators and human resources experts must be able to distinguish between skills in these knowledge-intensive digital occupations that require a college or even post-graduate degree and those that can be effectively trained in vocational training or short techniques. In my opinion, this distinction is one of the most important educational reforms that the next administration must be able to introduce into the Philippine education system.
(To be continued.)
Bernardo M. Villegas holds a doctorate. in Economics from Harvard, is Professor Emeritus at the University of Asia and the Pacific and Visiting Professor at IESE Business School in Barcelona, Spain. He was a member of the Constitutional Commission of 1986.