Automation Offers the Philippines’ Shared Services Industry the Tools to Staying Ahead of its Competition

Countries like the Philippines have long enjoyed a leading position as a preferred shared services or business process outsourcing (BPO) location. The country’s popularity has rested, to a large extent, on its cultural affinity to America, along with the population’s natural talent for languages and extraordinary work ethic. Nevertheless, faced with the current wave of automation, locations like the Philippines are having to take a long critical look at their value proposition to ensure survival in the modern marketplace.

While the benefits of cost, location, cultural sympathy, language, and skills still outweigh many of the emerging opportunities, this advantage will not last forever. For a country that has traditionally promoted its value based on low-cost FTEs, the fact that automation is emerging as an attractive solution for transactional processing and is desensitizing multinationals to ‘labor cost’, is the driving force behind the push towards a more ‘mature’ or sophisticated model.

The solution for shared services, in the face of increased automation, is to shift their focus away from transactional work – and, therefore, the low-cost FTE-driven model – and towards delivering data-enabled business insights and analytics of the kind that help businesses make smarter decisions.

This requires two actions: First, integrating intelligent automation, for example robotic process automation (RPA); and second, reskilling or recruiting staff that have a more natural affinity to date analytics and business intelligence.

And this is where the Philippines may be running into a problem. In a recent poll of a shared services audience at SSON’s 8th annual Philippines Shared Services and BPO event last month, nearly 2/3 of the audience cited their biggest talent challenge as recruiting and upskilling talent for the higher value services that lay ahead. 

What are the biggest challenges Philippines SSCs currently face regarding talent?

Source: Benchmarking Analysis of Philippines Shared Service Centers in 2017, SSON Analytics

This is important for many reasons. FTE-based models cannot afford to stick their head in the sand and hope for the best. It's true, ongoing momentum will certainly carry Shared Services some way into the foreseeable future, but faced with widespread adoption of automated service delivery across their peers and competitors, this strategy is not sustainable.

Forward-looking organizations that have recognized the writing on the wall are already busy forging close relationships with local colleges and universities, recruiting technology savvy Millennials, and ensuring "data" is taking center stage within the shared services model. And although nearly 40% of practitioners recognize that process automation is the "greatest enabler of knowledge-based work", and more than half have already embarked on an intelligent automation journey, what is notable is just how much scope remains even pre-intelligent automation or RPA for Philippines-based shared services to move up the maturity or value scale.

For example, six out of 10 practitioners at the Shared Services event had not yet implemented e-Invoicing or e-Procurement, or had an adoption rate of less than 50%. That still leaves a lot of "value" to be had on the table.

All the other hand, according to our survey, nearly half of the practitioners at the event confirmed that they were already providing significant knowledge-based work from their Shared Services Centres (SSCs). A good sign, but one that will depend on more process automation to achieve its full potential.

Source: Benchmarking Analysis of Philippines Shared Service Centers in 2017, SSON Analytics

Summary

Contrary to what many of the headlines or automation permits may say, the shared services model is far from dead. And yet, the emergence of intelligent automation processing solutions is nothing short of revolutionary. What is clear is that the traditional low-cost FTE-based model is not sustainable – nor will it deliver a competitive advantage in the future. For that, SSCs leaders will need to look to data analytics and business intelligence to deliver the kind of knowledge based services that, indeed, propel businesses ahead of their competition. The adoption of robotics processing is a key element in freeing up staff to take on this more value adding work.