By Nicole Hasham, Jason Dowling

Creating highly skilled “knowledge” jobs in Sydney’s outer suburbs is likely to fail and governments should bring people closer to existing jobs, a new report says.

It calls into question decades of government policies designed to shift so-called “knowledge-intensive” jobs such as engineers, scientists and financial analysts outside central Sydney, including a $13.5 million federal government grant for the University of Western Sydney’s new health and education jobs hub.

The Productive Cities report by public policy think tank the Grattan Institute argues that knowledge-intensive companies often cluster in central locations where they can collaborate and reach the right workers. This leads to increased productivity.

But there is little evidence that creating knowledge-intensive jobs in outer suburbs is cost-effective or leads to significant numbers of long-term jobs, the report said.

“When people say we need to move the knowledge-intensive jobs from the CBD to the suburbs, that just doesn’t work, it is not how the economy works,” Grattan Cities’ program director Jane-Frances Kelly said.

“You just can’t subsidise [businesses] enough to compensate for the disadvantage they would have not being in the CBD.”

The report says cheap rents, land availability and less road congestion in outer suburbs can benefit some firms, such as those in transport and manufacturing.

But knowledge-intensive firms may lose the benefits of clustering, which can “harm our cities’ productivity and employment growth overall”.

The report also downplayed the benefits of relocating government offices, as local workers do not always fill the jobs.

It questioned policies such as the federal government’s $45 million Suburban Jobs Program, which last year provided $13.5 million to support a new University of Western Sydney jobs precinct at Werrington Park. It aims to generate 6000 jobs in areas such as health, engineering, digital communications and education.

UWS economic geography professor Phillip O’Neill said a growing number of western Sydney residents had tertiary qualifications and sought jobs closer to home. The Norwest Business Park at Baulkham Hills and the Macquarie Park Corridor at Ryde showed that “high end” job centres outside central Sydney do work, he said.

A spokeswoman for Population and Communities Minister Tony Burke said high-skilled workers also lived in the outer suburbs and “if we keep putting homes at one end of our cities and jobs at the other then the only future is gridlock”.

Ms Kelly said governments should focus on increasing access to all jobs through better transport connections and housing choices in established suburbs. In some outer suburbs only 11 per cent of jobs are within reasonable public transport travel times, compared to 53 per cent from the city centre, which risks locking many residents out of job opportunities, the report said.
Read more: http://www.smh.com.au/nsw/cbd-location-is-best-for-knowledge-jobs-20130505-2j14k.html#ixzz2SSeBy500

By Martin Conboy

A few years back, I met former President Arroyo of the Philippines, and she told me that the problem with the Philippines was that in the provinces you have rivers with no bridges and a metropolitan Manila that has bridges with no rivers. The point being that there was a disproportionate level of investment in the capital of the Philippines that was not being spread out around the nation.

Philippine GDP grew 7.6% in 2010, spurred by consumer demand, a rebound in exports and investments, before slowing to 3.9% in 2011, and 4.8% in 2012 – still very respectable by world standards especially compared to Europe. The economy withstood the 2008-09 global recessions better than its regional peers due to minimal exposure to troubled international securities, lower dependence on exports, relatively robust domestic consumption, large inflows from overseas Filipino workers, and a growing business process outsourcing industry. In 2012, IT-BPO in the Philippines generated more than $13 billion in revenues. Furthermore, the sector employment expanded to over 700,000 people and is contributing to a fast growing middle class.

Many emerging economies rely on foreign creditors to bridge the gap between their exports and imports. The Philippines is a bit different; it relies largely on overseas employees. Over 10 million Filipinos equivalent to about a quarter of the country’s labour force live or work abroad. They are referred to as overseas foreign workers or OFW. The vast majority of these remit part of their salaries back into the Philippines to their families and villages. The appreciation of the local currency has also reduced the peso value of the dollar remittances sent by overseas Filipinos.

In 2012, the Central Bank of the Philippines claimed that official remittances streamed through banks and agents were worth US$21 billion to the Philippine economy.

The remittances are equivalent to 8.5% of GDP, helping the country to plug its trade deficit and amass over $80 billion of currency reserves. As a result, the Philippines is becoming a net creditor to the rest of the world and not just a net supplier of Labour.

The Philippine Stock Exchange Index recently surged to a record high and the Philippine peso climbed to its highest level after Fitch Ratings raised its credit assessment of the nation’s long-term foreign-currency-denominated debt to BBB- from BB+. In contrast, Fitch joined Moody’s in downgrading the UK to AA+ “to reflect a weaker economic and fiscal outlook” that has caused both the budget deficit and national debt to soar above earlier forecasts.

The UK downgrade was blamed on “the weak growth performance of the UK economy in recent years, partly due to private and public sector deleveraging and the Eurozone crisis”.

The Philippine upgrade may boost capital inflows further and confound the job of policy makers as they try to rein in an appreciating peso and curb asset bubbles. One only needs to look at the Fort Bonifacio area on the edge of the Makati business district to see that there is a property bubble in the making. Fifteen years ago there was nothing but fields where a brand new CBD is now standing, largely fueled by the ICT-BPO sector.

Both the current government and its predecessor have worked hard to put the country’s fiscal house in order, reducing its debt from 68% of GDP in 2003 to 41% last year. That’s less than half the rate of some European countries

The Central Bank cut rates by 0.25 percentage points to 3.5%. The move was also seen as an effort to offset some of the capital inflows into the country that has been a favoured emerging markets play.

There is no doubt that the government needs to broaden its tax base as weak tax collection, exacerbated by new tax breaks and incentives, has limited the government’s ability to address major challenges. Now the government is going beyond housekeeping too much needed repairs. The public finances rest on narrow foundations, and collected less than 13% of GDP in taxes last year, an insufficient ratio that helps explain why public investment amounted to less than 3% of the economy. To raise revenues, it last year passed a ‘Sin’ tax on tobacco and alcohol which survived the Senate by a single vote and came into effect on January 1 this year.

The Philippines does not suffer from a lack of foreign investor interest; indeed the Central Bank has been fretting about excessive capital inflows, which might push up the peso or lead to inflation or asset bubbles. The challenge for the ICT- BPO sector is maintaining its costs (as viewed from the outside world) as too much of a raise would see it becoming uncompetitive with other emerging players. Against the US dollar at the last trading day of 2012, the peso has gained nearly 7 percent since the start of the year. Reflecting the boom times in the Philippines is the fact that the peso was the second fastest appreciating Asian currency against the dollar last year. The rise of the peso has made Philippine-delivered services i.e. BPO work more expensive in dollar terms and slightly less competitive in the global market.

On a positive note monetary authorities have been successful in keeping the inflation rate at bay with the December rate at 2.9 percent, bringing the average pace of the price movement to 3.2 percent, within the lower end of the range target of between 3.0 percent and 5.0 percent.

By Alvis Brigis

What if we were able to monetize the information we put on the Internet? A revolution in which people are paid by the networks they use could herald a new economy for the world’s jobless.

Even as technology contributes to the everyday quality of our lives, robots and software are eliminating human jobs at an unprecedented rate, leading to a “great decoupling” of output/wages and jobs/income that’s becoming increasingly problematic. Technology-driven unemployment is getting worse at an accelerating rate. Meanwhile, Gallup’s latest World Poll demonstrates a growing demand for “good jobs” that transcends borders, cultures and languages. In a nutshell, the acceleration of automation-driven unemployment is both likely as well as broadly undesirable.

Gallup Chairman/C.E.O. Jim Clifton blames much widespread social unrest, instability and war on the lack of formal, 30 hour a week jobs, arguing: “If you were to ask me, from all the world polling Gallup has done for more than 75 years, what would fix the world–what would suddenly create worldwide peace, global well-being, and the next extraordinary advancements in human development, I would say the immediate appearance of 1.8 billion jobs–formal jobs. Nothing would change the current state of humankind more.”

So, where on Earth can we find the 1.8 billion (and growing) good jobs that would fix the world?

It turns out some likely solutions have been emerging all around us.

The prosumer role is poised to proliferate and scale.

With the release of the globally popular The Third Wave in 1980, futurist Alvin Toffler presciently predicted a massive shift from industrial to information-driven economy and the blurring of traditional economic roles resulting in a new class of participant he labelled the “prosumer” (producer plus consumer).

We’ve clearly been transitioning to an info-driven economy in which knowledge workers are in high demand. Much of this has been catalysed by new classes of systems like social media (Facebook, LinkedIn, G+), social-driven search (Google, Bing, Siri), citizen science (SETI-Live, Cell Slider) and big data that increasingly harness consumer-generated data while returning value to users in the form of organized information, entertainment, and occasionally cash (Google is paying select users up to $25 in Amazon gift cards to monitor Internet activity, Viggle is paying people for their TV viewing data). The result? An emerging prosumer class.

While today’s prosumer jobs pay little and fall into the informal category, there is reason to believe that they could grow in volume and value–rapidly. As accelerating change enables companies to get better at capturing, storing, transferring, processing and valuing user data, the prosumer role is poised to proliferate and scale.

New interfaces (iWatch, Google Glass, BCIs, Face Time, Kinect, Surface, search engines), sensors (FitBit, smartphones, data recorders in cars, reactive billboard cameras, camera-equipped drones), compression technologies, and faster computer processors are accelerating human-driven input. Social media, search, info-warehousing, banking, research companies and universities are collecting and mining vast amounts of this input. These developments are expanding the market for data that can be more easily applied across industries and converted into money, which in turn is increasing the demand for prosumers that can input, sort and output this data.

But what about the 1.8 billion jobs that people need now? In one sense, they’re already here.

Over the next decade, companies appear ready to pay more users more money for real-time and longitudinal life-streaming, driving, brain, health and genetic data; for product reactions, media reactions, geographic scans, species scans, general behavioural data, and so forth. More informational value will be captured on-the-fly as people socialize, consume media, learn, play games, navigate the world, or even sleep. Considering these near-term likelihoods, we can confidently predict that data-driven, prosumer-centric capitalism will steadily augment or even grab market share from the traditional 9-to-5, single-role, industrial economy.

A more extreme version of this scenario is that this transformation of capital flow and economics, something that Toffler explores in detail in Revolutionary Wealth, could become an outright boom. Billions of formally unemployed or underemployed humans could prove necessary for the rapid development of new technologies spanning medicine, entertainment, transportation, farming, warfare, search and artificial intelligence.

My confidence in this trend is bolstered by a macro trend: the observation that the billions of people on Earth have and will continue to find it in their interests to centralize information into an “Everything Map” (which Google is already consciously building), a much needed social tool and critical central component of accelerating change.

But what about the 1.8 billion jobs that people need now? In one sense, they’re already here. Facebook’s 1.1 billion users, YouTube’s 1 billion monthly users, Google’s 1 billion monthly users, all exchange their data for access to structured content. Baidu, Bing, Twitter and Yahoo together boast a formidable prosumer base of 2 to 3 billion. Though these systems currently offer prosumers little in value, Google’s Screenwise initiative, which pays some users up to $25 in Amazon Gift Cards, is an important early signal of a looming shift.

We could see an all-out war for prosumers in which more and more value is returned to users.

A Google user is estimated to bring the company about $43 in annual revenue per user (ARPU), a small but steadily growing figure. As Google and other prosumer-based companies increase both total revenue and ARPU, it will make business sense to attract and retain users by paying them a cut, thus keeping participants happy and establishing a sort of Prosumer Equilibrium.

Prosumers and their content will go “where [they] are wanted and stay where [they] are well treated”, as banking master Walter Wriston observed about various forms of capital. The result could be an all-out war for prosumers in which more and more value is returned to users.

At first the money shared with prosumers will be a trickle. I can imagine $100 per prosumer per network by 2018. But as extraordinary, revolutionary wealth is generated, as convergent accelerating change suggests, those numbers could grow quickly, perhaps exponentially. In 10 years, the relentless expansion of info-driven networks could provide billions of prosumers access to a variety of income flows that, when cobbled together, could equate to the formal jobs Jim Clifton says the world needs now. It’s a scenario worth contemplating.

In the meantime, tech-driven unemployment, inflation, and population growth are likely to exacerbate our present-day problems before the same technology comes to the rescue. The world will have to negotiate ongoing instability, conflict and economic shocks as it waits for prosumer pay flows to manifest and grow. We may well be on the cusp of one of the most stressful, and most transformative, decades in human history. One thing we can be absolutely sure of: there will be growing pains.

ALVIS BRIGIS

Alvis Brigis is a media specialist and futurist residing in Los Angeles.

From Economist Intelligence Unit

For many economies, 2012 was a year to forget. Austerity in the developed world and a slowdown in China dented global growth. The downturn caused hardship for households and businesses, and headaches for many politicians. Markets also endured their torrid moments, mainly reflecting ever-changing perceptions of the risk of a break-up of the euro zone. In the US, electoral politics got in the way of constructive economic debate.

In 2013 global economic prospects look slightly brighter. Here, we list some of the key economic themes that are likely to occupy governments, businesses, consumers and investors in the year ahead:

Stronger global GDP growth. The global economy will remain weak, but some improvement is in prospect. The downturn in the euro zone will ease, with the 17-country bloc likely to return to very weak year-on-year growth in late 2013. Recent stimulus in China should feed through more visibly during the year, with Chinese growth accelerating to an annual average of about 8.5%—although it should be noted that this will be a peak for the current cycle and is unlikely to be matched again given the slowdown in China’s trend growth rate. Congress’s January 1st mini-deal on the “fiscal cliff” removed an immediate threat to US growth prospects, but how the world’s biggest economy performs in 2013 will depend on the extent to which the next few months are marred by similar fiscal policy showdowns. The key downside risk to our forecasts will remain the possibility of further financial upheaval in the euro zone. But upside risks are arguably strengthening, in particular over the timing of the modest global recovery, which could gather pace sooner than we expect if confidence returns.

Relative calm in the euro zone? We expect plenty more ups and downs in efforts to contain and, ultimately, resolve the debt crisis in the euro zone, but the picture has brightened since mid-2012. The European Central Bank’s commitment in principle to unlimited sovereign debt purchases has calmed financial markets. Italian and Spanish sovereign bond yields have fallen to much more sustainable levels compared with late 2011 and mid-2012. The single currency’s crisis seems to have entered a less acute phase, in which concerns about austerity, slow growth and a lack of competitiveness are starting to replace fears of sovereign default and financial-market implosion. That said, the fundamentals of the debt crisis are far from resolved, and worries about France—something of a laggard in owning up to the severity of its fiscal challenges—could come to the fore this year. Events—from the Italian general election to political unrest in Greece—still have the potential to trigger a crisis, but 2013 could well be a year in which the euro zone’s problems largely rumble on.

More fiscal brinksmanship in the US. If the world breathed a sigh of relief when US lawmakers struck a deal on January 1st 2013 to prevent/delay implementation of assorted fiscal tightening that could have sent the US into recession, the risks of a self-inflicted economic downturn have not disappeared. A grand bargain over the country’s long-term fiscal challenges has eluded Democrats and Republicans, and the fiscal cliff mini-deal was disappointingly modest in scope. The legislation preserves some tax breaks and extends unemployment benefits but has deferred any decision on government spending cuts. This sets the US up for repeated bouts of political wrangling over fiscal policy during 2013. In particular, partisan brinksmanship will complicate negotiations over the raising of the US federal debt ceiling (which will probably be necessary in late February). All this bodes ill for economic policymaking during the year, and could hurt consumer and business sentiment—although markets and firms have become more resilient.

An extension of the risk asset rally. Quantitative easing (QE) in the US and elsewhere, combined with a slackening of financial tensions in the euro zone periphery, has fuelled a rally in risk assets in the past few months. The rally has a decent chance of continuing in 2013, as the ultra-low interest-rate environment in the developed world will encourage investors to seek higher yields in riskier assets such as equities, commodities and corporate bonds. That investors are still moving into risk assets is visible in higher yields on the traditional safe havens of US and German government bonds. Although still very low by historical standards—indicating continued investor caution—US 10-year yields were at 1.92% on January 7th, around 50 basis points up from July 2012. German yields are up by a similar amount from their June 2012 lows. For many investors, the search for yield may override valuation fundamentals, which could be a source of longer-term financial risk when markets eventually normalise.

A Japanese reflation agenda. The election of Shinzo Abe as Japan’s prime minister in December 2012 has potential repercussions that extend well beyond the domestic economy. One of Mr Abe’s main policy goals is to end the deflationary pressures that have long dogged Japan, and thereby to create conditions for self-sustaining economic growth. As part of this agenda, we expect Mr Abe to push aggressively for the Bank of Japan to raise its inflation target from 1% to 2% and to commit to unorthodox monetary easing on a much greater scale—both to stimulate domestic demand and to counter the deflationary impact on Japan of QE elsewhere. The success or failure of these efforts could have implications for global exchange rates, and the policies could create international trade tensions if perceived by Japan’s trading partners as an attempt artificially to support Japanese exports. Yet Japan’s poor demographics and other fundamentals mean that Mr Abe’s stimulus measures may fail to gain traction. At the same time, the prime minister’s agenda raises the prospect of increasing political interference with the central bank.

A higher profile for structural reform. In the coming year policymaking may take a longer-term view. Emergency measures were necessary in 2008-09 to prevent collapse of the global financial system and in 2010-12 to prevent a possible fracturing of the euro zone. Major risks to the integrity of the euro remain. Nonetheless, just as global financial policymaking is now focusing on systemic protection against future crises—albeit with uneven results, for example in banking regulation—in the euro zone questions of long-term competitiveness and structural reform are gaining a higher profile. Provided that further acute bouts of financial contagion can be avoided, issues such as the need to lower unit labour costs, liberalise services markets and create better conditions for innovation and sustainable growth will gain prominence. The reform focus will be echoed in parts of the emerging world—most notably in Brazil, where policymakers are having to come to terms with the country’s post-2010 slowdown and address long-standing needs for greater flexibility in the economy.

Austerity. Fiscal tightening will continue to constrain growth and dominate the public debate in many countries in 2013. Most obviously, it will remain a central economic and political issue in the EU, in part because of the severe fiscal consolidation still under way. Our budget-balance forecasts indicate that 20 out of the EU’s 27 member countries will experience fiscal tightening in 2013, which in many cases will come on top of a prior year of such hardship in 2012. In the UK, austerity will remain a source of tension between the two partners in the coalition government. In a number of countries in Europe, the social and political pressures that have emerged as a result of austerity will continue to fuel hostility towards immigrants and ethnic minorities. In the US, austerity will not bite as deeply or cause as severe social stresses, but the debate about fiscal sustainability will be intense and highly politicised. More broadly, in many countries a combination of weak or negative growth and a lack of fiscal resources will limit policy options.

Political changes. 2013 looks set to be relatively quiet year for major elections, but a number of forthcoming and ongoing political changes will still bear watching. Some of these will be the result of transitions that commenced in 2012. As discussed above, the change of government in Japan has potentially far-reaching economic policy consequences. China, meanwhile, is still in the early stages of a once-in-a-decade transition to a new political leadership. Economic challenges facing the new leadership (the members of which will be further formalised at a government conclave in March) include planning structural reforms to anticipate the erosion of China’s advantages as a low-cost export manufacturer. In Europe, general elections in Italy (in February) and Germany (in September) will be important for those countries’ continued policy responses to the euro debt crisis.

By Richard Branson

Many a Chairman will say he looks at his company like a family and then acts in a way which makes you glad you’re not related!

I have always pushed Virgin companies to walk the talk on that and ensure everybody feels part of the team.

Colleagues should take care of each other, have fun, celebrate success, learn by failure, look for reasons to praise not to criticise, communicate freely and respect each other.

This is doubly important for the Virgin Galactic team in Mojave, where we are busy creating the world’s first commercial spaceline. The team spirit and sense of togetherness instilled in such a young, innovative group is really inspiring to see.

My daughter Holly and I visited Mojave recently and, as well getting hands-on with the business of building spaceships, were able to spend time with some really inspiring people. Even in a space-age company aiming for the stars, it is your staff who are the key  to success.

If you’re here on LinkedIn in search of jobs, they may just have a space for you on one of the most exciting teams in the universe. Head over to Virgin Galactic to see if you will boldly go for any of their current vacancies.

And remember, we’re all only human – at least until Virgin Galactic start employing life-forms from other planets!

By Bianca Hall

New laws will allow authorities to collect and monitor Australians’ internet records, including their web-browsing history, social media activity and emails.

With the shift to social media marketing channels and social media monitoring these new laws could have an impact on Australian BPO providers.- Editor

But the laws, which will specifically target suspected cyber criminals, do not go as far as separate proposed laws designed to retain every Australian internet user’s internet history for two years in the name of national security.

Under the laws passed yesterday, Australian state and federal police will have the power to compel telcos and internet service providers to retain the internet records of people suspected of cyber-based crimes, including fraud and child pornography. Only those records made after the request will be retained, but law enforcement agencies will be prevented from seeing the information until they have secured a warrant.

It is believed that while some telcos and internet service providers keep data for up to a week, others routinely delete users’ data daily, frustrating the ability of authorities to gather evidence against suspects.

Attorney-General Nicola Roxon said the laws would help police track cyber criminals globally and give authorities the power to find people engaged in forgery, fraud, child pornography and infringement of copyright and intellectual property. They also will allow Australia to join the Council of Europe Convention on Cybercrime, which has 34 members.

”Cyber crime is a growing threat that touches all aspects of modern life,” Ms Roxon said. ”It poses complex policy and law enforcement challenges, partly due to the transnational nature of the internet.”

But Greens communications spokesman Scott Ludlam said the laws went further than the European convention, and that the government had failed to explain why the far-reaching powers were necessary.

The European convention states that the treaty is not focused on data retention but on targeting law enforcement.

Australia’s new laws mean information can be kept at least until police get a warrant.

Senator Ludlam was particularly concerned the laws would allow data that implicates Australians in crimes that carry penalties of three years or more – including the death penalty – to be collected and analysed.

”The European Treaty doesn’t require ongoing collection and retention of communications, but the Australian bill does,” he said in a statement. ”It also leaves the door open for Australia to assist in prosecutions, which could lead to the death penalty overseas.”

The deadline for submissions to a parliamentary inquiry into the separate proposed national security laws closed on Monday and a parliamentary committee will report on the issue at a date to be decided.

Those proposals would allow the telephone and internet data of every Australian to be retained for up to two years and intelligence agencies would be given increased access to social media sites such as Facebook and Twitter.

<em>Source: <a href=”http://www.theage.com.au/technology/technology-news/new-law-to-control-cyber-data-20120822-24mur.html”>The Age</a></em>

President Aquino has signed into law the Data Privacy Act of 2012, which aims to ensure the security and integrity of personal data towards attracting investors to the country’s Information Technology and Business Process Outsourcing (IT-BPO) industries.

Aquino signed the Data Privacy Act, or Republic Act 10173, on August 15, which requires the preservation of personal data collected by public and private entities.

“The State recognizes the vital role of information and communications technology in nation-building and its inherent obligation to ensure that personal information in information and communications systems in the government and in the private sector are secured and protected,” the law declares.

The law also establishes the creation of a National Privacy Commission, which shall “monitor and ensure compliance of the country with international standards set for data protection.

Among other provisions, it is mandated to publish a guide to all data protection-related laws on a regular basis.

It can also “compel or petition any entity, government agency or instrumentality to abide by its orders or take action on a matter affecting data privacy.”

In March, Senate science committee chairman Edgardo Angara —who sponsored the then-Senate bill 2965 on data privacy— said the law on data privacy can help boost the Philippines’ IT-BPO industry.

The industry can achieve projections of revenue increase from $9 billion in 2011 to $25 billion by 2016, Angara said then, and that employment could increase from about one million to four million in the next four years.

The law also has a provision on protection for journalists and their sources, stating that nothing in the act repeals or amends the law that does not compel those in the journalism profession to reveal the sources of leaked news reports. — TJD, GMA News

<em>Source: <a href=”http://www.gmanetwork.com/news/story/270934/scitech/technology/data-privacy-act-signed-into-law”>GMA News</a></em>

By Lauro Vives, 
Founding President and Chief Analyst – 
XMG Global

The latest downpours in the Philippines came during what is known as the “rainy season”, with the majority of the precipitation in August; so in that sense, it was not unexpected. This is after the preceding month saw heavy wind and rain, resulting in yet another 53 people dead. What was unexpected, however, was that depending on the source, upwards of 2 million people were displaced.

In terms of fatalities, as bad as it was, the past storm system was not that deadly. In December, for example, Tropical Storm Washi left more than 1,200 people dead and set off flash floods that swept away entire villages in the southern Philippines.

But again, this storm* was different. Unlike the devastation to the south, this storm ploughed straight into one of the biggest metropolitan areas of the world. The result: transportation systems were virtually at a standstill, with government sources stating that as much as 80% of the Metro Manila affected. This area was one of the hardest hit during the historic flooding that came with Tropical Storm Ketsana in 2009. 

This storm impacted business and financial centers, and the very hub of government itself. No government or the private sector was left unscathed.

Analyst Opinion: 



The rains and flooding for the past few days have created a heightened awareness, of the lack of preparedness of the Philippines, and has affected outsourcing operations in Metro Manila, through disruption of service and the lack of human resources to run operations.

The Malacañang order on August 7, 2012 (Memorandum Circular No. 33-A, s. 2012) reinforced the immediate need for an active governance model, which provides a structure for dialogue and decision-making; which BPAP and industry leaders must participate and coordinate during times of crisis. The lack of governance will continually fail to adequately consider or document the critical needs of the outsourcing sector, in which the President may have failed to appreciate.

As more work is outsourced to the Philippines, business needs and globalization are forcing investments in real-time applications and human resources to fulfill business processes 24 x 7. This is rapidly transforming the business continuity planning requirements. Therefore, it is incumbent upon outsourcing service providers and captives to have a workable and effective business continuity plan in place, and address “return to normalcy” practices. However, what if offices were suspended during a tropical depression such as the one witnessed last August 7, 2012 despite the availability of the technology and facilities?

During a crisis, personnel safety comes first and is a non-negotiable element. Missing, however, in the Philippines, is a crisis management plan specifically focused on “keeping the lights on” for every business. Looking back at the Japanese tsunami experience of 2011, this country’s government had a “business as usual” attitude. Despite the cumulative effects of the calamity and the painstaking recovery process, the Japanese government helped mobilize thousands of workers to continually keep business operations running. More importantly, the Japanese government did not deter businesses from continuing operations.

Sustaining operations especially in high geo-physical risk areas such as the Philippines, that is prone to major typhoons and earthquakes, is always a key-determining factor when selecting a location. Not being able to support business operations sustainability during a time like this has deleterious consequences for the country.

If the Philippines is to maintain its hold as a legitimate and reliable global provider of outsourcing and captive services, the country will have to meet the demands of the global market at any given point in time and in any given situation. This means the need to work towards establishing an “always ON” economy that mitigates risks in the face of any crisis. It is the country’s ability to always be operational, regardless of the degree of crisis; which includes the availability and mobilization of business-critical resources to run operations, which are the people. This includes, but is not limited to, instituting safeguards to ensure continuity of services and revisiting old statutes such as the 1987 Constitution, Article 12, Section 17 that allow the state to temporarily take over, or direct the operation of any privately-owned public utility or business affected with public interest, during a national state of emergency.

Bottom-Line: 



The recent event is more than just a review of lessons learned. It is about developing a business as usual attitude, although this should be the right mindset from the outset, only second to personnel safety. Above all, the resulting devastation highlighted the lack of essential infrastructure to support an industry that is currently employing over 700,000 Filipinos that contribute to globalization and play key roles in supporting business operations internationally. The responsibility for continuity of services must also syndicate service providers and captives to ensure their workforce has the ability to telework, particularly for critical functions. The tools, connectivity and means to do so have matured significantly since Tropical Storm Ketsana.

Although the Philippines has come a long way in strengthening utility infrastructures such as power and telecom services, it has continued to struggle with other essential infrastructure such as: transportation, water supply, sanitation, drainage and other critical urban infrastructures to meet the migration trends and mobilizing talents within and without Metro Manila. An unexpected natural disaster such as the past tropical depression, exacerbated a fundamental disconnect between the government and the needs of the outsourcing industry. The calamity also further highlighted the lack of critical infrastructure for the country to be “ON” in any given situation.

Editor’s Note:

*The severe rain was caused by the Southwest Monsoon, intensified by the tropical cyclone Haikui in China.
Source: GMA News

By David Mullings

It seems to me that too much time is being spent looking back at the first 50 years of Jamaica under Independence instead of looking forward to the next 50 years, especially what mistakes not to repeat.

There has been talk for many years about business process outsourcing centres, mainly call centres now but with the opportunity to move up the value chain to things like medical records transcription, programming and software development as well as payroll and accounts receivable processing. We mainly have focused on call centres and those have helped to prove that Jamaica is a viable location.

Jamaica talks about creating 10,000 ICT jobs and we now have some 13,000 employed in the business process outsourcing sector, but we can do much better. My attendance at the Trade Americas Expo in Miami a few weeks ago opened my eyes to exactly what we are missing in our own region. Colombia currently employs 120,000 people in the business process outsourcing sector, mainly through Indian firms that have set up shop there because it is nearshore instead of outsourcing half-way around the world.

Recall that the Latin American and Caribbean region is extremely close to North America, usually in the same time zone, and flights are much shorter to physically visit a centre if there is a problem or to vet them before a contract.

A Latin American centre makes sense to service the growing Hispanic population in the USA that are more comfortable speaking Spanish, but an English-speaking customer does not want to deal with an agent that speaks Spanish as his/her first language.

This is where the opportunity for Jamaica comes in; we are the largest English-speaking country in the Latin American and Caribbean region.

Partnering with some of the firms in Colombia and other parts of Latin America to handle their English-speaking contracts while they keep the Spanish-speaking ones makes complete sense and would immediately increase jobs in Jamaica. Yes, we start with call centre jobs, but we can parlay that new thrust into moving up the value chain. Jamaica is simply not on the radar of many organisations and I know this because I have spoken to a few Fortune 1000 firms, pitching them on Jamaica and they were surprised.

According to a Miami Herald article on May 22, 2012 titled ‘Nearshoring offers advantages to South Florida companies’, PepsiCo Latin America “decided to locate a shared services operation in Mexico 13 months ago after studying factors such as political stability, literacy levels and costs in several Latin nations. The Mexico centre, which handles corporate back office services for the region, now has 43 employees and will eventually reach 70″.

We are a politically stable country, never had a coup or dictatorship, comparable literacy levels, high number of university graduates, top class IT infrastructure and competitive costs. Jamaica needs to be one of the countries being considered for these kinds of operations.

Our costs are even more competitive now because LIME has relinquished its monopoly in the free zone, allowing competition and thereby allowing costs to go down. According to Yoni Epstein, the current chairman of the Business Process Industry Association of Jamaica, “Jamaica only has about six per cent of the outsourced business to the Caribbean and Latin America”.

I must commend Mr Epstein, who happens to also be a personal friend since 2002, for setting a goal of unity in terms of seeking out contracts. Jamaica cannot do well in this area or any other if an association is not championing the sector and it is left to individuals. The Government also must play a greater role through JAMPRO.

The team there has done good work in getting to 13,000 jobs with more companies planning to come in, but we need a game changer. At the Trade Americas Expo I was being courted by trade representatives from Colombia, Argentina, Mexico and the Panamanian ambassador, all wanting me to look at investing in their business process outsourcing sectors. There was no one from Jamaica trying to get me to look in that direction.

Jamaica 50 should not just be about the previous 50 years, but the next 50 years. We have a real chance to accomplish what really should have been already, so let us now come together and focus on the future.

David Mullings is president and CEO of Keystone Augusta and was the first Future Leaders representative for the USA on the Jamaica Diaspora Advisory Board. He can be found on Twitter at twitter.com/davidmullings and Facebook at facebook.com/InteractiveDialogue

Read more: http://www.jamaicaobserver.com/columns/The-next-50-years–Nearshoring-and-process-outsourcing_11946357#ixzz20rr7Yn4P

By Marty Wolf, M&A advisor

Many people would argue that Apple is the strongest company today. The way it makes money, it almost resembles a bank. But if you applied the Apple valuation on Facebook’s revenue, Facebook would trade at about $12 billion, not $57 billion (as of market close June 6, 2012), down from more than $100 billion on its inaugural IPO date.

Also, if you look at other great companies, such as Oracle, Microsoft or SAP, and their valuations on revenue or on EBIT, those companies trade between $10 billion and $14 billion.

I’m basing this off of the barometer my team uses. Each quarter we introduce the MW IT Index. Our market-weighted-value index takes the market value of 120 companies grouped into four technology categories: IT services and business process outsourcing, IT supply chain services, software, and SaaS. The index assigned a value of 1,000 to each composite group on December 31, 2008, and it has tracked the category performance since then.

Bottom line is that SaaS companies are trading at a premium of 150 percent or more from the other segments according to our latest quarter.

Facebook initially traded at about a 300 percent premium above such SaaS companies as Salesforce.com.

Facebook was trading at 30 to 40 times revenue, compared to companies in the IT products and services space that are trading at four to 10 times EBITDA and SaaS companies that are trading at two to five times revenue. If Facebook’s financials were in the IT Services space, it would be valued between $4 billion to $6 billion, not $57 billion.

It just shows that the space you are in matters. SaaS, IT services, IT BPO and IT supply chain companies are valued quite differently than Facebook.

But people must remember that when they invest in Facebook, they are investing in a company with assumptions that are going to be very difficult to achieve over time. Assumptions that leave little margin for error are built into the price of the stock.

For example, in the ’90s, Cisco was going to be the first trillion-dollar company. But they didn’t make it. The reasons why do not matter — what does matter is that a very high bar was set.

So, the Facebook market expectation is set as high as they have ever been. In addition, Facebook’s CEO, Mark Zuckerberg, was quoted as saying in a recent article in New York Magazine, “We don’t build services to make money; we make money to build better services.”  Most companies must do the opposite — make money then build better services. This is bearing out in the market reaction.

Today, Facebook has almost $4 billion in revenue and a billion in earnings. That is a real company. But, the market expectation might not be real yet, and there is little, or no, operating margin of error for the company to make its mark.

Plus, when we look into the future at possible competitors for Facebook, we don’t know who they are. They are probably in college or in a garage. That is why Warren Buffet does not invest in technology companies. Today’s technology darling can be obsolete tomorrow.

If you want to look at out-of-sight valuations, look at the SaaS space. If you want to leave the galaxy, look at Facebook.

We will see if they can meet expectations five years from today. That is possible.

The news that GM pulled its advertising will have little bearing on Facebook’s valuation. By the way, I assume you saw that Warren Buffet recently bought 10 million shares of GM.

Marty Wolf is the founder and president of martinwolf, a leading middle market IT M&A specialist. 

By Elizabeth Knight, Phillip Coorey

BHP attacks Government over tax and IR

AUSTRALIA’S most influential businessman, Jac Nasser, has slammed the Gillard government’s record on tax and industrial relations, saying that unpredictability is undermining investment and could push BHP Billiton offshore.

Addressing the Australian Institute of Company Directors yesterday, the chairman of BHP Billiton demanded the government deregulate the industrial relations system and stop targeting the minerals sector with taxes. “I cannot overstate how the level of uncertainty about Australia’s tax system is generating negative investor reaction. People don’t know where it’s going,” he said.

Mr. Nasser said that given the uncertain global outlook and the fact that some domestic leading indicators were not encouraging, the government needs to get the two key levers of tax and industrial relations right to boost sentiment and confidence.

The most recent tax changes affecting the mining industry are the minerals resource rent tax – which BHP helped design – and the carbon tax.

Mr. Nasser’s comments suggest the mining industry is delivering a warning to the government against any additional tax imposts to capture further revenue from the mining boom, especially if the mining tax fails to raise the forecast revenue – as the miners and the opposition are claiming.

Mr. Nasser said BHP, like many in the resources industry, was feeling the pressure from increased costs, increased taxes and royalties from state and federal governments, continuing global volatility and “a much more difficult industrial relations environment”.

He warned BHP had a “diversified portfolio” of countries and products in which it could invest. “Given our range of options, if we can’t meet our criteria in any one project, product or geography, we will redirect our capital somewhere else or we simply won’t invest at all,” he said.

Read more: http://www.theage.com.au/opinion/political-news/bhp-boss-threatens-to-invest-offshore-20120516-1yrc2.html#ixzz1v52S6pAi

Hayleys Business Solutions International (Pvt) Limited (HBSI) recently reinforced its commitment to sustainability and service differentiation by being the first and only BPO Company in the country to obtain Carbon Neutral certification.

Photo on right: Mohan Pandithage – Chairman and Chief Executive of Hayleys Group (third from left) receives the carbon neutral certificate from Subramaniam Easwaran- Co Founder, Carbon Consulting Company. Sutheash Balasubramaniam – Director/CEO (extreme left), Dr. Arul Sivagananathan – Managing Director (second left) and Asiri Silva Manager – IT and Infrastructure (extreme right) of Hayleys Business Solutions International and Sanith de Silva Wijeyeratne – Chief Operating Officer – Carbon Consulting Company, were present.

This pioneering achievement, unique in Sri Lanka’s business process outsourcing services industry, was earned after a focused effort by HBSI to adopt practices that reduce or eliminate greenhouse gas emissions. The certificate was awarded by The CarbonNeutral Company, a world-leading provider of carbon reduction solutions.
In accordance with The CarbonNeutral Protocol, a global standard for carbon neutral certification, an independent assessment of the CO2 emissions produced was undertaken. The company has already implemented several energy management initiatives in accordance with its offset-inclusive emissions reduction programme.
“HBSI has reduced and offset its CO2 emissions to net zero in accordance with The CarbonNeutral Protocol. As a result, we are Sri Lanka’s first and only CarbonNeutral certified BPO Company, as verified by an independent organisation,” Managing Director- Hayleys Business Solutions Limited, Dr. Arul Sivagananathan stated.
The certification makes a clear and credible statement about the action HBSI has taken on climate change and is expected to meet growing demand for climate friendly solutions. “We are confident that this move will go a long way in enhancing the competitiveness of our service offering in local and international markets.
Clients of Hayleys Business Solutions International stand to benefit immensely from the work they outsource being carbon n eutral. This certification plays a decisive role towards branding Sri Lanka as a sustainable outsourcing destination,” Hayleys Group Chairman Mohan Pandithage said.