Global In-House Centers / Shared Services

Basic Industry Information  The National Capital Region (NCR) remains the
preferred for GICs because of its cost attractiveness
 The Global In-House Center (GIC) sector represents with good quality environment, talent, and sector
predominantly Fortune 500 companies, with more specialization.
than 100,000 jobs that contribute significant value to
our global organizations.  80.1% of centers are found in NCR with Makati City
as the hotspot with 29.8%. However, companies are
 The Philippines is seen as one of the established expanding outside NCR with Cebu registering 5.1%
locations for GICs. Locators are assured with depth of activities.2
of expertise and outstanding performance and
superior returns. A growing number of organizations Top Locations for GICs
see it as a means of obtaining strategic advantages, City Percentage
not just as a cost-cutting measure. Companies who Makati 29.8
have established shared services centers in the Taguig 21.7
country originally for F&A are now outsourcing HR, IT Pasig 9.1
and other back-office functions like research, product Quezon City 8.1
development and tax and legal services. Manila 6.5
Cebu 5.1
TCO Savings Sustainability with U.S. Locations
2014: Number of Years Muntinlupa 5.1
IT-ADM IT-ADM Contact BPO BPO
KPO / Engineeri
Mandaluyong 3.1
Country (Base (Niche Center (Transact (Judgem
Analytics ng / R&D
Skills) Skills) (English) ional) ent)
India 12-15 13-16 14-17 15-18 12-15 12-15 12-15 Industry Associations
Philippines 10-13 12-15 13-16 13-16 9-12 9-12 9-12
China 7-10 7-10 9-12 9-12 6-9 5-8 7-10 Global In-House Center Council Philippines (GICC)
Poland 7-10 7-10 10-13 10-13 8-11 4-7 7-10
Mexico 7-10 7-10 8-11 8-11 <5 4-7 4-7 Products/Services
Brazil <5 <5 <5 <5 <5 <5 <5
Current arbitrage sustainability (base case)
5-10 < 5 years
 GICs typically serve global demand. Higher
>10 years proportion in voice by employees compared to
years
Source: How Cost Competitive are Global In-House Centers (GICs) ?, revenue. 27.7% of work within SSCs is finance
Everest Group
related. Analytics and marketing are the top 2
emerging functions.3
Major Players

GICs have grown significantly in the Philippines GIC Functions

especially for Finance and Accounting (F&A) and
Banking, Financial Services, and Insurance.1 Customer
Support -
6.6% F&A 22.7%
1. Fast Moving Consumer Goods (FMCG) – SC
IT- 16.9%
Johnson, Coca-Cola, P&G, Nestle, Diageo, Henkel,
Hershey’s, Mondelez. J&J
2. BFSI – Citibank, JPMorgan Chase, Deutsche
Knowledge Services, Wells Fargo, HSBC, ANZ, Other
Emerfing
American Express, Capital One, Northern Trust, Functions HR - 22.8%
Cardinal Health,Manulife, AIG, Sunlife, United (KPO,
Health Group, ING, QBE Marketing)
17.0%
3. IT and Electronics – HP, IBM, Sony, Ingram Micro, Procurement
Canon, Ericsson, Bosch, Lexmark, Dell, Fujitsu - 9.9%
4. Shipping – OSM, Star Cruises, Maersk
5. Engineering Design – Foster Wheeler, Flour Daniel
6. Others – Bayer, Bombardier, PWC, Shell, Chevron,
SGS, JLL, Emerson, Baker & McKenzie, Towers
Watson, 3M,Mercedez Benz

1
How Competitive are Global GICs, Everest Research 2015
2
Philippines Market Deep-Dive: Captive SSCs and BPOs (2000-2015), SSON, http://workbook.dart-institute.com/Philippines2016
3
Ibid
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Condensed from IT-BPM Roadmap 2022: Accelerate PH, Future Ready. IBPAP. All rights Reserved
As of December 2017
 Global In-House Centers / Shared Services

 Most GICs in the Philippines handle IT Services with  In terms of services offered, Philippine GICs do
35% followed by Consulting services and Customer higher value process work more that transactional
Service. processes.

Service Preferred to be Outsourced

Transactional vs. Complex Services
KPO 3% 2016

61%
Customer Service 26%
39%

Consulting 29%

IT Services 35% Higher Value Processes Transactional Processes

Markets Served
Industry Performance
 48% of GICs in the Philippines are owned by US
headquartered companies, followed by Europe at
Shared Services Functions
USD Billion, 2016
less than half that number, 20%.5
IT
Services
0.08
Headquarters of Philippine GICs
Rest of
Non- Asia - 4% Americas -
Voice 3%
1.03
UK -7%
Austrailia -
7%
Voice US -48%
2.86 Philippines
- 11%

Rest of
Europe -
Revenue By Vertical Markets, 2016 20%

Retail 10%
BFSI Manufactu  50% of GICs service global clients, followed by APAC
36% ring with 30%, and GICs serving Americas only at 11%.
11%

Geographies Served by Philippine GICs

Local - 7%
Tech
18% Americas -
11%
EMEA - 2% Global -
Others Hospitality 50%
9% Energy 8%
8%

APAC -
30%

5
Philippines Market Deep-Dive: Captive SSCs and BPOs (2000-2015), SSON, http://workbook.dart-institute.com/Philippines2016
2|P a g e
Condensed from IT-BPM Roadmap 2022: Accelerate PH, Future Ready. IBPAP. All rights Reserved
As of December 2017
 Global In-House Centers / Shared Services

Vision, Goals, Target and Milestones  In terms of TCO savings, the Philippines offers
between 62-70 percent savings across all functions
 The Philippine GIC industry is projected to reach for GICs.
US$7.61 billion in revenue by 2022, up by 62% from
2016. Typical Total Cost of Ownership (TCO) Savings
between Tier-2 US cities and GIC destinations
 Employment will reach 187 thousand by 2022 from 2014; %
148 thousand in 2016. This represents an increase Knowledge Business
IT-ADM
Process/Analytics Processes
of 26%.
India 72-74% 74-76% 80-82%

GIC Industry Projections Philippines 62-64% 65-67.% 69-71%

8 187.5 200 China 44-46% 49-51% 56-58%

182.3
176.1
169.2 180 Mexico 37-39% 37-39% 47-49%
7 161.5
156.4
148.7 160 Poland 36-38% 41-43% 41-43%
6
140 Brazil 23-35% 28-30% 29-31%
5 Source: Everest Group and NASSCOM Study on Substantiating
120
Business Impact by GICs 2014
4 100

80
 Beyond cost arbitrage, the country is an attractive
3
location for GICs because of its strategic time zone
60
2
advantage. The Philippines is within 4 hours of most
40 major cities in the Asia Pacific (APAC) region.
1 Companies can implement the “follow the sun”
20
4.69 5.2 5.65 6.12 6.61 7.11 7.61 model servicing the US at night shift, Europe in the
0 0 mid shift and APAC in the morning shift.
2016 2017 2018 2019 2020 2021 2022

Revenue (US$ Billion) Emplyment ('000)

Philippine Advantage

 The Philippines is classified as a mature location on

Everest Group’s Market Vista Locations Maturity
Heatmap. With its sizable graduate pool, low cost of
operations, and English language advantage, the
Philippines offers sustainability arbitrage that is only
matched by India. The country offers an attractive
proposition for companies looking for destinations to
located their GICs.

 Companies are assured of the best value-for-money

proposition with natural pool of talents and human
resources that are skilled and adept in the use of
English, commanding 72% proficiency among the
population. The Philippines also enjoys high literacy
rate at 95.9%4, considered among the highest in
Asia.

4
CIA World Factbook
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Condensed from IT-BPM Roadmap 2022: Accelerate PH, Future Ready. IBPAP. All rights Reserved
As of December 2017