outsourcing to manila, page-3

Roeroc

Personally I feel torn between loyalty to Australian workers and the rationality of companies choosing least cost options. American companies have chosen the path of least cost production by exporting the production of goods to China on a gargantuan scale. Multiple global companies have outsourced call centres to India. The purpose of these choices is to generate additional profits for the outsourcing companies, but I concede that the jury is out on whether in the long term these actions are good for their wider national economies.

I disagree with you when you say that “This is short term view and can only deliver short term benefits”. I think that this statement is more of a slogan than a rationale. Given that the AUD stays strong and salaries in Sydney do not fall, I cannot see how the costs of running an operation in the Philippines can come remotely close to those in OZ for decades to come.

I also think that your idea “of a little less profit” is more of a slogan than a rationale. There is no reason to assume that if the manila operation works, as I expect it will, that the straw man figure of 150 staff cannot be increased to 300 or more. I am not suggesting that positions in the Sydney operations centre will be ‘transferred’ Manila (i.e. people will loose their jobs), although there is no physical or legal block to prevent this happening, but that the company could use Manila as a location from which to grow internationally. It will be interesting to see what management have to say on this issue.

Regarding staff; one of the key issues is quality/skills. If CCP can recruit highly motivated graduates with relevant experience in manila why shouldn’t they? I remember when, under Lucas’s leadership, CCP adopted an ill-fated strategy of doubling the number of staff in a ridiculously short period of time. My view is that the key reason this strategy failed was that that the company could not recruit sufficient staff with requisite skills and decided to train 'imperfect' staff and then train them up. This training diverted better skilled staff from their work. Consequently, the productivity of the new staff was well below that of existing staff, the productivity of existing staff fell and costs rose. We are still suffering the consequences of that manoeuvre today. The Manila expansion strategy seems like a much better strategy as it is being done gradually and from the get go is cost effective and profitable. Another point is that this operation is there, largely, to expand CCP into new lines of business. I think this speaks volumes about lessons learnt from past mistakes, a quality that I always value in people.

I also like companies that are well run, with good management and treat their staff well. I can see no reason why this does not continue to be the cases at CCP’s OZ operations. Perhaps a more balanced way of looking at CCP is that it is becoming, like numerous other financial services companies, a mini-multinational.

K