The Ventus Story The Philippines’ largest telephone company— Philippine Long Distance Telephone Company ( PLDT)— ventured into the call- center business in 2001 to leverage the company’s telecommu-nications investments and diversify its sources of revenues. As Manuel Pangilinan, PLDT’s chairman, noted, With the continued decline in the settlement rates for long distance calls and given the fact that PLDT had already invested heavily in its fiber optic network ( both international and domestic), it was a natural move for us to diversify downstream into the call center out-sourcing business. Also, as globalization of services was gaining traction and with India taking the lead in this area, we thought that conditions were ripe for PLDT to position the Philippines as a viable destination site for outsourcing, particularly for U. S. companies. Commercial operations in the call- center business commenced in March 2002 with 50 full- time employees. At the end of 2008, the company had over 6,500 employees in seven Philippine locations serving about 20 customers. The company operated call centers for dif-ferent customers under two major names and legal entities: Parlance and Vocativ. This was later merged into ePLDT Ventus in order to create a single global brand. The company has been very successful in delivering value to its customers in terms of cost savings, service- level quality, process improvements, and other key metrics. In general, customers sign up with Ventus because of the potential savings they could generate. On aver-age, clients save between 25 and 33 percent of their fully loaded costs by outsourcing their call- center operations to the Philippines. However, most customers keep or expand their busi-ness with Ventus for reasons other than cost savings. For example, Ventus helped a U. S. flower- delivery company develop a call- handling system to meet the surge in customer calls during Mother’s Day and Valentine’s Day. Similarly, it helped a U. S. tax- preparation services company handle increased call volumes during the busy tax season. Another customer, a major U. S. telecom company, noted that Ventus has consistently achieved one of the highest-quality marks from among the various call- center providers that it worked with in the United States and abroad. As a result, the company has transferred more business to Ventus. Success Factors Ventus rode the explosive growth of international outsourcing globally and in the Philippines. Companies from the United States and other industrialized countries have been outsourcing more of their call- center operations and business processes to the Philippines,India, and other locations in order to cut costs, enhance quality, and remain competitive on a global basis. Moreover, Ventus has smartly leveraged the resources of the PLDT group of companies. These include telecom connectivity, redeploying underutilized PLDT assets ( e. g., buildings and other physical facilities), and the use of shared services. In this way, Ventus has been able to employ a “ model of building to market and to customer specifications” at a relatively faster speed and lower cost than its competitors. On average, Ventus can build, fit, and cus-tomize call- center operations for customers within three to six months. Ventus has also successfully capitalized on its position as a member company of PLDT— the most profitable company in the Philippines— to attract employees to work for its call cen-ters. Although Ventus does not pay the top wage rates in the industry, employees regard the company as a stable and prestigious employer. Employees also enjoy the benefits of working for a large employer, including excellent health benefits, pensions, performance bonuses, and profit sharing for management positions. The company has also benefited from a strong and stable leadership team. ePLDT Ventus president Ray Espinosa, Ventus CEO Helen Marquez, operations VP Albert Santos, and business development VP Ken Lamzon have created a culture that stresses profession-alism, high- quality service, attention to customer needs, and a strong camaraderie among employees. The company has spared no expense on training and in building world- class facilities that provide customer- service representatives an excellent work environment. As a case in point, the company commissioned English as a Second Language ( ESL) teachers at a major California university to customize an “ English for Filipinos” training module exclu-sively for Ventus’s customer- service representatives. The partnerships that Ventus has established with major U. S. clients and global third-party providers have been very instrumental in the company’s recent success. These successful partnerships have given Ventus credibility and visibility as a global provider of international outsourcing services. In addition, Ventus has used the knowledge gained from these partnerships to build a strong and globally competitive company. The Impact of the Global Financial Crisis on Outsourcing The global financial crisis has caused major headwinds for the growth of Ventus and the Philippine BPO industry in 2009. More specifically, it has posed four challenges for Ventus and other BPO providers in the Philippines. First, the U. S. recession impacted companies that have traditionally fueled the growth of the BPO and call- center industries in the Philippines. The hardest- hit sectors include out-sourcing providers to banks and financial- service firms, retailers, and travel and leisure firms. Second, a number of companies with outsourcing plans prior to the financial crisis had to cancel programs or put them on hold due to funding difficulties, management turnover, or lack of business visibility. Third, consolidation in industries, such as in banking and finance, has resulted in loss of business for a number of BPO providers. A growing number of customers are consolidating their global service supply chains to fewer locations or selling off their captive operations to other providers. Interestingly, the Philippines has emerged as a primary beneficiary of this consolidation as more companies select it as a global hub for their voice- based contact-center facilities. Finally, mounting U. S. unemployment has changed the labor- cost arbitrage dynamics of international outsourcing. Some outsourcers are responding to this change by repatriating work back to the United States, demanding price concessions from offshore providers, or increasing service- level requirements. While the growth of Ventus and the Philippine BPO industry will continue, it will be mod-erated by the above challenges. It is not likely that the Philippines will attain the ambitious targets projected by the Business Process Association/ Philippines anytime before the U. S. economy recovers fully from the recession and global financial crisis.Meeting the Challenges from the Crisis Even before the global financial crisis, Ventus had diversified its customer base by reaching out to domestic clients. Foremost among these are other PLDT companies ( such as SMART, the Philippines’ largest provider of mobile communications) and Maynilad ( a major water utility company), as well as external clients. This domestic diversification has helped Ventus grow and has cushioned the impact of the financial crisis on its business. The company’s management has been contemplating a path that will address the near-term challenges from the global economic crisis but at the same time sustain Ventus’s long- term growth and profitability. In this regard, the company has to address three key issues. Expansion into the Data Segment BPA/ P projects the data segment of business- process outsourcing to grow annually by over 50 percent and reach 300,000 employees in 2010. These include back- office transactions ( e. g., finance/ accounting/ HR services), medical and legal transcription, animation, engineering design, software development, and digital- content development and support. As competition becomes more crowded and pricing pressures become more intense in the call- center space, Ventus and PLDT’s management have been looking for ways to pro-vide higher- value added services that will continue to differentiate their company from com-petitors and accelerate the company’s growth. Expanding the company’s presence into the data segment of BPO is one option on the table; however, this could prove to be a double- edged sword. On the one hand, it provides Ventus with a platform for tapping into a fast- growing segment of outsourcing and gives the company an expanded suite of services that it could offer to customers who wish to out-source both voice and data services. On the other hand, running a data- based BPO is differ-ent from operating call centers, as this requires different customer- service specializations and entails a different economics ( e. g., cost and pricing). In 2006, PLDT acquired SPi Technologies, a leading global provider of medical and legal transcription and publishing services. Although PLDT has no immediate plans of combining Ventus and SPi, Ray Espinosa, ePLDT’s president, has been eager to create synergies between the two companies and to maximize PLDT’s voice and data outsourcing capabilities. Market, Customer, and Geographic Diversification Shortly after it commenced commercial operations, Ventus signed a marquee client, a major U. S. satellite provider. The client has been a driving force behind Ventus’s early growth and to date accounts for the lion’s share of the number of call- center seats held by Ventus. Like many Philippine- based call- center providers, however, Ventus has been largely opportunistic with customer acquisitions. The company’s sales presence in the United States has been minimal, and it has relied primarily on networking and customer inquiries and referrals. Ventus realized that it would be difficult to continue generating sales in this manner in light of the U. S. economic slowdown. Ventus’s response to this issue is to look into strengthening its sales presence in the United States, including the deployment of one of its key managers to the U. S. and the formation of a sales team that will cover various geo-graphic and industry segments in the U. S. The focus of the company’s business is on inbound calls ( customer service, technical support, and sales). The company serves a broad array of industry verticals, including satel-lite TV, electronics, retail, financial services, flower wire order, technology distribution, and others. Unlike other providers that have been seriously hurt by the downturn in the banking and financial services industry, Ventus is fortunate to have limited exposure to this sector. On the other hand, some of Ventus’s business- to- consumer ( B- C) retail customers have been significantly hurt by the U. S. recession.Ventus remains committed to the U. S. market and its current customers. However, it real-ized that the company would have to build a diversified customer base in order to counter the negative impacts of the financial crisis. These are some of the issues the company is grappling with: 1. How can the company have a better mix between business- to- consumer ( B- C) and busi-ness- to- business ( B- B) customers, particularly since the latter segment has been more resilient to the U. S. recession than the former? 2. How can Ventus tap into telecommunications and other sectors that continue to grow despite the financial crisis? How can Ventus generate business from emerging compa-nies and industries ( e. g., smart mobile devices, social- networking space, health- care services)? 3. How can Ventus continue to grow its domestic business— particularly those con-cerns outside the PLDT group of companies? How can Ventus leverage its expertise in B- C and industry verticals where it has key competencies to serve domestic clients? 4. As new markets emerge and grow, such as the Hispanic market in the United States and multinationals in China, should the company focus on these markets and customer seg-ments? If so, should Ventus build new facilities or acquire or partner with companies near the United States, such as in Mexico or Costa Rica?