IV.

EXTERNAL ANALYSIS

A. General Environment

In the review and discussion of general environment, this paper covers factors that are
relevant to both the Philippines and the United States. The market of the company are
businesses in the US while the employees and operations are based in the Philippines.

a. Economic Developments

The figure below shows the Global Competitiveness Index for 2018. The Philippines ranked 56th
out of 137 economies. It performed best in Institutions, Infrastructure and Macroeconomic
environment. The country is lagging behind in Innovation and Business sophistication. Among
those listed in the most problematic factors in doing business, inefficient government
bureaucracy, inadequate supply of infrastructure, and corruption were listed top on the list. The
Philippine Development Plan 2017-2022 outlines the strategies that will address these
challenges.
Source: www.weforum.org

The United States ranks 2nd in the latest results. It also showed highest in Institution,
Infrastructure and Macroeconomic environment. It is important to note that while the country
got Innovation and Business sophistication last, the US still ranked 2nd on both categories
globally which is still way better compared to the ranking of the Philippines (at 65th and 58th,
respectively). However, among its most problematic factors in doing business, tax rates, tax
regulations, and inflation were rated the most impactful.
Source: www.weforum.org

The ranking of the Philippine is a notch higher than in 2017. It is an indicator that the perception
of the international business community of the country has improved. This year, the Philippines
also took the top spot of “Best Countries to Invest In” by the American media company, US
News. The National Economic and Development Authority (NEDA) Secretary, Ernesto Pernia,
said that ranking is proof that the country is doing good on it reforms to become more business
and investor-friendly (NEDA, 2018). However, it can be noted as well that the country was still
rated low in infrastructure. Pernia added the that the actions outlined in the PDP and the
ongoing “Build, Build, Build” program of the government is expected to improve the country’s
overall international competitiveness. He believes that the nation’s infrastructure will be at part
with other ASEAN countries by 2022 (NEDA, 2018). The implementation of the first package of
the Tax Reform for Acceleration and Inclusion (TRAIN) is expected to fund the projects.

Pernia explained that while the Philippine economy looks robust as a whole, there are still
regions in the country that experience chronic poverty and inequality. This is the reason of
shifting the investments away from Metro Manila to the Visayas and Mindanao. The Regional
Development Councils spearheaded the formulation of the Regional Development Plans (RDP)
to execute President Duterte’s aim to reduce inequality through regional and rural
development. The RDPs contain the overall development framework and strategies as well as
the specific priority programs for each region. The RDP for Central Visayas highlights the
importance to link major urban centers to key production areas and market centers through
construction and upgrade of arterial roads, developing secondary and major ports, and
integrating transportation systems. The Mactan-Cebu International Airport, the New Bohol
Airport, Cebu BRT Line and the New Cebu International Container Port had been approved by
the NEDA Board and are now in various phases of project implementation. The board is still
reviewing approval for the Talisay-Naga Coastal Road and the Cebu-Bohol Interconnection
Project. Feasibility studies are still being completed for the Talisay-Naga Coastal Road and the
Metro Cebu Expressway (NEDA, 2018). NEDA projected that the average growth rate in the
Visayas region expected will be between 7.7 and 8.3 percent - higher than the government’s
target for national GDP growth for 2017-2022. Pernia added that the four main growth drivers
of the Central Visayas region are manufacturing, construction, travel and tourism and IT-BPM
(NEDA, 2018).

In terms of contribution to the growth of economy in the Philippines, both the NEDA and
Department of Trade and Industry (DTI) confirm that IT-BPM industry along with the
remittances from the Overseas Filipino Workers (OFW) will remain the top 2 earners of foreign
exchange in the next few years (Lema, 2017). Based on the 2018 report of the Philippines
Statistics Authority, Philippine economy posted a 6.6 percent on Gross Domestic Product (GDP)
growth in the fourth quarter of 2017 and a 6.7 growth for the entire year of 2017 (Philippine
Statistics Authority [PSA], 2018). Among the economic sectors that were measured in the last
quarter of 2017, Services grew by 6.8 percent, second to the Industry sector at 7.3 percent (PSA,
2018). The IT Business Process Association of the Philippines (IBPAP) said that the sector has
grown more than twice the global market growth rate over the past five years. In 2015, the
industry generated 1.2 million jobs and US$ 22 billion in revenues. In its six-year roadmap which
was released in 2016, the IBPAP expects the industry to grow in the next six years, earning as
much as $38.9 billion in revenues by 2022 as it continues to expand in the global market
(Lorenciana, 2017).

DTI Secretary Ramon Lopez assured the IT-BPM industry that it can rely on the government to
be its partner in implementing the plans to grow the sector. In his speech, he emphasized the
significant role of the industry in working on the county’s competitive advantage to be the
premiere country of destination for both voice and non-voice services. He added that the total
global opportunity for the IT-BMP industry is expected to grow from $166 billion to $250 billion
by 2022 (PSA, 2015). The PH IT-BPM Roadmap 2022 aims to address that need and create more
jobs and to sustain inclusive growth. Lopez also added that the sector is expected to get higher
value work on software development, healthcare information management, creative services
and products and engineering services (PSA, 2015). The Cebu Economic and Business Unit
(CEBU) shared its goals to hit 200,000 workers employed in the IT-BPM industry in Cebu City and
a monthly revenue of PHP20 billion by 2020. This was announced during the Transformation
Summit in Cebu City which was attended by players in the IT-BPM industry. The number of IT-
BPO firms in Cebu is expected to increase from 329 to 606 (Lorenciana, 2017).

However, the IBPA noted that the IT-BPM industry will grow slower compared to how it has
performance in the last six years. Previously, it performed at 17 percent on local annual growth
rate but now projected to be at 9.2 percent. However, the Voice segment is projected to be up
to $22.2 billion which is more than half of the entire for this sector in 2022. This revenue will be
driven by the contact centers, business process and outsourcing, global in-house centers (GICs),
and health care. In 2022, it is also projected that the share of non-voice services will increase to
42 percent from just 34 percent in 2016. (Lorenciana, 2017).

One of the programs that the IBPAP has been working with the government agencies include
the implementation of the Training for Work Scholarship Program (TWSP). This program has
helped more than 230,000 graduates beginning from 2010 to until 2016. The partnership of the
IBPAP and the Commission of Higher Education (CHED) has resulted in the creation of the
Service Management Program (SMP). This is a specialization track for business and IT schools
which aim in developing manpower suite for the industry. He also added that the industry can
avail of various tax incentive packages given by the Board of Investment (BOI) and the Philippine
Economic Zone Authority (PEZA) (PSA, 2015). Lopez said that the DTI’s focus will be on creating
decent jobs and they will be focused on removing bias against foreign investors and those
serving the domestic market (DTI, n.d.). In the 2012 report by the Philippine Statistics Authority
(PSA) on Census of Philippines Business and Industry – BPO Activities, which was released in
2015, the government has already given the industry P119.1 million in subsidies (PSA, 2015).

The latest data from the Philippine Economic Zone Authority (PEZA) showed that Cebu now
houses 22 information technology centers and parks and 160,000 workers in 349 companies.
Large multinationals have established delivery sites across the city’s IT parks and business
centers. In a report, Tholons noted that the growing talent pool in Cebu attracted worker from
the Mindanao region which allowed the city’s BPO sector to further grow. It also pointed out
Cebu as an educational hub in the central and southern Philippines. In Region VII alone, there
are currently 138 higher education institutions that cater to more than 250,000 yearly college
enrollees. It also noted that the city’s IT-BPM industry included a healthy mix of services,
supporting all major service segments which include Information Technology Outsourcing,
Knowledge Process Outsourcing, and Business Process Outsourcing. This is proof of the diverse
talent pool available in the area (Destacamento, 2017).
 B. Socio-cultural, Demographic Trends and Lifestyle Changes

In the latest Marketing book of Kotler, Kartajaya and Setiawan (2017), they described how the shift to
digital economy and platforms have driven massive efforts to integrate digital marketing strategies into
the traditional ones to attract and keep the now hyperconnected customers. Customers now switch
from one channel to another and expect a seamless customer experience. Businesses now leverage on
the strategies and techniques of both online and offline channels in attracting and keeping the
customers (Kotler et al. 2017).

This shift is largely driven by the millennial generation. They will comprise the majority of the customer
base and workforce. They are the ones who were born between 1980 and 2000. They are also referred
to as the Y generation. In 2016, there were 80 million of these customers in the US and 2.5 billion
worldwide (Johnson, 2016). The number is growing. They are the most ethnically and racially diverse
among generations. They grew up alongside new technology which makes them socially connected.
They are confident, achievement-oriented, have high expectations, and aspire to make a difference with
their work (Johnson, 2016).

The millennial generation is projected to spend more than $200 billion annually starting 2017 and $10
trillion in their lifetimes (Nelson, 2012). They are the considered the tech-savvy, most mobile, and the
most social generation in history. They multitask on multiple devices at once - 80% reported using two
or more devices while watching TV. They are loyal to brands – 70% report that they always come back to
brands they like. They put their friends first but they trust expert strangers with relevant information
and experience when making purchasing decisions. Millennials seek out advices and opinions from
blogs, sites and social media. They take a lot of time to share their opinions and always want to be
heard (Nelson, 2012). These are very similar patterns of behaviors that are observed among the
millennials in the BPO industry. They are not intimidated to share their opinion or feedback to the
leadership team. They expect to be heard and appreciate appropriate actions to be done immediately. It
is very common to see millennials sharing work-related posts on social media and they are not
transparent in showing what they think or feel about work-related matters.

In an article by Johnson (2016), she shared a few characteristics of the millennial customers that are
helpful to better understand this segment. These qualities drive companies in building their products
and services and BPO companies as well in attracting and keeping them. Millennials are self-reliant. They
would rather research information that they need themselves than calling customer service. They use
self-help options or technology more than the other generations. They expect omnichannel experience.
They don’t like repeating information. They expect information provided to the companies to be used
for their convenience every time they use other or alternative communication channels. Companies
need to use new technology to better make sense of these information provided by the customers in
order connect with them more effectively. They want a quick solution. They don’t want to wait for it.
They expect questions answered and issues fixed the first time. They have zero tolerance on delays and
usually complain about them on social media. They don’t appreciate being put on hold and expect
answers to be made available in various platforms including email and SMS. They value relationship and
authenticity. They appreciate prompt and conversational responses and become brand ambassadors
whenever they are satisfied with the service or products. They can’t stand fake and scripted responses.
Customer service agents need to interact with them in a conversational and natural manner. Finally,
they are not afraid to leave a company when they are no longer satisfied. They don’t complain and stay
(Johnson, 2016). This is very obvious quality observed among BPO agents. Whenever they don’t feel
valued anymore by the company, they leave – oftentimes, without telling them the reasons.

In another article by Convoso, by the year 2025, 75% of the workforce will be composed of millennials.
They are inherently different from older generations due to massive rise of technology and development
of social media networks that have empowered and enriched experiences during their lifetime. They are
used to seamless responses, instant gratification, quick transactions regardless of channel, and
seemingly endless interactions. These differences are in directly correlated to the enhancements in the
digital age. Millennials live in the age of technology while the generations before them simply embraced
and adjusted to them. They are also tech-savvy yet abrasive which is the reason why in the Forbes study,
68% of recruiters report having difficulty managing them. They believe that this challenge in attracting
engagement affects both the millennial customers and employees. Call centers have been experiencing
high turnover rates for years. Keeping them engaged is proving to be another challenge. They
recommend a few ways to attract and manage the millennial workforce and customers. First, provide
them with clean and modern user interfaces (UI) or platforms. Based on a Gallup survey, millennials are
the least engaged generation. They suggest for businesses and companies to use gamification
technology to engage and reward them. These will improve their sense of control – relevant for
millennials who want to work with purpose. They suggest self-sufficient working methods like flexible
hours and working at home. Just last year, Congress has approved the law that regulates 4 x 11
scheduling where BPO agents can choose to work 11 hours per day, four times per week. Organizations
need to embrace new technology. Millennials do not like outdated software and techniques. They
expect higher expectations – 68% of them based on a study by Microsoft. This expectation needs to be
set at the beginning of onboarding process in call centers. Insufficient training could lead to higher
turnover rate among customers and employees. Millennials are hypersensitive to how quickly questions
are answered or issues are resolved. In a study by Cirrus, 72% of customers expect First Call Resolution
(FCR). They expect scripts that are dynamic and quick. They also expect consistency of service across
channels and geographies. Call center metrics need to be aligned to this expectation and sufficient
actions need to be done regularly with the employees to improve their competencies. Businesses and
BPO companies need to stay social. Both customers and agents go online to complain about bad service.
Organizations need to come up with ways to engage them positively. Another study showed that
millennial customers are more brand loyal – 64% reported they are more brand loyal than their parents.
However, their loyalty only come from personal and authentic experiences on more cohesive platforms
(Convoso, n. d.).

Digneo (n. d.) in an article projected that the focus on social media management tools will continue in
2018. Before 2000, the customer service industry was hugely dependent on websites and Interactive
Voice Response (IVR) for answering and transferring calls to the correct representative. Now, around
81% of the US population has at least one social media account which leads to a major shift in consumer
behavior. In their report, browsing social media has recently become third most popular online activity.
Businesses are starting to realize that social media is a game changer. It gathers for them a massive
amount of consumer data and feedback that help them analyze trends and innovate. Companies now
want to invest in real-time customer management solutions that will help gain first-hand product or
service insights, instead of just plain call centers. They turn these issues that they gather from customer
insights into new business solutions that will address issues in the future. The article also noted that
according to Credo Consulting, consumers’ demand for multi-channel communication have drastically
grown in the last five years which is consistent to the characteristics of the millennial generation
mentioned above. Examples of these channels include social media, live chat, etc. BPO service providers
are now investing in dedicated social media service teams and management devices to better address
this change. They found that customer issues are resolved more quickly when social media teams work
alongside front-line customer service representatives.

The millennial workforce is filing the hiring needs of the BPO industry. However, there is not a clear
strategy from the sector and the government to better understand the profile and needs of this
generation. There is a need to understand the motivation of this significant segment of the workforce to
better equip them and more effectively connect with the millennial customers as well.

In a press release from the NEDA in 2017, the agency was urging other government agencies and
partners to work towards maximizing nation’s demographic dividend. This is attained through the
transition that takes place when the birth and mortality rates decline, the government will spend lesser
on the needs of the youngest and the oldest segments in the country. This gives an opportunity for the
country to use its resources in economic development and family welfare investments. NEDA
Undersecretary for Planning and Policy, Rosemarie Edillon said in her speech during the second National
Family Planning Conference in Cebu City that there are strategies to attain demographic dividend that
have been added in the Philippine Development Plan (PDP) 2017-2022. Some of those include the full
and aggressive implementation of existing laws and policies, such as the Responsible Parenthood and
Reproductive Health Act (RA 10354), the Magna Carta for Women (RA 9710), the National Population
Policy (PD 79, s. 1972) and the carrying of the sustained universal healthcare program. According to
Edillon, the Philippines and Thailand had roughly similar growth rates back in 1975. But Thailand
addressed that issue and is now at an average of 1.6 only (NEDA, 2017).

Part of the focus items that the IBPAP’s Technical Working Group based on the PH IT-BPM Roadmap
2022 lists down the High Impact Programs (HIPs) to address concerns on human capital. As shown on
the roadmap’s website, the availability of the right talent is particularly important in the IT-BPM sector
where service output largely depends on the quality of its human capital. They believe that “Human
Capital Availability” is the most important differentiator when potential investors choose their
outsourcing destinations. There is an urgent need to attract more educated workforce in joining the BPO
industry improve their readiness by establishing a training and skills acquisition environment. In order to
accomplish this, there needs to be a stronger coordination between the industry and the academe. They
laid out a number of action items to address this need. First, they recommend building an industry-led
talent acquisition ecosystem, career path, skill-mapping and advocacy to address the concern on supply
of talent. Second, they suggest to create higher quality skill development programs. The Service
Management Program (SMP) has made education more accessible to more individuals. Graduates of this
program now have access to industry-specific skills development and training. Third, they recommend to
enhance the SMP to become SMP+ targeting specific subsectors and upskilling to middle and high-skilled
job development. The Service Management Program was designed to train upcoming graduates with
basic skills needed for the IT-BMP industry. In order to upgrade the output of the SMP graduates, there
must be improvement through specialized content; and stronger industry-academe collaboration in
developing the curriculum, materials and assessment. Fourth, they suggest to build a more sustainable
long-term funding mechanism to implement activities for human capital development. They plan to
expand the funding network to multilateral groups, government agencies and international industry
chambers as well. Finally, they recommend to initiate a national campaign to enhance English
proficiency from the early education, near-hire groups and the existing workforce. They believe that
while the country’s proficiency on the English language is a strength of IT-BPM industry, there are still
important areas for important to be truly globally competitive (IBPAP, n.d).

In a report by ABS-CBN News, BPO employees have started upgrading their skills for to address the
growing use of artificial intelligence, according to Jay Santisteban, Operations Director of the Contact
Center Association of the Philippines (CCAP). He added that call center agents are being trained for
higher-paying jobs that require critical thinking and more complex decision making. CCAP shared that
tasks that can be automated are expected to be reduced by 28 percent in the next six years. However,
middle and high-skill tasks that require experience are seen to grow 7 percent and 48 percent,
respectively, during the same period (Vibar, 2017).

C. technological developments

There have been massive advances in technology which are hugely driven by the millennial customer
and workforce. These are also shaping the way the BPO industry worldwide is being managed. Digneo
(n. d.) in this article, projects that the emergence of new technologies will continue as one of the major
trends for the business process outsourcing industry in 2018. Some of these new technologies include
cloud computing, automation, robotics, mobility, big data, digital supply chain, and social media (Galolo,
2017). Simpler tasks that are outsourced are now being addressed by robotic process automation (RPA).
Examples of these low-skill tasks include data entry, basic account inquiries, simple billing questions, etc.
Businesses are leveraging on this technology to increase savings and improve efficiency. Business
processes now focus on more complex jobs to be done. Companies can also decide to get these new
technologies or build them on their own. The BPO companies should be able to provide more cost-
effective solutions to their clients in order for them to continue the partnership. This could be a threat
to the BPO service providers but can also present an opportunity if they are able to upskill their
workforce to support middle and high-skill tasks. The article projects that around 700 thousand medium
and high skill jobs will be created by 2022. There is growing call to action to the industry and the
government agencies in addressing this important factor which could have a huge impact to the BPO
workforce.

Another growing trend in technology is the use of social media management tools. As mentioned above,
a good majority of the US population has at least one social media account and spend a lot of their time
browsing online. Companies are now leveraging on this technology by making their presence on multiple
social media platforms more cohesive and appealing to the millennial customers (Digneo, n. d.). The
latest 2018 Global Digital Suite report from We are Social and Hootsuite shows that 4 billion people in
the world are now using the internet. According to the report, more affordable smart devices and
cheaper mobile data plans drive the growth of internet users. More than 3 billion people worldwide are
using social media and are accessing them using their mobile devices (Kemp, 2018). To provide a
perspective on a global scale, the total world population in 2018 is 7.5 billion. Over half that (53 percent)
are internet users. Close to half of that population (42 percent) are active social media users, 68 percent
are unique mobile users and 39 percent are active mobile social users. In terms of global digital growth,
active mobile social users have grown 14 percent since 2007. Overall, the report shared that 2018
results tell us that businesses are now starting to quantify return of investment from social media;
customers are trusting more social communities over traditional channels; and a growing understanding
of the influence and impact of artificial intelligence and social data from analytics that can now be
gathered from new technologies (Kemp, 2018).

The following are comparative results from the report between the United States where the customers
are based from; and the Philippines where the workforce come from against a few categories. In terms
of time spent on the internet per day, the Philippines got 9 hours while the US got 6 hours. When asked
if new technologies offer more opportunities than risks, 74 percent agreed in the Philippines and 54
percent in the US. The Philippines ranked first globally in terms of time spent on social media (3 hours
and 57 minutes) and the US at 24th place (2 hours 1 minute). In terms of social media penetration, the
Philippines ranked 15th place at 59 percent and the US at 12th place at 61 percent versus only 39 percent
of world average. Globally, 17 percent of the mobile users make online payments and purchases. In
terms of ecommerce penetration, the US on is 5th place (69 percent) and the Philippines at 33rd place at
39 percent (Kemp, 2018).

Based on their results, they predict that direct messaging will be increasingly used which companies can
leverage for their brand’s improved transparency. They believe that social commerce will grow
massively in the next few years with more influence coming from the brand’s “community” as
consumers become contributors. Video chat, augmented interactions, and real-world integration are
will be used increasingly as mobile users engage in more active conversations. In terms of social
commerce, they believe that companies can enhance customer experience by adding shoppable ads,
messenger support and social payments; as well as integrating an omnichannel experience with physical
stores (Kemp, 2018).

Cloud computing is another emerging technological trend that Digneo (n. d) projects to continue in
2018. More companies are now adopting to this technology which allows virtual storage and address
limited space, budget and resources. According to a study by Rightscale, around 95% of small and
medium-sized businesses (SMBs) have adopted to cloud technologies and outsource part of their
process to companies. The standardized system between the BPO company and the client and the
availability of more storage improve the companies’ business continuity. Cloud computing technologies
increase the companies’ resilience to risks, improve data security; and simplify data administration in
multiple locations as well as access to remote teams. Cloud computing will become more mature and
mainstream as it provides a cost-effective alternative to companies (Digneo, n. d.). BPO companies need
to invest more in this technology to better support their clients and acquire headcount from the more
complex work that this technology may require.

The Chief Delivery Officer at Sutherland Global Services, Rajneesh Tiwary, believes that the strength of
the Filipino workforce on English proficiency may no longer matter a few years from now as this could
be diluted by Artificial Intelligence (AI)-powered technologies. AI can collect a huge amount of data in
significantly lower period of time and predict outcomes for a certain business process or service.
According to Rey Untal, President and Chief Executive Office of IBPAP, AI is expected to replace 40,000
to 50,000 low-skilled jobs or those tasks that are process-driven in the next five years. According to
IBPAP, contact centers comprise the majority of the country’s BPO industry and account to 12.6 percent
of the global BPO market. It adds that the US remains to have the biggest share for the industry but
demands for BPO services from Australia, New Zealand and Europe are growing. The estimated share of
the Philippines to the global outsourcing pie is $250 billion by 2022. They also project for mid and high-
skilled jobs or those that require specialized expertise and abstract thinking to increase with an
estimated BPO sector headcount of 1.8 million by 2022 (Lema, 2017).

In the latest world ranking of Tholons on “Top Outsourcing Cities”, Cebu City is no longer part of the top
ten list. Melanie Ng, President of the Cebu Chamber of Commerce and Industry (CCCI), shared that the
city’s lower ranking is an indicator that they need to build stronger initiatives that promote digital
technology and innovation. She committed to collaborate more with the government agencies and align
their efforts with those of the Cebu Innovation Council and the IBPAP. On the same report from Tholons,
it noted that the Philippines placed third among Top 50 Digital Nations, next to India and China. It noted
the strengths of the Philippines which include expertise in customer service with the young workforce
that is proficient in English on top of its affinity to western culture. However, it also warned the country
of its vulnerability due to the massive advancements in technology which the industry and the
government need to address with a sense of urgency. The industry needs to build a clear action plan
that will upskill its workforce to counter the impact of digital disruption (Galolo, 2017).

The Technical Working Group of IBPAP has outlined High Impact Programs to address the advancements
in technology. They are aware that the evolution of technology drives transformation of the BPO
industry and its workforce. They believe that a more integrated approach in implementing the actions
will drive better support from all stakeholders. The IBPAP aims to position the Philippines as a
technology-enabled hub to attract high value-add services. This requires entry of specialized high-skilled
individuals into the workforce on top of upskilling the existing ones. They acknowledge that a
strengthened focus on Science, Technology, Engineering, and Mathematics (STEM) is needed so a
framework should be created to enforce a national advocacy. They also plan to establish a High Entry
Placement Program (HEPP) that aims to train graduates on value-added work. The objective is to
provide them with special training that will equip them the skills to support middle and high-skill jobs
and increase their chance of getting hired. In addition, they plan to establish Higher Education
Technology Consortiums (HETCs) to build a group of high-skilled specialists. These specialists will take
the lead in developing skills involving new technologies like Internet of Things, business analytics,
software engineering, big data analytics and the rest of the technologies mentioned above. Finally, they
will establish a “future-ready” program specialized for BPO industry which aims to upskill existing
workforce with advanced skills in emerging areas like supply chain optimization, data visualizations, and
augmented reality (IBPAP, n. d.).

In a report by ABS-CBN News, an industry study by Accenture proves that business profitability can be
improved by successfully integrating human and artificial intelligence capabilities in the BPO industry.
The report shared that automation in areas including financial services, manufacturing, and information
and communication may result to 38 percent increase in profitability by the year 2035 and result in $14
trillion worth of industry output. It encourages businesses to aggressively develop their strategies to
address impact of Artificial Intelligence (AI). The organization’s Research Managing Director added that
leveraging on business process that integrate automation and other innovations in AI with the
workforce will generate longer-term profitability of companies and economic growth. Founder and CEO
of AI Pros, George Yang, said that AI can also be a solution if businesses see it as the problem. He added
that this should not be a concern to the BPO industry because the competition will be among AI
applications (Fenol, 2018).
In another report, COO of Sitel, Craig Raines, believes that in the long run, it is the ability to integrate
human touch that will make the businesses more profitable. He believes that the focus should be on
how to drive better customer experience by resolving their issues. He agreed that that BPO workforce
should be upskilled to with alongside AI solutions. He noted that initial customer interactions can be
cared for by robots and human agents may only come in the process if there are more complicated
issues that need to be fixed. He added that while millennials prefer to use mobile apps, they will need to
communicate with call center agents at some point. Humans can understand context and can go an
extra mile, unlike machines or robots. Raines said that emotion will be the primary value-add and
human connection will be the main differentiator of a BPO company. He doesn’t believe that
automation and AI will eradicate the need for human experience. However, he also urged the industry
to move more quickely in adapting to this new perspective and by looking through the customer journey
more deeply (Vibar, 2017).

D. political, legal, government aspects

A number of laws and projects have been implemented since the start of the Duterte administration
that will continue to have an impact to the BPO industry in the country.

Beginning July 2017, the Regional Offices of the National Economic and Development Authority (NEDA)
launched their respective Regional Development Plans (RDP) 2017-2022. The RDPs are patterned to the
national plan or Philippine Development Plan (PDP), which is based on Duterte administration’s 10-point
socioeconomic agenda. There are ongoing projects in Central Visayas which are on different stages of
implementation. NEDA Region VII said that these projects are consistent to the plan of the
administration to empower the regions outside of Metro Manila by improving their infrastructure.
Metron Cebu is identified as the metropolitan center for the region an Metro Tagbilaran as the regional
center. By 2022, it aims to reduce poverty incidence among families to 17.6 percent and cut
unemployment rate to 3-4 percent (NEDA, 2017). The Cebu Bus Rapid Transit (BRT) project had been
approved by the NEDA Board but the construction has been delayed due to the proposal of Michael
Dino, Presidential Assistant for Visayas. Socioeconomic Planning Secretary, Ernesto Pernia, only learned
in a subsequent meeting in 2017 that Dino’s proposal was a hybrid LRT-Subway project. The proposal
has a LRT lien that starts from South Cebu and transitions into a subway line entering Cebu City. Then it
shifts to a LRT line again as it enters north of Cebu City. Pernia liked this proposal better considering the
circumstances of the city but informed Dino that this will need to go through a proposal and approval
process. He also said that he alone cannot put the Cebu BRT project on hold (NEDA, 2017). Cebu City
Mayor, Tomas Osmena, continues to rally against the delay and assures the public that the BRT project
is what the city truly needs based on their study. Last October 2017, NEDA confirmed that the
government has formed an inter-agency task force whose mandate is to create policies and process that
will address gaps and delays in the infrastructure development of the country (NEDA, 2017).
Improvements in the infrastructure in the region will drive more businesses to invest especially in the
BPO industry.

In another press release by NEDA, they suggested on creating a separate roadmap which should still be
aligned to the PDP, should the government pursue federalism. NEDA Undersecretary, Rosemarie Edillon
expressed some concerns if the transition to the federal type of government pushes through. She said
that there might be challenges in the implementation considering the peace and security issues of the
country on top of its susceptibility to natural disasters. She added that the government should be able to
efficiently gather resources to help a state in emergency situations. The military force should also be
flexible and quick in moving from state to state. There could also be issues in revenue collection as
transfer pricing of goods and services could change in each state. She also shared that the federal form
of government may drive states to “race to the bottom” by offering attractive fiscal incentives in order
to attract more investors. The cost of doing business can also skyrocket in the event states will quickly
make actions to impose more regulations in order to increase their fiscal resources (NEDA, 2017). The
proposed roadmap should be helpful for all sectors as they can review and prepare for the changes
before they are implemented.

In December 2017, President Duterte signed the first package of the Tax Reform for Acceleration and
Inclusion (TRAIN) bill. NEDA said that this is the first part of the government’s proposed Comprehensive
Tax Reform Program (CTRP). The program is expected to gather the additional revenue to fund the
nation’s projects like the “Build, Build, Build” program and other investment requirements. Secretary
Pernia said that the implementation of TRAIN is important as it will increase the spending capacity of the
average working Filipino with more take home pay; fund the government’s programs for human capital
and infrastructure; and boost the revenue-to-GDP ratio of the country. TRAIN exempts those with an
annual income of P250,000 and below from personal income tax. It also adjusts excise tax on
automobiles and fuels (NEDA, 2018). This has been seen a positive development by the majority of the
BPO workforce as most of them are now exempted from paying the income tax and is expected to drive
better retention in the industry. In NEDA’s analysis, with the CTRP, real gross domestic product (GDP)
level will be higher by 0.5 to 1.1 percent by year 2022. Pernia said that the passing of TRAIN and the
2018 General Appropriations Act are in line with the development strategies in the PDP. That plan lists
down the investment priorities which include tax reform, infrastructure development, and human
capital (NEDA, 2018). Just this year, President Duterte signed the Free Tuition Law that lists a total of
112 state universities and colleges and 78 local universities and colleges across the country (CNN
Philippines, 2018). This will drive more college graduates who will be joining the BPO workforce.
However, there are concerns that some businessmen express as regards the changes in the tax
incentives under Package 2 of TRAIN. According to the report by Manila Bulletin, it is causing uncertainty
for some companies. According to the Executive Director of the American Chamber of Commerce of the
Philippines (AmCham), Ebb Hinchliffe, TRAIN 2 is causing concerns in the business sector because the
government is changing rules midstream. Companies now have to wait and see until this law is passed.
He added that the move to impeach the Supreme Court Justice, the efforts to change the Constitution to
federalism, on top of Trump’s policies add to the uneasiness (Magkilat, 2018).

Currently, the industry enjoys incentives from PEZA which includes income tax holiday with a maximum
of 8 years and a perpetual 5 percent tax on gross income earned (GIE). They also have zero VAT on local
purchases and up to 30 percent of local sales. However, the latest draft of the Department of Finance
(DOF) on TRAIN 2 have notable changes. The second package is supposed to reduce corporate income
tax (CIT) rates and modernize the incentives given to investors. The recommendation is to reduce the
CIT from 30 percent to 25 percent. According to former president of IBPAP, Jose Mari Mercado, the
current tax incentives for the BPO industry is one of the reasons why companies put up their business in
the country, among other factors. He expressed that investors might decide to go somewhere else
because of this. Tax expert, Atty. Benedicta Du-Baladad, shared that changing the rules after investors
have decided to invest will be alarming and will cause fear to the businessmen. She recommended for
the government to set a fixed CIT which will be based on regional average so investors can plan and
make decisions accordingly (Magkilat, 2018).

In another report by Manila Bulletin, Senator Paolo Aquino IV who is the chairman on the Senate
Committee on Science and Technology plans to look further into the effect of TRAIN on the BPO sector.
Specifically, he will look into Duterte’s decision to veto a special tax rate provision for the sector and
threats of investors’ plan to relocate or change destination due to the new tax reform. Aquino
supported to keep the special tax rate for regional operating headquarters and regional headquarters
(ROHQs/RHQs) during its period of amendments (Torregoza, 2018). The DOF expressed that the veto
affecting the BPO sector only affects managers and above in some companies and doesn’t impact the
majority of the workforce.

In terms of international policies, the current administration has laid out plans to ensure that the
Philippines continue to maximize its potential. The NEDA expects that ASEAN and the country’s
integration to the larger Asia-Pacific region will further improve the nation’s trade performance. Pernia
noted that the proposed Regional Comprehensive Economic Partnership (RCEP) agreement will provide
opportunities for all economies involved (NEDA, 2017). The administration is also working to strengthen
the relations with the United States. After Trump became US President in 2016, many BPO companies
grew concerned as the new administration can have an impact to the trade relations and regulations.
Companies were initially unsure due to Trump’s “America First” policy. This prompted the return of the
anti-outsourcing bill in Congress despite it failing during the past administration. It caused apprehension
in the Philippines especially the country just earned a $25 billion in BPO revenue from the US 9 (Digneo,
n. d.). However, in another report, the US Ambassador to the Philippines, Sung Kim said that the BPO
industry in the Philippines will continue to boost in spite of Trump’s proposed policies. Kim told the
members of the American Chamber of Commerce in Cebu that it was too early to know how Trump’s
new policies will affect the BPO industry in the country especially that those have not bee implemented
yet. He highlighted how the US companies are satisfied with their operations in the Philippines due to its
vibrant workforce and the strong cultural affinity between both countries. Kim noted that automation is
more of a threat to the BPO industry than the policies of Trump. This is true not only in the country but
around the world. Leaders who joined the meeting with Kim agreed that there should be more
investment in upskilling the workforce with higher value skills which are harder for automation to
replace. Kim assured the members of AmCham in Cebu that the US will continue to work with the
Philippines to reduce trade barriers, streamline business regulations and increase foreign investments
(Silva, 2017).

The Technical Working Group of the IBPAP has also outlined High Impact Programs to address the need
on government support on its PH IT-BPM Roadmap 2022. The believe that government support is
particularly helpful in the areas of education, cost of doing business, investment incentives, regulatory
environment and overall country branding. Their recommendations include providing competitive
incentives to all investors through an economic policy; creation of an evidence-based evaluation of
incentives through a comprehensive industry benchmarking; modernization of policies and regulation
that support global trends in the industry like flexible working arrangements. Work at home is becoming
more adopted by IT-BPM companies worldwide and is gradually practiced in the Philippines. IBPAP
recommends for working offsite to be introduced with its legal and fiscal considerations (IBPAP, n. d.).
In a press release by the National Economic and Development Authority, the government is working to
further enhance the ease of doing business in the Philippines. Secretary Pernia assured the business
sector that the government is working to make significant reforms to improve the business climate in
the country. NEDA is now looking at establishing a one-stop-shop or co-location of government agencies
to facilitate faster processing of permits. Businesses will only have to submit all required documents to
one government representative or office who will handle all the required process from there. The
country placed 113th in the World Bank Group’s 2018 ranking of 190 economies on its annual ease of
doing business report. It ranked 99th place in the previous year. However, it improved its score from
58.32 last year to 58.74 this year. Pernia added that the President has issued Executive Order 27 which
mandated all government agencies at the local and national levels, including GOCCs, to follow what is
provided for in the Philippine Development Plan and to even adjust their budget and programs to
achieve the objectives of the PDP. There are also legislative forms that are being worked on to improve
the ease of doing business in the country with the Expanded Anti-Red Tape expected to be passed this
year. In addition, the government is pushing to include the amendment of the Local Government Code
to address the challenges in local service delivery and the passage of E-government Act to enable
interoperability of government data and processes to increase efficiency and economy in the delivery of
services (NEDA, 2017).

E. ecological aspects

There are not much ecological factors that directly affect the BPO industry in the Philippines. But the
industry is supportive of government programs that help care for the environment. Most BPO
companies also advocate for programs that help reduce waste and improve readiness for natural
disasters. In a press release by The National Economic and Development Authority, the agency
highlighted the significance of disaster preparedness as it joined in the Nationwide Earthquake Drill
(NSED) last in June 2017. The NSED aims to promote implementation of regular exercises in time of
disasters and calamities. Jose Miguel Dela Rosa, NEDA Undersecretary, highlighted the need to expand
programs and improve resiliency especially of local communities. Dela Rosa is the chair of the NEDA
Disaster Risk Reduction and Management (DRRM) Office. He added that in order to ensure the survival
of Filipinos in times of calamities, the country must sustain and improve on efforts that support climate
change mitigation and disaster risk reduction and management. He also noted that programs on climate
change and DRRM are important strategies in the PDP (NEDA, 2017).

The NEDA also pushed for more compelling policies for environmental protection. Mercedita Sombilla,
NEDA Assistant Secretary for Regional Development, said that all stakeholders in both the private and
public sectors should work in executing the strategies aligned with the PDP to protect fragile ecosystems
and to rehabilitate degraded natural resources. Sombilla noted that improving ecological integrity and
environmental health are critical to support the economic growth of the country (NEDA, 2017).

In another press release, the National Economic and Development Authority says that the Philippine
government aims to implement measures to fortify trade ties with the United States. Socioeconomic
Planning Secretary Ernesto Pernia highlighted the intention of the Philippines to keep its current trade
with the United States positive in a meeting with the US-PH Society Board of Directors. The meeting
provided an opportunity to promote trade and investment ties after the meeting of President Rodrigo
Duterte and Donald Trump in November 2017. He added that there is a need to discuss and explore free
trade agreements (FTA) with the U.S. to foster investment opportunities (NEDA, 2018).

In March 2018 report by Business Mirror, the Bangko Sentral ng Pilipinas (BSP) reported that Foreign
Direct Investments (FDI) in 2017 reached $10.5 billion, 21.4 percent higher than the previous year’s
$8.28 billion. This performance is reflective of the sustained investor confidence in the country’s growth
opportunity. It also confirmed that all FDI components registered increases last year (NEDA, 2018).

In another report, demand for office space by the business process outsourcing (BPO) industry is
expected to grow amid worries over the “America First” policy of President Trump, according to Pinnacle
Real Estate Consulting Services. The firm believes that the business decision to outsource services may
still be more efficient versus outsourcing manufacturing that may experience more additional taxes
from the US government. They observe that when US businesses decide to outsource the service
component of their company, the Philippines remains their top option. The report noted that the Cebu
office market follows the country’s trend where the BPO industry heavily drives the market (Lorenciana,
2017).

F. other external factors that may be more directly relevant to the BPO industry.

There are other external factors that are directly relevant to the BPO industry in the Philippines. One of
them is the international perception of the Philippine as an ideal outsourcing destination. Based on the
latest ranking of Tholons, Cebu City is no longer in the Top 10 Global Destinations for Outsourcing. Cebu
ranked 12th which is five notches below it previous ranking. The city was on the 8th spot for the last three
years. Tholons explained that the report for that year considered new factors as key components of the
index. They include startup ecosystem, innovation, and digital transformation. This was the way the firm
wanted to present how digital innovation is transforming the industry. They highlighted how new
technologies like customer relationship management and self service is radically reducing the need for
manpower. It added the while cities are coping with these changes, there are growing efforts for
businesses to shift and adjust to the massive innovation. Tholons added that traditional business model
will no longer work versus the digital transformation. It warned that the cities who are currently
engaged in efforts to adapt to digital innovation will take the lead and will capture the market
(Destacamento, 2017). Digneo in his article shared that new outsourcing destinations will emerge in
2018. Investors are searching for alternative cost-effective locations. These countries include Bulgaria,
Romania, Egypt, Mexico and Colombia. These countries have started to show their strengths and are
working on getting the businesses from the investors through improved internet connection, lower
salary, fiscal incentives, good infrastructure, and a skilled workforce with strong background in Science
and Technology.

However, the Cebu BPO office market doesn’t seem to be affected by the delisting of Cebu from the
latest ranking. Based on the assessment of Colliers International Philippines, Cebu still recorded strong
numbers in the last report in 2017. It said that Cebu remained resilient amid worries that concern the
BPO sector. They anticipate growth in the next three years. They project an addition of about 500,000
square meters of office space in the Cebu which will bring the total inventory to 1.4 million square
meters by the year 2020 but will be concentrated in Cebu IT Park and Cebu Business Park (Galolo, 2017).
There is a unique trend that is affecting the BPO industry which is hugely driven by the millennial
customers. Startups are becoming BPO customers. There has been a huge increase in the number of
startup companies in the last few years. These businesses are challenged to keep afloat with very limited
resources and time constraints. In order to reduce labor cost, these companies look overseas to hire
talent. Examples of these companies which used talent outsourcing include Slack and Klout. Startups
and BPO companies have become partners and Digneo (n. d.) projects for this trend to grow in 2018.
BPO companies support startups in hiring talent at reduced costs and completing tedious tasks like
recruitment. This partnership is advantageous for startup businesses as they improve their quality of
work, leverage on new technologies and generate more revenue. In 2014, around $462 million was
invested by startups into the BPO industry (Digneo, n. d).

The IBPAP also aims to address is development of SMES and Startups. They believe that SMEs play a
significant role in the economy. The same is true in the Philippines. The SMEs and startup ecosystem
provides a great breeding ground for new and innovative enterprises and developing new sectors. They
plan to encourage and incent establishment of incubation centers specific to the industry. They will also
encourage for entrepreneurship programs to be incorporated in the education system of the country.
Introducing it early one will be more helpful (IBPAP, n. d.).

The IBPAP shared their Philippine IT-BPM Roadmap 2022 with the theme “Accelerate PH, Future Ready”.
On its website, it said that the roadmap is all about accelerating the growth of the PH IT-BPM industry
through strengthening domain expertise and capabilities in the emerging sectors, leveraging
advancements in technology and ensuring that the Filipino talent is future-ready. The new roadmap
provides guidance to the different subsectors in the Philippines which include Animation and Game
Development, Contact Center and BPO, Health Information Management, IT and Software
Development, and Global In-House Centers operations. The Roadmap targets for 2022 include 1.8
million direct jobs; 7.6 million direct and indirect IT-BPM employment; 500,000 jobs outside of NCR; 73%
mid to high-value jobs; $40 billion in revenue; and 15% Global IT-BPM market share. Technical working
groups were formed to provide direction in developing and in implementing various High Impact
Programs (HIPs) identified in the roadmap (IBPAP, n.d.)

The Technical Working Group of the IBPAP has outlined programs to address issues on inclusive growth.
They believe that expansion of the BPO sector to regions outside of Metro Manila will benefit the entire
economy. They recommend to improve the Next Wave Cities Program by providing more
comprehensive information through digital took kits and shared to ICT councils. Next, they plan to
empower the ICT councils to facilitate growth of the sector. Finally, they plan to update the National
Disaster Risk Education and Management Plan (NDRRMP) with focus on the IT-BPM industry. This will
ensure business continuity and reduce losses from disasters (IBPAP, n.d).

Based on the latest data from the Department of Labor and Employment (DOLE) the BPO industry is still
the highest job generating sector in the country based on their job applicant system online. In 2017, the
industry posted 133,300 call center positions (Patinio, 2017).

Another focus area that the IBPAP aims to address is the country competitiveness. They plan to sustain
our current inherent strengths but need to work on a new brand that represents the country’s
compelling competitive advantages especially in responding to the growing demand for innovation
driven by digital disruption. They plan to develop a campaign strategy with a new brand for the country
as a destination of choice for IT-BPM services. Next, they recommend to form a government-industry
council to represent the industry and push the agenda of the sector (IBPAP, n.d.).

But it doesn’t hurt to work alongside another very competitive country – India. In a report by Malaya,
the IT-BPM groups in the Philippines and India have joined hands to further strengthen their lead in this
sector. The IBPAP aims for more collaborate programs with its Indian counterpart (NASSCOM) so both
groups can jointly address emerging trends and opportunities of the sector. The joint council will talk
about actions and share best practices (Malaya, 2018).

In a report by Tech and Lifestyle Journal, the call center in the Philippines is expected to stay as among
the strongest segments that contribute to the national economy despite the challenges. Based on their
observations, call center job opportunities still dominate the job vacancy posts online. The article noted
at least three factors that that keep the call center sector a strong contributor. First, there is a
worldwide industry shift from customer service to customer experience and based on the assessment of
a global consulting and research firm, Everest Group confirmed that the country is ready for this shift.
Second, there are new job opportunities as the industry is addressing ongoing shifts that are focusing on
technology and nature of service. This is according to Benedict Hernandez, Chairman of the Contact
Center Association of the Philippines (CCAP). Genpact Services LLC, a US-based BPO had started
uptraining its operations in the Philippines four years ago. Its Country Manager, Danilo Sebastian Reyes,
said that while English proficiency is an advantage, there are still skills needed to be enhanced toward a
more customer-focused orientation on service. Third, call centers boost property industry growth. In
2017, a total of 1.2 million square meters of office space was added to the land area occupied by call
centers nationwide. Sheila Lobien, Jones Lang LaSalle (JLL) Philippine Regional Director shared in
business forum that they saw the highest growth in terms of supply in 2017. Lobien also noted that the
country has the lowest office rental rates in all of Asia which presents the country as a cost-efficient site
for extended offices of global companies (Humarang, 2018).

Cebu City ranked 7th in the 2016 Tholon’s Top Outsourcing Destinations report. The report considered
Cebu as one of the country’s budding central business districts (CBD) where most BPO companies are
based due to its low rental rate, educated pool of talent, and a growing economy. In 2016, the BPO
industry in Cebu employs more than 120,000 individuals which is approximately 10 percent of the total
BPO employees in the country. The BPO industry in the Philippines grew by an annual average of 20
percent in the past ten years. Industry experts are projecting a growth range between 12 percent to 18
percent in the next five years. The forecasted BPO growth on a global scale is a steady six percent in the
coming years (Lorenciana, 2017).
 1. Translate the above in terms of what it meant for your business, identifying
opportunities and threats that may affect the following:
a. Market demand and opportunities –
https://psa.gov.ph/content/2014-annual-survey-philippine-business-and-industry-aspbi-
business-process-management-bpm

https://www.aseanbriefing.com/news/2017/04/17/business-process-outsourcing-
philippines.html

b. Types of products and services offered

c. Intensity of competition
d. Suppliers and distributors
e. Costs of doing business
f. Other aspects of the business

In another report by Business Mirror, online gaming is now being touted to be the next big business
process outsourcing (BPO) industry, according to the Ateneo Center for Economic Research and
Development (Acerd). Acerd Director Alvin P. Ang said in terms of real-estate demand in Metro Manila,
online gaming now accounts for 32 percent. The information technology-business process management
still accounts the lion’s share at 40 percent. Ang added these firms are considered Philippine Offshore
Gaming Operators (Pogos). They have sprouted in Quezon City, Manila, and Muntinlupa. These Pogos
are currently serving the Chinese market and Ang expects the trend to continue because of the size of
the market. “That’s something that you want to consider, how to diversify your BPOs in such a way that
you go for higher value sectors,” Ang said. Meanwhile, Socioeconomic Planning Secretary Ernesto M.
Pernia said diversifying and growing the BPO sector should come from the private sector. This is why
Pernia said the government is encouraging BPO firms to be more conscious of technological
advancements, especially now that artificial intelligence (AI) has entered the picture. In 2017 the United
Nations Conference on Trade and Development (Unctad) said some 85 percent of retail and 89 percent
of BPO workers are at risk of automation. Unctad said that, while increased digitalization will create new
jobs, there will be occupations that will disappear as a result of automation. Unctad added increased
digitalization will introduce four changes—job creation, job destruction, job changes and job shifts. New
jobs will stem from the production of new goods and services, such as 3D printing, software, app
development and AI. The report stated that conditions of work will be affected, such as benefits
extended to workers that allow more flexibility for people in remote locations and people with
disabilities. Unctad also said new skills and education adjustments will be required particularly those
linked to digital skills. Workers will also be required to have strong cognitive, adaptive and creative skills
(Ordinario, 2018).

B. Industry and Competitor Analysis

1. Analyze the industry’s situation and prospects by looking into the following:
a. Market size and/or growth rate and stage in the growth cycle
 b. Number of players and their relative sizes; market share analysis
c. Market aspects (products or service, price, promotion, and channels of
distribution)
d. Buyer/Customer profile
e. Factors affecting costs of doing business
f. Operations/Production aspects
g. Technology developments
h. Industry financial analysis (growth, profitability, liquidity, leverage, efficiency)
i. Problems in the industry
j. Critical success factors in the industry
2. Analyze your industry using Porter’s Five Forces Framework of competitive analysis and
based on the preceding analysis, state your conclusion for each force.
3. Do a competitor analysis:
a. Identify your major competitors and provide relevant information for each, e.g.
revenue size, financial health, market share, strategies, etc. If there are too
many, select and focus only on a few (about two or three) and explain why you
chose to focus on these competitors.
b. Evaluate your competitors and your company vis-à-vis the critical success
factors identified earlier. Do a Competitive Profile Matrix and explain the
ratings.
C. Summary and Conclusion
1. Using the results of your general environment and industry analyses, identify and
summarize the major opportunities and threats.
2. Use the EFE matrix tool to assess how well your company is responding to the
opportunities and threats in the environment. Make sure that the factors included in
your EFE have been discussed in the external and industry analyses and the factors you
discussed in your analyses should be reflected in your EFE for consistency. Explain your
weights and ratings.
3. Draw your conclusion about the industry’s overall prospects and industry attractiveness.
4. Make a conclusion about your current company’s competitive position or business
strength in the industry, e.g., very strong, strong, middle-ground, weak.
5. Identify key strategic issues related to the external environment that will have a
significant impact on your business.