Dr Balaji Sadasivan Senior Minister of State for Information, Communications & The Arts and Health Keynote Address at the "Deliver Your Business, The Trusted Way" Seminar, Raffles City Convention Centre
Dr Balaji Sadasivan
Senior Minister of State for Information, Communications & the Arts and Health
Keynote Address at the "Deliver Your Business, The Trusted Way" Seminar, Raffles City Convention Centre
Singapore, 02 December 2004
Ladies and Gentlemen,
A very good morning to all of you.
- I am very happy to be here this morning among key decision-makers and IT leaders who play a pivotal role in developing Singapore into an attractive place for businesses.
BPO - The Next 'Big Thing'
- Business process outsourcing or BPO in short, is seen today as the services industry of the future. India, for instance, is regarded by many as "The BPO country". So what does this mega trend mean to Singapore and where do we fit in this global outsourcing phenomenon?
- BPO is not new. It is merely globalisation at work - doing a task in a country that offers more competitive advantage. Yet, it is also new, in that globalisation in services is a more recent phenomenon. Cheaper cost of communications and the availability of tools and resources to manage across geographical boundaries have allowed BPO to take off.
BPO - What Role Does Singapore Play?
- Singapore has always benefited from outsourcing. We have always been a regional hub where MNCs consolidate their regional operations and deliver services to their subsidiaries in the region. These operations include customer and technical support and procurement. Singapore can continue to be a key player on the BPO scene, not by competing with countries like India, but by focusing on niches where our strengths lie.
- Global companies have had a lot of experience of manufacturing their products overseas. They have in place stringent product specifications and quality assurance processes to ensure that products carrying their brands live up to their customers' expectations.
- In services, this quality assurance is a more complex business. Services, by their nature, require direct interaction between the customer and the service-provider. Before a company decides to outsource its back-office functions, it has to satisfy itself on two key points. The first is the issue of trust. Can it trust its BPO partner to keep customer information confidential? Does the BPO partner operate in an environment where there is legal protection against any wrongdoing? The second is cost. Not any one cost component, but the totality of labour, rental, infrastructure and other costs, relative to capabilities.
- Singapore can carve a specific niche for itself. First, Singapore is widely seen as a trusted business hub. The Business Economic Risk Intelligence (BERI) and the Institute for Management Development have both ranked Singapore as the lowest risk country in Asia Pacific1. The World Economic Forum has also ranked Singapore as the top country in Asia for protection of intellectual property2. Not surprisingly, major foreign banks such as Citigroup have chosen Singapore to be their Regional Processing Centre for operations such as cash and securities settlement and claims processing. IBM has also used Singapore as the global procurement hub by setting up a Singapore Trading Centre. These MNCs have chosen to locate their operations in Singapore because we offer a highly secured and stable business environment.
- Second, Singapore offers good value for money for mission-critical functions requiring reliable infrastructure and high skills level. BASF, for instance, runs its Asia Pacific Trading Centre out of Singapore. ERP software provider, SAP, also locates its global shared services operations in Singapore where it fulfils the IT support, HR and Finance operations for more than 9,500 installations across the Asia Pacific region.
- Third, with our excellent business links with the region and beyond, Singapore can leverage on the complementary strengths of other countries to deliver a compelling total package. Singapore's ability in bringing together commercial partners from India and Singapore is illustrated in the Frontline and ACCEL ICIM alliance. This alliance allows Frontline to leverage on ACCEL ICIM's outsourcing capabilities and resources to scale up Frontline's BPO operations quickly, and to deliver BPO solutions in a more cost-effective manner.
Business Continuity / Disaster Recovery - An Example of BPO activity in Singapore
- One example of a niche in the BPO space where Singapore's strength lies is in our Business Continuity & Disaster Recovery (BC/DR) industry. Singapore is largely free from natural disasters, intrinsically making us an ideal outsourcing location for BC/DR services. We have strengthened this intrinsic advantage by building and institutionalising world-class competencies in this area.
- I am pleased to announce that IDA, in close-participation with the industry and the IT standards committee (ITSC), has established theworld's first standard for Business Continuity and Disaster Recovery (BC/DR) service providers. Seven BC/DR service providers have recently been certified under the new Standard. They are: Hewlett Packard, IBM, NCS Pte Ltd, and Singapore Computer Systems for the full BC/DR Service Provider category; and Equinix, SingTel Expan and StarHub for the Disaster Recovery Facility category.
- The Standard specifies stringent requirements that BC/DR service providers must possess so that they can provide a 'trusted' operating environment and help companies secure and recover critical data in the face of catastrophic events. Not only will the standard provide assurance to end-customers and free their energy to focus on core competencies, but also, through periodic reviews, will help service providers to continuously upgrade their offerings - ensuring that individual service providers and the BC/DR industry as a whole remains a world leader.
- The establishment of the BC/DR industry standard is indeed a significant milestone to further cement Singapore's position as a trusted infocomm hub. It illustrates how Singapore can leverage on its intrinsic strengths and competencies to differentiate itself as a 'value-added' player in the BPO arena. Moving forward and to enable our local companies to plug into the growing global BPO market worth US$173billion3 in 2008, IDA has championed a multi-agency plan to develop similar strategic competitive advantages in various other areas.
IDA's Strategies to Promote Singapore's BPO Industry
- There are four key strategies to help us promote Singapore's BPO industry.
- First, attracting major suppliers and user companies to consider offshoring here. Free Trade Agreements with major markets and BPO providers will be leveraged, so that Singapore can benefit as an intermediary between the two parties. An example is the Singapore-US FTA. This allows for engagement of demand generated activities. Agencies like EDB and MAS will play lead roles here.
- Second, building capabilities so that local infocomm companies can compete for the BPO pie. IDA will build linkages with foreign BPO providers and help facilitate alliances between local companies and BPO providers in regional countries such as India and Philippines. Such alliances offer the advantage of helping local companies grow and compete against the bigger players in the field.
- Third, building strong supporting and related industries. We will continue to enhance Singapore's status as a telecom hub to support the growth and development of the BPO sector. We will also promote R&D in outsourcing technologies to retain high-value BPO activities in Singapore.
- Fourth, providing a conducive environment for shared services and BPO such as keeping costs competitive and ensuring the availability of skilled manpower.
- To promote the BPO industry, the IDA will set aside S$12 million to help local infocomm companies develop capabilities in the development and provision of high-end BPO services. Through IDA's industry assistance schemes, 1,000 infocomm professionals will be trained in BPO service provisions by 2006.
- To sum it all, we should capitalise on our strengths and work towards making Singapore a competitive and attractive place for high-end outsourcing processes. It is our hope to see more local infocomm companies acquire the capabilities to ride the outsourcing wave.
- On this note, I wish you a fruitful seminar.
Notes to Editor:
1 Source: The 2002 Country Risk (Political) - Global survey by BERI/IMD
2 Source: 2002 & 2003 Global Competitiveness Report, World Economic Forum
3 Estimate on global BPO market in 2008 is from Gartner