Philippines-based Bacnotan Consolidated Industries Inc. (BCII) is venturing into the country’s ’sunrise’ business process outsourcing (BPO) sector, through acquiring an 80% stake in One Animate Ltd, a Hong Kong company engaged in animation outsourcing services, for a total investment amount of US$6.73 million (P336 million).

One Animate owns 95% of Toon City Animation Inc., a 15-year old Manila-based animation studio whose clients include Walt Disney, Universal Studios, Nickelodeon and Warner Bros Animation. The firm provides 2D, Flash and 3D CGI animation services for various TV, direct to video and theater feature release production. Its portfolio includes the Tom and Jerry TV series, Kim Possible, Mickey Mouse Works and Teamo Supremo.

BCII, a member of the Phinma Group, is a listed holding company with diversified investments in steel, energy, mining, property, financial services and education. Earlier BCII had announced that it was entering the BPO business this year, leveraging on the company’s strengths in managing service enterprises and people, and because “it is an industry with a bright future for the Philippines”.

Philippines integrated media giant ABS-CBN Broadcasting Corp. announced a US$5 million investment in online social networking and blog service Multiply Inc. in exchange for a 5% stake. Under the agreement, ABS-CBN Global has the option to increase its holdings in Multiply to 10% during the two-year period following the initial purchase of shares.

Florida-based Multiply had received $21.6 million investment over three rounds from Point Judith Capital, Trans Cosmos and VantagePoint Venture Partners.

ABS-CBN’s Interactive head said that close to 3 million Filipinos worldwide used Multiply’s services, generating 400 million page views a month. The company’s long-term plans include more Internet advertising and launch of mobile services for site users in the Philippines.

According to Friendster, which claims to be Asia’s most popular online social network and four times bigger in the region than Multiply, there are 30 million Filipinos registered with their site and 24.3 million of them are active Friendster users, logging in at least once every 30 days.

Pune, second largest city in the state of Maharashtra and in close proximity to financial capital Mumbai, is set to join the ranks of 6 metropolitan cities in India, namely Delhi, Mumbai, Chennai, Kolkatta, Hyderabad and Bangalore.

A study by ASSOCHAM conducted in October this year, evaluated four upcoming tier II cities: Pune, Ahmedabad, Lucknow and Chandigarh as the most likely contenders for India’s 7th metro city and compared them on eight parameters that were considered metro requisites. Pune was ranked first on 5 of the parameters.

*Business Environment: Pune was viewed as the city with the most optimistic business outlook, followed by Chandigarh, Ahmedabad and Lucknow respectively.

Fast becoming a major industrial hub in India, Pune created 32.7% of total jobs tracked by ASSOCHAM for the period January to June 2008. The state government had also highlighted Maharashtra state as India’s most favourable investment destination based on the AT Kearney FDI Confidence Index Report.

*Employment Opportunities: Pune has been at the forefront of India’s IT/ITes sector, an important automobile manufacturing centre and fast progressing as a multimedia hub. Cummins, Thyssen-Krupp, IBM, Siemens, and EDS all have a major presence in Pune. The city hosts plants by Tata Motors, Daimler and Bajaj Automotive.

Volkswagen is investing 500 million euros ($632 million) on a new plant in Pune that will begin production in 2009, ahead of scheduled 2010, with an eventual capacity of 300,000 small cars a year. A number of animation companies (Big Animation, Anibrain, Krayon pictures, Jump Games) have also shifted base from Mumbai and Bangalore to Pune.

*Educational facilities - Dubbed ‘Oxford of the East’, Pune is home to 9 universities, 80-100 public and private institutes along with 6 government recognized R&D centres and 80.73% literacy rate. Next came Lucknow, Golden City of East, with 6 varsities, 5 qualified institutes and 9 R&D centres, Chandigarh and Ahmedabad.

*Real estate cost and availability: Pune has the highest property prices and population among the four cities, while Chandigarh is the next emerging real estate market. Lucknow came in last due to its time-consuming process for acquiring land.

*Infrastructure availability: Pune bagged top spot with 26 malls and multiplexes and 25 star category hotels, followed by Ahmedabad (25 malls & 17 star hotels), Chandigarh and Lucknow.

*Transportation facility: Pune needs to improve on its increasingly congested services (ranked 3rd). Pune reportedly has only 6% of its geographical area for a road transport system which supports a disproportionately high vehicle population due to a lack of efficient public transport conditions. Ahmedabad and Lucknow drew for first position on the connectivity parameter.

*Financial services: Lucknow grabbed first placing on the number and density of offices of scheduled commercial banks per population and transparency in trading systems, followed by Chandigarh, with both Pune and Ahmedabad tying for 3rd position.

*Social infrastructure: Refers to the presence of a qualified workforce, quality institutes and cost of living. Ahmedabad came in 1st with a literacy rate of 79.9% and its high-grade institutes, Indian Institute of Management (IIM), National Institute of Design (NID), National Institute of Fashion Technology (NIFT) and Entrepreneurship Development Institute of India (EDII). Lucknow was placed 2nd and both Pune and Chandigarh were assigned 3rd positions.

Overall, Ahmedabad was deemed the 2nd most promising metro city offering good infrastructure, facilities and connectivity. Lucknow was ranked 3rd as it needs to buck up on infrastructure, business environment and social infrastructure. Chandigarh, the smallest city among the four by area and population, was ranked last though it led in financial services and business environment.

Business Times - Asia will take a substantial hit from slowing demand for its exports as the global downturn unfolds but will remain the world’s most economically-dynamic region, an Asian Development Bank (ADB) economist said yesterday.

‘The growth rate will decline but Asia will maintain the highest growth in the world,’ Jong-Hwa Lee, head of the Manila-based development lender’s office of regional economic integration, told reporters.

Mr Lee would not reveal the bank’s 2009 forecast or for individual countries ahead of their scheduled release early next month. He said that Asia excluding Japan grew about 9 per cent last year and that there are expectations for about 7.5 per cent growth this year.

‘Everyone now understands external demand will decline substantially, not only in (South) Korea but in China and India,’ Mr Lee said. ‘The question is how to strengthen domestic demand and this is the real challenge.’

He said countries that can take steps such as cutting interest rates and taxes and increasing money supply and government spending ‘have some room to increase domestic demand’ and ‘may avoid substantial negative impact from the global slowdown’.

China, Japan and South Korea have announced stimulus measures to boost their slowing economies, with Beijing unveiling a four trillion yuan (S$895.3 billion) package.

Mr Lee was in Seoul for the release of the bank’s Asia Bond Monitor report, which said resilient local currency bond markets can serve as an important source of funding for governments as they boost public spending. The ADB report, issued twice a year, examines local currency bond market developments in the 10-member Association of South-east Asian Nations, China, Hong Kong and South Korea.

It said that growth in the region’s local currency bond markets slowed in the first half of 2008. As of the end of June, outstanding local currency bonds totalled US$3.7 trillion, up 8.1 per cent from the end of 2007.

The report said that though foreign investors have abandoned regional stock markets because of the global credit crunch, local currency bonds have held up ‘in stark contrast to the wholesale repatriation of foreign investor capital during the 1997-98 Asian financial crisis’.

The ADB, established in 1966, helps finance projects aimed at poverty reduction. In 2007, it approved US$10.1 billion in loans and another nearly US$1 billion in grants and technical assistance. — AP

China is gaining 240,000 Internet users per day and its online population will reach 500 million in about three or four years, said the Chinese Vice-minister of the State Council Information Office in a keynote address at the second US-China Internet Industry Forum held on Nov 7.

The market size of China’s Internet-based economy jumped 52.2% from the same period a year ago to reach 14.63 billion yuan (US$2.15 billion) in the third quarter of this year, an increase of 9.8% from the previous quarter. However, according to iResearch, the cyber economy’s growth had slowed from 62.8% year-on-year and 14.9% q-o-q in the April-June period.

In Q3, advertising and gaming continued to be major generators of Internet business revenue, combining to account for 72.7% of total income of the web-based economy. Online games accounted for 37.4% market share, while advertising took up 35.3% share.

The market volume of Internet ads increased 12.7% to 5.16 billion yuan (US$756 million) in the third quarter, thanks mainly to the Beijing Olympics. The B2B e-commerce market grew only 0.7% to 1.46 billion yuan (US$213.8 million).

In late October, leading Chinese search engine Baidu finally launched its own online shopping platform, youa.com, to compete head-on with Alibaba’s Taobao.com, which had pretty much monopolized China’s C2C marketplace.

Alibaba.com, China’s largest ecommerce company, announced the company’s third quarter earnings had climbed 49% to reach 308.6 million yuan (US$45.2 million), up from 207.3 million yuan a year ago. However, Q3’s profit growth pales in comparison to the 159% surge in the prior quarter.

Through the first 9 months of 2008, Alibaba had registered net profit growth of 100% year-on-year. Alibaba’s international marketplace attracted a record number of registered users, increasing 74% year-on-year.

Graphic: China’s Internet Economy, Source - iResearch

While India leads the world in business process outsourcing (BPO), the Philippines is the second largest call centre outsourcing player globally - generating an estimated 300,000 jobs and US$4 billion revenue in the fiscal year ending mid-2008, which is slightly less than India’s US$4.7 billion, according to a study ‘Contact Center Offshoring: Philippines’ by the Info-Tech Research Group.

Enterprises that have call centers in the Philippines include Dell, Citibank, AOL, HSBC, Convergys, Sykes and Telus. Some 60% of India’s outsourcing work comes from the US, 30% from Europe and 10% from the rest of the world.

As the outsourcing trend accelerates, India and Philippines often top the preferred contact centre destinations for European, U.S. banks and IT companies due to their high English proficiency and lower salaries, as labor costs typically make up 60% of a call centre’s budget.

Barack Obama might have spoken but American companies are likely to continue, if not ramp up, their outsourcing activities which can translate into significant cost savings to maintain their global competitiveness.

The Philippines BPO sector is projected to grow between 35% and 40% this year to rake in US$7 billion for the country and it has been one of the fastest growing sectors in the last 7 years. Rick Santos from global property services company CB Richard Ellis said the financial crisis would actually drive more BPO business to the Philippines and about 502,000 sq meters (5.4 million sq feet) of office space is expected to be leased this year, up 52% from 2007.

By 2010, BPO revenues in the Philippines are projected to reach US$12.2 billion at a five-year annual growth rate of 38% (SGV Industry Bulleting-BPO Edition). The Philippines BPO sector is expected to account for 10% of the global outsourcing market by then, double its current stake, and to be employing up to 1 million people.

There will, nonetheless, be some initial pain and casualties such as local BPO firm Advanced Contact Solutions, Inc. (ACS) that recently laid off about 900 workers after a major US-based client had gone bankrupt.

Even so, U.S. relationship management company Convergys has confirmed that its expansion plans are on track, which include 5 new integrated contact centres in the Philippines. Within 5 years, the Cincinnati Ohio-based company has grown to more than 14,000 employees in 10 contact centre facilities; 6 located throughout Metro Manila, 3 in Cebu City and one in Bacolod City. The last facility employs 700 local Bacolod residents, with plans to add up to 300 by year-end. In India, Convergys has about 13,000 staff and intends to hire another 2500 by end-year.

Contact centre firm PeopleSupport Philippines is now owned by Aegis Services, BPO arm of India’s Essar Group, and currently employs about 8000 staff in Makati, Cebu and Baguio. The newly-merged  entity, Aegis PeopleSupport, has mentioned the possibility of hiring between 5000 to 10,000 agents in the near term to support a local clientele, in particular to tap the growing domestic telecommunications, banking, financial services, health care and retail sectors.

This is Aegis’ 11th acquisition in 3 years. Despite the slowdown, Aegis BPO is continuing to recruit as it forecasts its organic growth rate to maintain at about 35%. In the past 3 months, Aegis said that business from the US market had increased 75% due to a recognized need to outsource or offshore to cut costs, while India sales improved by 54% and the Philippines 25%.

Aegis, India’s fastest growing BPO, also plans to boost its Indian operations by recruiting about 1000 people on a monthly basis till March 2009. The decision is in line with the company’s plan of increasing headcount to 35,000 by end fiscal year 2008–09.

The India BPO industry is estimated to employ about 700,000 people across 25 countries and expected to grow nearly five-fold to US$50 billion by 2012, a study by India’s National Association of Software and Services Companies (Nasscom) and consulting organization Everest Group said.

Nasscom recently cut its hiring forecast for the country’s IT services and call center industry to 200,000 staff (from an earlier projected 276,000) for the Indian fiscal year running from April 2008 through March 2009, due to the global economic crisis which is expected to last for 12 to 15 months.

AFP - China may legalise its thriving unofficial sector of “underground banks” in an attempt to help companies which have seen credit dry up recently, state media reported Monday.

Under the regulation drafted by the central bank, companies and individuals will be allowed to extend loans if they do not have bad credit or criminal records, the Beijing Times reported.

But they are banned from accepting deposits, and their lending rate should be kept within four times the government-set benchmark interest rate, it added.

“China’s credit market is monopolised by banks and the introduction of the regulation will break the monopoly by enabling qualified lenders to register and lend,” said Liu Ping, an official with the central bank’s research bureau.

“It can help resolve the problem of hard access to loans suffered by small and medium-sized enterprises,” she said, according to the newspaper.

Private lending will serve mainly smaller companies and farmers who can use their property as collateral, according to the draft regulation, which has been submitted to the Cabinet for review. Unofficial lending in China covers everything from loans among relatives to mafia-style operations, where failing to pay back one’s debt can mean death.

It has been a crucial link in providing finance for private enterprises that might often lack the connections to obtain loans from state-owned banks.

The central bank found in a survey that pawnbroking houses and “underground banks” have been thriving to an unprecedented extent in coastal regions, said the Beijing Times.

Lending rates in some areas reached as high as 300 percent, with the average standing at between 12 and 15 percent, it added.

The current benchmarking one-year lending rate at commercial banks is 6.66 percent.