I Think I’m on To Something… [BPOs]

So I went to Jack in the Box after a good ab workout at the gym and drove through the drive-thru (yes, I have to be specific because once I road my bicycle through the drive-thru.  It didn’t go so well) and right when I get to the window I get this response…

“Hello, good evening, my name is Linda.  What would you like to order tonight?”

… whoa whoa whoa.  Timeout.  Who in snobby stuck-up America ever says that in a drive-through window?  For years, all I ever got were disgruntled high school seniors giving me an attitude whenever I tried to super-size a Happy Meal.  But for real though, the person taking my order sounded way too polite and too scripted, it reminded me too much off… that’s it!  It reminded me of the Philippines.  Yeah, I just got back from there, you all know, but that’s one of the best things I liked about that country- friendly, hospitable service, and they don’t get tips.   So, if it wasn’t the politeness that gave away her non-American locality, then it had to be her accent.  What can I say, she sounded real attractive.  I’m good at these… from the sound of her voice I can tell you she was 5’2″, 115 lbs, black hair, brown eyes, 36-C, great smile.  Yup, I can’t wait to get my Jumbo Jack.  So anyway, I convince myself that she’s really near.  I drive to the next window, and what the horse?!  All I see is some overweight guy wearing a hair-net.  I earnestly took a peek behind him, but could not find my little princessa.  From then I knew, Jack-in-the-Box is up to something for sure.  Whoever took my order was in a totally different time-zone, different country.  She’s telling me “good evening” when she probably just woke up.  But it all makes sense too me though.  Mr. Jack has been charging for buttermilk sauce which pisses me off, but honestly, paying an extra 10 cents is not going to boost Jack in the Box Inc. [[JBX]] revenues or help them get through a recession.  If they are going to be competitive they have to get creative by cutting down costs.   I’ve searched some of their archives on their Corporate website, and they mention very little about outsourcing, but I am balls sure they are outsourcing some of their labor to call-centers in the Philippines.  It makes sense though…  Mr. Box can hire a foreigner to handle its drive-through windows, pay her 1/4 of an American worker, and at the meantime lessening the work for other workers (well that’s not true, they just layoff one American worker and give everyone else more duties.  Mwa ha ha.  Vicious.  But its money to be fought for.)

So, what does this mean for me.  Well, I’m a bit excited because I feel I’m early to the trend.  Everyone knows about India call-centers, and how much impact they have had on a Company’s outsourcing options.  I still remember one time I called Dell’s Tech Support because my Desktop wouldn’t work, and I spoke with this Indian guy.  First question he asked was “did you try plugging in your power?”  Whoa, I almost hung up.  But eventually we fixed it together so it’s all g.   Okay, where was I?  Oh yeah, India benefits greatly by doing work for lazier countries.  Just look at InfoSystems (INFY), which trains other companies how to run their technology.  INFY started Progeon Limited which is their BPO company (thats stands for Business Process Outsourcing, which is basically what I’m talking about here).  I really can’t dig out much data on that subsidiary, but it’s nice to see a giant like [[INFY]] adding fuel to this special type of market.

BUT that’s not where I’m doing my next batch of research.  Right now I am scoping out “underdeveloped” countries that are actually more advanced than the world gives them credit for.   Back in 2006, a study was done on Business Process Outsourcing from the Philippines, and the numbers were pretty impressive.  The Philippines generated revenues of $2.1 billion in 2006.  That’s third behind India and China and slightly ahead of Malaysia.  That’s a huge increase from the start of the decade when the outsourcing industry in Manila employed just 2,400 people and the industry had revenues of merely $24 million.  Fastforward to 2009 and the story was sort of lost when the global economy took a punch to the throat in 2008.  What many feel to realize is that there is a positive paradox for countries like India, China, and the Philippines… when “richer” countries begin to struggle, the demand for cheap labor increases.  Win for the companies that pay their workers 500 pesos a day.  So anyway, I’m sure that this story will start to be more popularized in the near future so just be glad we’re on this now. 

Currently I’m looking for more ways to invest in these under-the-radar economies but it’s a little difficult.  Once an ETF of these BPO influenced countries comes available I’ll be a strong buyer, often and early.  For now, those who trade on the Toronto Stock exchange have a few companies that invest in Philippine call centers.  For now, my pick though has got to be ICT Group, Inc. [[ICTG]] .  ICT GROUP currently manages over 40 operations centers across the United States, Canada, U.K., Ireland, Mexico, Argentina, Costa Rica, the Philippines, India and Australia.  Guess which is their fastest growing center?  You got it, the Philippine Islands.

Over the past year, ICTG has done amazing. They just had their conference call a few days a go and they sure surprised.

So for now, enjoy the ICTG ride.  It’s one of the closes instrument we can use to invest in BPOs that exist in economies in the middle of their growth stage.   In the meantime, keep an eye out for more of these companies, or a fund or ETF that will allow us to invest in overseas BPOs.  Imagine if you bought INFY at $5, or SIFY at $3.  You’d be ordering Jumbo Jacks for the entire block.  We’ll be given a second chance soon enough.  As we continue to struggle with labor unions, politics, unemployment checks, I’ll be very bullish on “alternative work forces.” Correlation implies causation.  Just like buttermilk.  I have no idea what that means, I made it up.

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