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Not Wanted: Pinoy Poachers

By Computerworld Philippines Staff
February1, 2008

The exodus of Filipino IT workers abroad continues to hurt the local IT industry and with the influx of multinational companies, employees are not only competing with work available abroad but also competing among themselves.

“We are killing each other, we are joining the numbers game and that is not healthy because, in time, a developer or a programmer will cost more than what our CIO’s are earning,” says Yvonne Manuel, assistant vice president for human resources at American International Underwriters (AIU), during Computerworld Philippines’ yearend roundtable forum. Manuel was among the panel reactors during the forum which tackled the 30-year-old problem with poaching of IT Pinoy talents by foreign employers.

Panel speaker, Lito Averia, Philippine Stock Exchange CIO and HR/IT Forum moderator, says that the problem with skills poaching goes as far as three decades ago. “But with the onset of technologies and computerization, the issue has become very pronounced. Unlike before, when brain drain referred to our people leaving the country to look for other opportunities, today the recruiters are the ones coming to the country to offer opportunities for our people.”

Another reactor, Augusto Lagman, chairman and CEO of Vinta Solutions Inc., proposes the formation of a group composing of representatives from the IT industry, government, and legal organizations to address the problem. “The problem is serious enough so maybe it’s worth doing that,” says Lagman. Lagman also suggests that recruiters be compelled to invest in training. “Since they make money out of their recruitment activities, it’s only right that they also invest in the replenishment of that supply.”

Other reactors of the panel were Leo Querubin, general manager, Crimsonlogic Philippines Inc.; Jean Donald Abear, labor marketing and monitoring division chief, Department of Labor and Employment (DOLE); and Atty. JJ Disini, assistant professor at the University of the Philippines College of Law and managing partner at Disini & Disini Law Office.

The yearend forum turned out to be a very engaging discussion, drawing interesting reactions and comments from guests during the open forum. The guests included IT advocates, CIOs, and human resource practitioners.

Sponsored by Astech-Pengson and Hewlett-Packard Philippines, the discussion was moderated by Computerworld Philippines publisher and editor-in-chief, Ibarra C. Gutierrez. Following are the highlights of the discussion which was held at the Tower Club in Makati City on December 4, 2007.

Averia: The issue of skills poaching has had a long history in the Philippines, this goes back as far as three decades ago; but with the onset of technologies and computerization, the issue has become very pronounced. Unlike before, when brain drain referred to our people leaving the country to look for other opportunities, today the recruiters are the ones coming to the country to offer opportunities for our people.

Now what is the impact of skills poaching? One, there’s very little time for the skills to mature. [IT] professionals gather experience under very limited time and that poses a problem, because the completion of projects also takes longer. There is also an inflationary impact on companies because programmers tend to jump from one company to another; and while they actually lack the necessarily skills or experience, they demand higher salaries. This is disruptive in the sense that companies are left holding the bag—one day you’ll find that your whole IT department is gone and they’ve migrated to Singapore or somewhere else. There’s also very little time to turn over the work that is being done; therefore, the project would suffer and, ultimately, the company’s commitments and credibility are affected. There is a big risk if companies—especially developers here whose customers are abroad and they have contractual commitments— are not able to meet those commitments, then they become open to a lot of legal risks. There’s also an ROI impact because when you hire someone, a new graduate for example, it would cost the company about P500,000 to P600,000 for the first six months. That counts salaries, office space, resources, everything—just getting him up to the productive stage. This was like 10 years ago and it already cost half a million pesos to get a fresh graduate up to productive stage.

Now, what actions have been taken? Several years ago, we have been doing what is called “from brain drain to brain train.” We tried to train our people—we get new people in, we tried to train them. In some instances, I partner with a school just to make sure that I have steady supply of talents; but then again our talents today seem to be trained to set up their own businesses if not, migrate and go abroad. Now, we are facing another challenge, because like I mentioned earlier, while before our talents just go abroad to hunt for new opportunities, today there is a direct recruitment [happening] here. We’ve been questioning the legality of that kind of activity because what happens is a foreign entity or a foreign individual comes in, gets a function room in a hotel, invites everybody there, conducts a one- to two-day recruitment activity; then at the end of the day he might get 50%, 75%, 25% of the applicants, we don’t know. Also, probably because some foreign recruiters realize there may be legal implications in such recruitment initiatives, what they do now is they hire a local organization to do the recruitment for them—these local recruiters do the recruitment from the interview to the exams here then when the applicant passes, they send them abroad right away. There are also cases now where our talents go abroad, usually on a tourist visa and, while they are there, they hunt for employment.

Now I, personally, am not against this migration. We are not against people looking for greener pastures or for them to develop their future in some foreign land; but then again, we, the industry in particular and the country in general, should also do something about this. Maybe we can put in some controls. One of the things that Mr. Lagman has been harping on is to get those recruiters to contribute to the development of our local talents, and then they can harvest much—like foresters who cut down the trees have to re-forest to give something back. Another thing is, maybe we can identify the eventual employers of our local talents abroad and offer them BPO services. So instead of our talents leaving, these employers can provide job opportunities by bringing the jobs here. I don’t know what approaches we can take to do that; of course, we have to work with government agencies to promote that kind of approach. Finally, maybe we have to work closely also with the concerned government agencies so that we can make proper representation with other countries and discuss how we can best address this problem. If they happen to have a shortage of manpower and they see us as fertile ground of talents, then maybe we can work something out.

So those are some of the things that I have in mind. Now I’m sure the reactors have a lot to say too.

Manuel: I am, in fact, a victim of this humongous problem. The problem really is the exodus of IT talents to other countries, specifically to Singapore; this results to higher turnover rates and escalating costs of hiring replacements. Now why is this a problem? IT jobs in the Philippines are growing at a high speed. In my company, for example, we are the regional technology center of all non-life insurance companies of AIG in the Asia Pacific region. They can put up a regional center in Japan or in other Asian countries but they choose the Philippines because they believe that we have a good number of talented IT professionals here. Now if our local talents are going out of the country, then what happens to our being the technology center in the region?

So what are other companies doing about it, knowing that this is the problem? I heard from some of my colleagues in the HR IT profession that they offer starting salaries way above the market average just so they can attract whatever is left in the Philippines; so what happens is we are competing with one another already. Second, they give longevity bonus. For example, we will give you this X amount for as long as you stay from three to six months and then another X amount if you continue to be with us for another X number of months. Then there’s the traditional project completion bonus—if you complete your project, then you will be given the project bonus; but our employees are very smart, what they would then do is they complete the project but even before they complete the project they are already signing with another company either in the Philippines or outside the country. Now, I actually have a question for Atty. JJ (Disini) because other companies I know enforce an employment bond and I don’t know how strong the employment bond is and how it works, because it looks like this problem is here to stay.

Personally, I feel proud that our Pinoy talents are now very much exportable, that the quality of our IT talents is at par or maybe even better than our foreign counterparts. I’m happy that they are Filipinos doing a good job outside the Philippines. I’m happy that, when I do exit interviews with my employees, they would tell me that this opportunity is a realization of their dream to work outside the Philippines because, more than the money, the opportunity will be good for their resume. So it’s not just about the money. For many, it’s a dream come true and a realization that they can now earn dollars instead of pesos and send it over to their families and their families being proud that they have relative who is working abroad. So we need to realize what our employees really need, why do they go to other countries, why do they go to Singapore— what’s in Singapore that cannot be found here in the Philippines?

My turnover in 2007 was 24.75% versus 13% the previous year and most of these people are now either in Singapore or in other companies here in the country. As I mentioned earlier, another problem is that IT jobs in the Philippines are skyrocketing with the emergence of new IT companies and the influx of multinational companies; so we are now not only competing with work available abroad, we are also competing among ourselves and that is not healthy for the industry. We are killing each other, we are joining the numbers game and that is not healthy because, in time, a developer or a programmer will cost more than what our CIO’s are earning. In my company, we know that we really cannot prevent them from going out of the country, so what we can do is analyze the situation— find out what their aspirations are, find out what our employees’ wants and needs are, and then develop a program specific to those wants and needs. For example, for 2008 we will be creating a deep bench of talents by introducing the graduate associate program; in the past, we don’t hire new graduates because we want to hire people who can do the job on day one but, because of this problem, we are now changing that strategy and we will begin hiring new graduates and train them. Another strategy that we will be implementing in 2008 will be skills upgrading and re-tooling for existing staff. We will convert them or their skills into something that is more in-demand. We also have what we call outsource partnership where we partner with different consulting companies which can handle the turnover problems that we are having. We are now so desperate that we have active alliances with body shops and executive search [companies]. I only used to talk to executive search people or head hunters for openings in the executive level but now, even for the lowest level of programmers, I go to head hunters, and we all know how much they are charging—so the cost of hiring and replacing is rising and that is really a problem. Since we have outsource partnership with some of the consulting companies, their employees, over time, become very much trained and very much ingrained in the way we do business; so part of our memorandum of agreement with them is to allow us to absorb these consultants as our full-time employees.

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