Articles, essays, and talks of Rey Lugtu

(Published in the Manila Standard Today under the “Greenlight” column, December 10, 2007) “Filipinnovation” is the catchword of the recently held Philippine National Innovation Summit, which was organized by the Department of Science and Technology (DOST), IBM, Asian Institute of Management’s Policy Center and the Intellectual Property Office, in cooperation with other private organizations and government agencies. Not only does the new word show the natural innovativeness of Filipinos in wordplay, but more importantly it captures the soul of the Philippines’ national innovation strategy – that we Filipinos need to embrace innovation as a way of life in order to stay competitive in the global economy. Presenting a framework for focusing energies The summit is laudable as it was able to cover three major aspects of the national innovation strategy - human capital, industry and public policy - each one having specific directives. This will serve as a road map for the stakeholders in the

(Published in the "Business Mirror" under the Mirror Image column, Oct 10, 2007) . The Philippines emerges as one of the favorite destinations for the estimated $150-billion business-process outsourcing (BPO) industry, according to a recent global study by Diamond Management and Technology Consultants. The consulting firm projects the local BPO sector to grow 50 percent in the next three to five years. In this hypergrowth BPO sector, similar to other fast-growing industries like the telecommunications- industry growth in the late ’90s, firms focus their time, resources and energy on hiring and building up of operations. In this break-neck pace, what many companies neglect are the ethical norms and standards that they need to uphold. One ethical issue that BPO firms need to contend with involves ensuring employee safety, health and welfare. The irregular working hours of BPO employees, specifically call-center agents, is taking a huge toll on their health, resulting in a condi

(Published in the Business Mirror under the Mirror Image Column, Sept 12, 2007) The BPO sector has grown by spectacular levels, providing employment to more than 200,000 BPO professionals. It is projected to grow on the average 38 percent until 2010, contributing more than $12 billion in revenue. Similar to the experience of India, much of the growth in the Philippine BPO sector has been driven by relatively lower labor costs. This has been the salient characteristic of the first phase of global BPO development which took place in the 90’s through the early 2000’s, where clients and providers alike placed emphasis on cost, efficiency and productivity. As clients in the US and Europe searched for ways to bring down cost further, they turned to providers in India, Philippines, and others to provide low labor costs to perform customer care, HR, and accounting BPO services. As established BPO providers are besieged by new entrants from China, Latin America, and other relatively lower cost

(Published under "The View from Taft" column, BusinessWorld, July 12, 2007) The global business process outsourcing sector is likely to see only a modest growth of 2 percent in 2007, after a continuous average growth of 14 percent annually during the last five years, according to Technology Partners International, a sourcing advisory firm. TPI said the first quarter of 2007 saw the lowest number of BPO contracts signed in the global context since the first quarter of 2003. The contract value was also the lowest since the third quarter of 2002. Despite this gloomy backdrop in the BPO global landscape, the global BPO market is projected to reach 173 billion dollars by 2007 – a huge market considering that the Philippines only garnered $3.45 billion dollars in 2006. According to estimates of the Business Processing Association of the Philippines, the BPO sector’s revenues are expected to grow almost threefold to $12.1 billion by 2010 from the end-2006 level of $3.45 billion. Lea

(Interview with Prof. Rey Lugtu by JOSEPHINE B. VALLE Researcher, BusinessWorld, for the Best Practices Forum series, published in BusinessWorld, June 27, 2007) After designing a product or service around a specific target market, a company will have to communicate its message to its audience. For this, it has an array of media to choose from. On one end, there is the traditional television (TV), print and radio, and on the other are the more non-traditional or alternative means. Perhaps the most utilized alternative media is the Internet through tools such as E-mail, online advertisements, Web sites and Web buttons, among others. Value-for-money real estate developer Phinma Property Holdings Corp., for example, maintains a Web site that showcases its projects with features such as virtual tours to further educate its prospective buyers of its offerings. It also maintains a mailing list through which it Emails details of projects to prospective buyers. Although TV and print still compr

(Interview with Prof. Rey Lugtu by Ernesto Calucag, Senior Researcher, BusinessWorld, for the Best Practices Forum series, published in BusinessWorld, June 27, 2007) Many entrepreneurs think that selling to the widest possible market is the likeliest path to success. But given the cutthroat competition that prevails in today’s business environment, the “take all comers” approach has not been very effective, most especially for small businesses competing headon with the bigger players. Thus, one exceptional business strategy has emerged, and that is for small businesses establishing themselves in a niche market. Because no matter how hard they try, no large company can be all things to all people. There will always be segments of the population whose needs for particular products and services are going to be unmet — leaving room for small businesses to succeed by meeting those needs. A niche, in marketing terminology, is a small market consisting of an individual customer or a small gro

(Interview with Prof. Rey Lugtu by JOSEPHINE B. VALLE Researcher, BusinessWorld, for the Best Practices Forum series, published in BusinessWorld, June 27, 2007) Of the many market segments in the Philippines, the overseas Filipino workers (OFW) segment seems to have the x-factor, attracting companies from different sorts of industries be it banking, real estate or cars. Real estate developer Phinma Property Holdings Corp. known for its “best-value-for-money” homes, for one, acknowledges the growing allure of this market segment. “Because of the affordability of our units and the locations, we’ve really been catering to local end-users where the market is still strong in that segment. But, we cannot discount the fact that the OFW market is really growing,” said Phinma Properties assistant vice-president for marketing and design Grant Orbeta. Mr. Orbeta recalls the OFW market started getting attention around 2001. Since then, it has been expanding and companies pursuing this segment have

(Interview with Prof. Rey Lugtu by Ernesto Calucag, Senior Researcher, BusinessWorld, for the Best Practices Forum series, published in BusinessWorld, June 27, 2007) As mass markets continue to fragment into millions of niche markets by the minute, business owners and marketing professionals alike are in a hurry to find the right combination, whether traditional or new media tools, to lure their choice of niche market. But even with newer marketing tactics, experts believe traditional marketing media, or the use of television, radio or print media, still remains an effective marketing tool when it comes to communicating with your target niche consumers. Marketing Professor Reynaldo Lugtu, Jr. from De La Salle University Professional Schools said that traditional media’s effectiveness is very evident in the way bigger companies advertise their new products in the market, particularly those who want to conquer new business segments as their way of widening the revenue base. “Television,

(Interview with Prof. Rey Lugtu by BusinessWorld, for the Best Practices Forum series, published in BusinessWorld, June 27, 2007) BW: What is niche marketing all about? Prof. Rey Lugtu: A niche, in marketing terminology, is a small market consisting of an individual customer or a small group of customers with similar characteristics or needs. Niche marketing is, therefore, targeting this small market that is not being readily served by the mainstream product or service. A niche market is characterized by the following: -It should be profitable to serve that market -It should have enough number of buyers to make your business sustainable -The market should be growing or has growth potential so that you can continue meeting the demand for a long time. The above characteristics may be termed niche characteristics. They could however, just as well apply to a market segment. However, market segments, in contrast, are large identifiable groups within a market, such as the rich segment, the

(Published in The Manila Standard Today under the Greenlight column, June 26, 2007) Business process outsourcing is a sector that has undoubtedly witnessed spectacular growth over the last few years, providing employment to more than 200,000 BPO professionals. It is projected to grow on the average 38 percent until 2010, contributing more than $12 billion in revenue. The main drivers in this growth are BPOs in areas of contact center, back office services such as HR and payroll services, and transcription services such as medical transcription, These “lower value” BPO services all account for more than 87 percent of the total information technology enabled-services (ITES) revenues. Though industry experts project a double digit growth for these groups of BPO services until 2010, what’s worrying is that the growth is slowing down, and even plateauing in five years according to many industry practitioners. This is due to the maturing market, especially in the contact center area, and the

(Published in Manila Standard Today under the Greenlight column, April 16, 2007) A trade delegation organized by the Center for International Trade Expositions and Missions (CITEM), the export promotions arm of the Department of Trade and Industry, is scheduled for a tour of United States and Canada in June. Delivering content expertise The goal is to sustain the growth in local business process outsourcing sector by enticing more investors to locate in the country for skills-based BPO activities such as finance and accounting. Of particular interest in this mission is the increased understanding for higher-value BPO called Knowledge Process Outsourcing (KPO). KPO refers to the outsourcing of high-value complex tasks and processes to specialized service providers. As compared to traditional BPO, KPO delivers ‘knowledge’ or content expertise that demand advanced analytical and/or technical skills and some decision-making or decision-support processes; rather than process expertise that

(Published in the Business World under the "View from Taft" column, March 8, 2007) When Sen. Hillary Clinton announced her presidential campaign in January, her website immediately drew 150,000 new sign-ups – people registering their e-mail addresses with the site, the New York Post reported. Also, during the campaign launch, a web forum, which is like a cyber town hall meeting hosted by Hillary on Yahoo!, drew a near-record of 35,000 people. Interestingly, a large part of these Internet traffic forms related to the Clinton campaign has been from the 18-to-24-year-old group, and Hillary’s campaign office issued a statement that "could be good news, as the 2008 election will almost certainly be strongly influenced by the Web.” The role of the Internet as a vehicle for political campaign has been growing in importance over the past years, as Internet connectivity becomes affordable and more pervasive. In fact, a 2004 study by the Pew Internet and American Life Report shows