i.t. matters
Sunshine ventures in outsourcing
By MARICEL E. ESTAVILLO, Reporter
Outsourcing, or contracting out a function that does not form part of a company’s core business, is often associated with the call center business due to its phenomenal growth. But the call center business does not define the entire outsourcing industry.
Investment consultancy firm McKinsey & Co. has projected the worldwide demand for outsourcing services to reach $180 billion by the year 2010; and the investment pie goes beyond the popular customer service type.
Unknown to many, the country is hosting for several years now the digital animation and the medical transcription businesses -- two outsourcing groups that have growth potential and are yet to be fully harnessed.
DIGITAL ANIMATION
Digital animation production, or at least some parts of the script-to-screen process, has been a thriving business since Burbank Animations, Inc. set up a studio in 1983.
To date, animation studios have been doing pre- and post-production services for cartoons and animated films like "Scooby Doo," "Tom and Jerry," "Addams Family," "The Mask," "The Jetsons," "Dragonball Z," "Digimon," and "Captain Planet," some of which are box-office hits.
The services provided by home-grown animators are layouting, in-betweening, cleanup, digital background production through scanning, colory styling, special effects creation, digital ink and paint applications, web design, graphic and art design, as well as mobile applications and art and animation training.
According to the industry group Animation Council of the Philippines Inc. (ACPI), revenues from providing animation services in the international market is seen growing by 20% to 30% annu
öally, from the $50 million that the industry earned in 2003.
Still, ACPI noted that this figure pales in comparison to the estimated $50-billion global industry that is growing at an average of 25% year-on-year.
It pays to engage in the business, but enter it is both hard and costly for an aspiring investor, said Mina Caliguia, managing owner of animation studio ArtFarm Asia.
ArtFarm Asia has produced the all-Filipino animated feature called "Kuwentong Kayumanggi" that was aired on GMA-7. The company also did two feature films for Roger Corman, a Hollywood-based movie producer.
"This is not for short-term players, which means that once you enter the animation business you are playing for good. You won’t leave because the cycle of animation is a like a cycle of a dinosaur," said Ms. Caliguia.
One modest project alone that will run for five years would need at least P10 million, which could only be recovered after 10 years. To be sure, neophyte investors are advised to expect a break-even or slim margin.
"If you don’t have technical proficiency in animation and you are just in for the money, you should have not entered the industry. The barrier to entry is very high," she said.
The intricacies of the animation industry is similar to the film industry, with
Similar to the
"These agents dictate where to bring the contracts. And to get started, you should have a white [caucasian] agent with you. White people talk with white people and it is hard for brown people to get direct contracts from producers," said Ms. Caliguia.
The challenges usually do not end in the contract signing. "Clients want you
to serve their operational requirement even to the last detail. And this is something that is difficult because every project calls for a different consideration," she added.
For instance, in the Mickey Mouse character, once the producer found out that his ear is smaller than what is required, the producer would not pay even a single cent for the project.
"This is really a tough business. Imagine a work that is supposed to look like a work done by just one person, but there are actually hundreds of animators for that one work alone," said Ms. Caliguia.
Still, Filipino animation houses, about 20 companies to date, continue to stick it out with the business due to its potential.
Ms. Caliguia said acquiring a fraction of the $50-billion industry is like creating a thousands more jobs; and Philippines is a promising market because of its young population wherein the average age is 16-years and below, while those who have grown up are still collecting animation tracks.
"There is really something there that calls for serious and strategic positioning," she said.
MEDICAL TRANSCRIPTION
Meanwhile, medical transcription is tagged as the next bright spot after the call center boom. From nine companies in 2001, the industry has grown to 40 this year.
A medical transcription job involves accurate encoding into electronic format the oral dictation of physicians and other healthcare professionals. In the
Data from industry group Medical Transcription Industry Association of the Philippines, Inc. (MTIAPI) showed that the country is taking in less than one percent of the
The
Within the
Competing with the
Evelyn S. Abat, MTIAPI president, said that if the country can get hold of even just 10% of the US market, revenues will soar to more than P50
billion.
To get started, a small company with 15 computers would need an initial investment of between P1 million and P5 million, said Ms. Abat who is also the managing director of medical transcription company eData Services Philippines, Inc.
The amount would cover for office space, networked computers, servers, foot pedals, headsets and salary for the manager,training personnel, and transcriptionists.
In a month, for revenues of $10,000, the owner is assured of a margin of between 20% and 30%. Companies usually pay their workers based on the number of characters encoded or lines. Each line, equivalent to 65 characters, is $0.08.
Ms. Abat noted that the sustainability of the business relies mainly on manpower and a direct contact with hospitals and clinics in the
Some medical transcription companies easily close shop as they mainly accept subcontracted work. Ms. Abat said even existing companies in the country are still faced with the challenge of insufficient manpower. Most companies still impose "work bonds" that require employees to stay for at least two years as the training process spans for three to six months.
She added that its a must for prospective investors to understand the business by having the mindset of a medical transcriptionist. "The business calls for serious involvement. You just don’t need to put in the money. Owners should know the business first."
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