Country Profile Thailand for CBI KPO services

1.0

Introduction

Today the economic crisis forces many businesses to seek the effective method to reduce cost
and enhance the internal operations. The concept of global Business Process Outsourcing
(BPO) and Information Technology Outsourcing (ITO) has been growing since decade. Many
Business concerns the budget of IT investment in order to reach cost optimization while
delivering paradigm for the best services. Over few years, Thailand has proven as the
international reputation on BPO and ITO as the centre of excellence to conduct the world
class software outsourcing. The software industry gains the strong complementary elements:
a centric manufacturing of international software leading companies that align the global
market leaders and numerously indigenous companies who achieve the significant global
market success. Thai software has been recognized internationally as being dynamic, highly
innovative, technically expert and international standard adept.
Since 2008 to 2010 Thailand has been ranked as the Top 30 global destination for IT
outsourcing by Gartner. Thai Software Industry today comprises over 1,900 companies,
employing over 100,000 people, with combines sales growth 17.2% The vast majority of
software activities are exported, so that the number of software exporting last year achieved
USD 14 billion (2010). (annual report Ministry of ICT ,2011) 1 The upcoming Asean
Economic Community 2015 (AEC 2015) give the opportunity to trigger point of a paradigm
shift and integrated the economics in all Asean Regions. Thailand as the strategic location
was proven as the Hub of Asean Detroit export and manufacturing in automotive industry.
Thailand is also location of hugh foreign investment from Japan, USA, UK Germany and so
on. Thailand has been recognized as one of 30 top destination of global IT outsourcing
ranked by Gartner. Some international leading software companies such as Thomas Reuters
and DSTi located the development center since 2001 to employ Thai IT professional more
than 1,500 people and to deliberate quality software to global market place. AEC 2015 will
synergy platform to regional single market and production based which require removal of
trade barrier among countries (Asean + 3 countries; China, Japan and Korea) will deliver
collaboration across business sectors especially software concerned as the services will be
key driver to shift the business model that revolutionize the industrial sectors in the near
future.

Why Thailand: Destination for BPO and ITO

Situated in the strategic location in Asia-Pacific region Thailand offers ranges of advantages
to foreign business firms. According to World Competitiveness Scorecared 2009 2 shows
Thailand ICT statistics as 26th rank top in the world on the domestic consumption in ICT
sector represents 24 million internet users, increasing number of 69 millions mobile users and
augmented social network as a number of Facebook reached more than 13 million users.
Thailand IT market is the largest in South east Asia region and project to grow at CADR of
12% over 2010-2014, while total value of domestic spending on IT products and services are
more than USD 5.4 billion in 2010 and by 2014 at USD 8.7 billion. As the crossroad of
software development in South East Asia, Thailand has been envisaged as highly competitive
software development and centric distribution/delivery in the region. Thailand provides
further impetus toward domestic and regional strategic integration to be success to embrace
the market liberalization by 2015. There are some key critical factors such as Human
Resource, Skill & expertise, infrastructure support, IT professional and standardization
measurement, government privilege, strong software clusters to drive successfully Thai ICT
market. The additional atmospheres to support the investors are in term of the initiatives,
taxation, legal framework, business support, and investment conditions.
2.0

Characteristics of BPO and ITO Thailand services

2.1

Business Process Outsourcing (BPO)

The late 20th century and the beginning of the 2nd millennium saw a huge development in
the BPO sector. Owing to the dependence of the BPO industry on information technology, IT
Jobs in BPO are generally divided into two categories, back office outsourcing and front
office outsourcing. There is a stark difference between these two categories of BPO jobs.
BPO in Thailand is not outstanding compared to ITO , mostly BPO in Thailand is in term of
internal BPO such as Human Resource, Lawyer, Accounting, Call Center, Selling, Marketing.
In Thailand there are oversea companies who looking for outsourcing services. However
there are very few BPO buyers to subcontract local outsourcing in Thailand. This cause
language capabilities in specific business area.

2.2 Information Technology Outsourcing (ITO)

Gartner accredited Thailand as 10 leading locations for offshore services in Asia Pacific
2007-2011. These are assets to Western and Japanese investors. Like most other
manufacturing industries, Thailand is gaining its acceptance in IT services outsourcing. Over
the past decade Thailand has gradually turned to be the destination for offshore outsourcing
location. For instance, Thomas Reuter has established the Software Center since 2001 after
18-months deliberation of global development site. From ITO and BPO table, we divided into
three categories as following:
Remarks:
High activities: Lower activity
Even top three location remains in India, China, and Malaysia are outstanding to provide the
off shoring software services activity, Thailand is rank as the significant player. One article
from the Global Service location 4 (top 10 locations based on their capabilities as figure
following. Thailand focus on niche quality of software services which produce output on the
qualified graduates and English capabilities moving up to value chain of BPO and ITO
industries due to large workforce and cost competitiveness.
Thailand skilful workforce:
The software sector in Thailand has been driven by the highly skilled and well educated
workforce. Thailand education system transforms the variety of IT professional courses set by
the standard nationwide. Thailand development policy delegates the opportunity to the
geographic clusters such as the IT valley in the northern of Thailand and outsourcing cluster
in Phuket. The development of language skill in Thailand has been proven as the various
interpretation skill. Thailand is also the largest IS/ISV communities to do outsourcing in
Southeast Asia region. Also now we have certified 47 companies CMMI appraisal and more
than 70 certified PSP developers training and ranked at 3rd in the world. The number of
certified software professional in PM, Software Quality Assurance and software tester were
approved by Quality Assurance Institute (QAI) achieved 80 persons. The industry
development is underwritten by the continued state investment in education and research. The
information and communication technologies are the priority area supported by the
government; therefore the investment in R &D has also significantly risen. The Ministry of

ICT has invested to initiative projects to collaboration among academic, research and
industries to ensure the optimum usage of resource and apply successful commercialization.
From INSEAD global IT report show the Quality of Education in country which represented
perception index 1-7. Thailand was ranked at 3.6 scales. There are more than 100 universities
produce more than 4,000 skill professional workers annually. Some institutions, for example
Software Park Thailand provided professional high skill enterprises training such as IT
professional, project management, and software process. From figure about the population
with English as the first and the second language (Cambridge Encyclopedia of English
language, KPMG analysis) 5 show 3% of 65 million people in country know english as
second language (2.5 million). The multiple language skill rise the localization business
opportunities because localization enabler for international businesses. Adequate recruitment
of the best skill and talent workforce are in various industrial sectors. A case in
point,ProZ.com, the largest online community of translators and the Localization Industry
Standards Association (LISA), the leading organization for companies involved in
localization and globalization is located in Bangkok to promote the localization and
translation industry in domestic and global arena.
Market of BPO in Thailand
Besides being a famous tourist destination and the auto making hub for Southeast Asia,
Thailand is best known as a tourist destination, the government of Thailand is attempting a lot
to encourage business and make higher investments in Business Process Outsourcing (BPO).
The opportunities for global BPO in Thailand are obstructed by lack of government support
and vision, limited access to investment capital, and lack of regulations regarding privacy or
security, as per to research analysts. They also cited the adequate of infrastructure, ICT
research facilities, labor policies, etc. in the BPO market of Thailand. For these reasons ,
Office of the Board of Investment (BOI) decided to encourage higher and better investments
in Business Process Outsourcing. It has expanded Activity 7.22 for including not only call
centers, but also an array of services under the new category of BPO. This activity will
include finance and accounting services, administrative services, sales and marketing
services, human resources support, international call centers and data processing, and
customer services, just to name a few. Recently, the India-based company, Infosys, has
decided to put up its BPO in Thailand