Thailand's Offshore Services Landscape

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Thailand’s Offshore Services Landscape

David Jerome Graduate School of Social Sciences MSc International Development Studies

Supervisor: Dr. Bart Lambregts. 10th March 2015 Student Number: 10601317. Email address: [email protected]

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Acknowledgements

I would like to offer my special thanks for the valuable and constructive suggestions during the planning and development of this research to the many people without whom this thesis would have been an insurmountable obstacle.

I wish to thank Dr Bart Lambregts, who has been an invaluable guide throughout the whole thesis process. He has shown patience and understanding through all the difficulties this research has entailed, and has always been frank and constructive with his advice. Without him, this thesis would have been impossible, and I am extremely grateful for all his time and consideration.

I also wish to thank my family, for their love and support has been constant. Despite the travails involved in this research, they have always been an inspiration and source of advice for me, and their encouragement to seek new experiences and challenge myself in new surroundings have been instrumental. I will be forever indebted to them, and hope they are as proud of me as I am of them.

Finally I wish to thank Elisa Wubs, who has supported my every effort from day one, and guided and supported me throughout. I will always be thankful for her companionship and support.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Abstract

This thesis looks to explore Bangkok’s offshore services landscape and its suitability as a location for offshore services in general. Globalisation has provided an opportunity for developing countries to benefit from a new international division of labour, and there is little existing research to gauge to what extent firms are choosing Thailand as a viable location for offshore services production. India and the Philippines have become regional powers in offshore services, and a cornerstone of their economic growth has been achieved by successfully harnessing their human capital to effectively engage with this new wave of service provision. Thailand has been developing rapidly over recent decades, but how much of its success is attributable to offshore services is uncertain.

Data was gathered on offshore services firms and interviews were conducted with experts in the sector, academics and government employees in Bangkok, Thailand and in Europe over a period of six weeks from January 2014.

Results suggest that Thailand’s offshore services landscape is primarily made up of less advanced Business Process Outsourcing (BPO), but with a substantial presence of more advanced Information Technology Outsourcing (ITO) and Knowledge Process Outsourcing (KPO). The suitability of Thailand to further offshore services was contested, with many participants presenting a negative prognosis. Despite this, Thailand has many qualities that suggest it is a viable location for offshore services, and it retains great potential as a location for offshore services firms to locate in the future. Active engagement and growth of human capital, coupled with political stability would go some way to making Thailand an extremely suitable location for offshore services in the short, and long term.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Contents Chapter 1. Introduction ...... 7 1.1. Patterns of unevenness in the global offshore service delivery landscape ...... 7 1.2. Relevance of this research ...... 8 1.3. Thesis outline ...... 9 Chapter 2. Theoretical Framework ...... 10 2.1. What are Offshore Services? ...... 10 2.2. Drivers and enablers of offshore outsourcing ...... 11 2.3. Firms' motives to engage in services offshoring ...... 12 2.4. Different modes of services outsourcing and offshoring ...... 15 2.5. Factors influencing firms offshoring location decisions ...... 16 2.5.1. Creating suitable conditions for offshore services ...... 21 2.5.2. Summary ...... 23 Chapter 3. Methodology ...... 24 3.1. Research questions ...... 24 3.2. Conceptual scheme ...... 24 3.3. Research design ...... 28 3.4. Research techniques ...... 30 3.4.1. Quantitative ...... 30 3.4.2. Qualitative ...... 30 3.4.3. Secondary data ...... 31 3.5. Ethical considerations, challenges and constraints ...... 31 3.5.1. Ethical Considerations ...... 31 3.5.2. Epistemological and Ontological Position ...... 32 3.5.3. Challenges and Constraints ...... 32 3.5.4. Reliability ...... 33 Chapter 4. Thailand’s Offshore Services Landscape ...... 35 4.1. Data sources and methods ...... 35 4.1.1. Limitations ...... 36 4.1.2. Validity ...... 36 4.1.3. Data appreciation ...... 37

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

4.1.4. Selection Criteria ...... 37 4.2. Bangkok’s OSS: Basic characteristics...... 38 4.3. Bangkok’s OSS: Probing relations ...... 40 4.3.1. Ownership and markets serviced...... 44 4.3.2. Line of business, ownership and firm size ...... 47 4.3.3. Location ...... 49 4.4. Concluding remarks ...... 53 Chapter 5. Explanatory factors of Thailand’s Offshore services Network ...... 55 5.1. Notes on data and methodology ...... 55 5.1.1. Access Difficulty ...... 55 5.1.2. Interview difficulties ...... 56 5.1.3. Additional Data ...... 57 5.2. Explanatory factors of Bangkok’s OSS...... 57 5.2.1. Presence of adequate IT infrastructure ...... 57 5.2.2. Regulatory context ...... 59 5.2.3. Institutional and policy context ...... 61 5.2.4. Stability of the business environment ...... 64 5.2.5. Availability of adequate Human Capital ...... 65 5.3. Conclusion ...... 67 Chapter 6. Conclusions and recommendations ...... 68 6.1. Research Motivation ...... 68 6.2. Concluding Remarks ...... 68 6.3. Policy recommendations ...... 70 6.4. Recommendations for further research ...... 71 Literature List ...... 72 Data Sources ...... 80 Chapter 7. Appendix ...... 82 7.1. Firm List ...... 82 7.2. Provisional interview guide ...... 86 7.2.1. Basic questions to provide background information of interviewees: ...... 86 7.2.2. Further information - May differ on respondent ...... 86

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

7.3. Offshoring Business Matrix ...... 87

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Chapter 1. Introduction

1.1. Patterns of unevenness in the global offshore service delivery landscape The growth of offshore services (OSS), driven by contemporary globalisation, has introduced new elements into the international division of labour. It has created the opportunity for developing countries to profit from these with Southeast Asia, as a region, one notable example. It has become increasingly prominent in service sector outsourcing although development has been only embryonic in some countries such as Thailand, Burma and Cambodia (Tholons, 2014). Furthermore, research suggests that there is a marked discrepancy between the prevalent processes occurring amongst those SE Asian states which have embraced offshore service economic models and the current state and condition of Bangkok’s OSS. This thesis examines developments and processes of change in Bangkok's OSS, and analyses the principal explanatory factors.

Despite Bangkok’s growth as one of SE Asia’s major economic drivers, fuelled substantially by manufacturing offshoring, what emerges as a surprise is that, according to several outsourcing consultancy rankings, it significantly underperforms (Bangkok is 85th in Tholon's top 100 outsourcing destinations). However, economic forecasts identify Thailand as one of the countries with the greatest potential for future growth, for example, rated 7th in OSS according to the 2011 A.T. Kearney report (A.T. Kearney, 2011). Why Bangkok's engagement with offshore services opportunities has been limited is unclear and under-researched. Is the current wave of services offshoring bypassing Bangkok? If so, then why? This thesis will attempt to address these fundamental questions.

In order to gauge Bangkok's position with regard to OSS an assessment needs to be undertaken of the broader development of Thailand's engagement with offshore services. OSS can take a wide range of forms and the factors which account for this economic development are complex and difficult to unravel. They include but are not limited to human capital and capabilities; institutions and structures; laws and public policy; and foreign investment and confidence. The growth of Thailand's economy and structures to facilitate the emergence of OSS is also an essential aspect of this enquiry. Equally important is relating the research within a more comprehensive research programme about the globalization of services production and consequent local social and economic effects.

In broad terms, since World War II the international economy has expanded, diversified and accelerated. Industrial processes have been exported from more developed to less developed nations. Global labour arbitrage has been a major consequence of the disintegration of barriers to international trade, resulting in jobs and processes moving to cheaper locations differentiated by lower labour costs, less regulated working environments and governments sympathetic to untrammelled external investment. Neo-liberal economic prescription has been a potent catalyst for relocation of substantial sectors of modern western economies in particular and especially since the 1990s. Important also has been the communications revolution resultant from the emergence of the internet which has allowed computer-based processes to operate internationally and almost instantaneously. Offshore outsourcing

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 has become standard practice in the IT-Industry (Pradhan 2006), and based on the successful experience and rapid growth of the IT-Industry, and the standardization of technology, businesses in various other sectors have been adopting comparable practice. Any activities that can be deconstructed and digitally transferred around the world are potential avenues for offshore outsourcing. (Allied Digital 2010)

Enthusiasm for international investment in offshore outsourcing of services stems also from pivotal changes in perception and confidence amongst business sectors. Recognition of improvements in education and skills in developing countries, and a dramatic reduction in data transmission and international communication costs has presented the opportunity for individuals and businesses to contract individuals or companies from all over the world to secure the completion of projects to requisite standards and at a lower cost (Pradhan 2006). Similarly, there is an increased tendency towards outsourcing in larger corporations (Massini et al. 2010). These large corporations have the capacity to set up offshore locations, introduce local training schemes and provide employment in lower income countries. Firms based in the developed northern hemisphere increasingly outsource production and services to the developing world for the financial advantages (market access, cost saving) that are on offer (A.T. Kearney 2009).

The scale of inward investment and the opportunity to integrate their economies into global production networks (GPNs) is enabling many Southeast Asian states to diversify their economies and enter a new phase of development (Bair 2008). A fundamental element of taking any country forward, and maintaining growth, is to provide and maintain a highly skilled and competent global workforce (NASSCOM, 2006). In South-East Asia, much attention is focused on the remarkable successes achieved by cities such as Manila and Cebu City where thousands of new jobs have been created, and the metropolitan areas are developing into versatile global offshore service hubs (Allied Digital 2010). Surrounded by uncertainty, however, is how Bangkok is responding to this form of economic restructuring and investment stimulus.

While Bangkok possesses an important position in car manufacturing, electronics and computer hardware production, a clear picture of the extent to which it has engaged in offshore services production is lacking. This research project, which makes extensive use of both qualitative and quantitative data, aims to extend awareness and knowledge of the importance, functions, volume, scale, characteristics and potential of offshore services for both Thailand, and Bangkok specifically, as they aspire to develop a modern, stable and sustainable economy.

1.2. Relevance of this research The relevance of this research to International Development is derived from concern about development processes. There are a variety of debates in existing literature on International Development and economic geography around the question, ‘what explains the variety in development trajectories that countries (or regions and cities) pass through’ (see Linder & Strulik 2014, Pomeranz 2000, Nicholson & Sahay 2001, Gereffi et al 2001). This question has traditionally attracted a significant amount of study, e.g. how did South Korea and Taiwan become such successful economies? Why did Thailand benefit from offshoring in manufacturing so much more than the Philippines (Raquiza, 2012)? The current ‘new’ wave of Globalization in services production is giving this question new relevance.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

What are the factors that determine why some countries are in an advanced position, and other nations struggle to catch up? My particular interest is to explore how Thailand engages with the services offshoring wave and what are its explanatory factors.

The academic relevance of this research project will be in contributing to the pool of information on globalized service production, precisely, what is Bangkok’s position in the offshore services industry? Additionally, this project will attempt to uncover reasons ‘why’ Bangkok is used (or why not) as a destination for offshoring, if it is indeed occurring. The current lack of research of Bangkok’s position is due to the greater awareness of the Philippines, India and Singapore (amongst others) as offshore services (OSS) destinations and greater focus as a result. This research will provide an opportunity to illustrate the state of Bangkok’s contemporary OSS, and the power relations that influence them.

Furthermore, this research is valuable from a practical policy perspective as well. Identification and quality assessment of the explanatory factors behind OSS can potentially inform country policy. Identification of the stimulating factors or lack of, behind successful outsourcing can be utilised by government or private companies to create an environment conducive for greater outsourcing. This can provide opportunities to create legitimate input elsewhere for successful development policies and projects (Bloomberg 2013). If OSS proves to be beneficial to growth within countries, an increased understanding and greater clarity of the processes and phenomena of Bangkok’s positioning in globalised service provision can be used to contribute to broader debates on globalisation and development.

1.3. Thesis outline I will first outline the theoretical framework (chapter two). This will consist of defining ‘offshore services’, what enables them, and how they relate to larger processes of globalized economic production and the formation of global production networks. Chapter three will contain an outline of the concepts included in the research. Chapter four will elaborate on the methodology used in the research. This will include operationalization of the concepts included, the study population and the data collection methods used. I will then present some of the most significant initial findings of the research, particularly quantitative results. Chapters 5 and 6 will further elaborate on the findings on both aspects of the research (research questions 1 and 2), derived from interviews, secondary data and a business table matrix which should provide information on the current nature of Bangkok’s outsourcing businesses. Chapter seven will be a discussion of the findings, and suggestion of further research areas that have arisen during the research. The final chapter (chapter 8) will be conclusion of the research, and a summary of the overall research project.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Chapter 2. Theoretical Framework

This chapter will include a brief explanation of what constitutes offshore services, the drivers and enablers of these offshore services, the different modes of services outsourcing and offshoring , the factors influencing firms offshoring location decisions and creating suitable conditions for offshore services.

2.1. What are Offshore Services? One of the central problems of research into offshoring is the frequent interchangeable use of terms which appear to be synonyms such as offshoring, outsourcing, offshore-outsourcing and relocation. This study will use a definition of offshoring provided by the Offshoring Research Network (ORN).

Offshoring refers to ‘’The process of sourcing business functions or processes supporting home-based or global operations from a foreign country, either through wholly owned organizational units (captive offshoring/shared services) or external service providers’’ (ORN 2007). The ORN includes a wide range of business functions and processes as offshoring, such as information technology (IT), finance & accounting, contact centers, human resources, legal services (LPO), analytical and knowledge services (KPO), software development, procurement, marketing and sales, engineering and new product development (ORN 2007).

Offshoring services (OSS) are proving to be a viable option for countries who wish to diversify their economic base, and try to increase high skilled employment and knowledge diffusion. In 2008, India had revenues of over $40 billion dollars from their IT and outsourced businesses processes (Nasscom 2009). The Philippines, Eastern Europe, and to a lesser extent South Africa, all have burgeoning sectors, and have established themselves with a share of the market. Members of The Association of Southeast Asian Nations (ASEAN) are becoming increasingly significant in outsourced business processes, with a growing percentage of their GDP based upon these services. Despite starting from a limited position, there has been a high rate of growth in the sector (and in standardisation), and country policymakers are receptive to strategies which will increase this rate of growth, and assist in the movement towards a service orientated economy.

For the purposes of this research, these ‘standardised tasks’ have been split into three separate processes; business process outsourcing (BPO), information technology outsourcing (ITO) and knowledge process outsourcing (KPO). (Baldia 2007)

BPO involves outsourcing of more standard business back-office tasks ‘’generally performed by white collar and clerical employees to achieve various benefits such as cost savings, better quality and ability to focus on core competence’’ (Tas & Sunder 2004). BPO involves outsourcing processes that are not core to a company but are essential for smooth operation of the company. The customer transfers the complete responsibility of these functions to the vendor who guarantees certain service quality standards. Such processes include customer service, payroll processing, inventory management, etc. These processes require a different skill set to KPO, in which both language and culture are far more

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 important considerations. An illustration of the size of the BPO market is the industry in the Philippines; by 2016 the BPO market will be worth upwards of $25 billion dollars, making up roughly a tenth of the nation’s GDP (Calderon, 2013).

ITO is the outsourcing of computer and internet work, involving processes such as programming and software management. It has emerged as a result of the expenses incurred through the maintenance of a domestic information technology/software programming department, which is labour intensive. The close linkages between the US/Europe and Asian IT industries have enabled many of these labour intensive software and programming processes to be outsourced (Rohde 2004). This process was accelerated at the turn of the millennium, when the demand for large numbers of programmers really emerged. This explosion of OSS opportunities led to many menial tasks being exported all over the world, particularly to India and other Asian countries.

KPO is the means by which knowledge-intensive and core information related activities, consisting of integral parts of a company’s value chain, are outsourced. KPO could be considered a more recent, but growing phenomenon in outsourcing. This is because of the requirement for highly skilled employees, who possess advanced analytical or technical skills in addition to specialist expertise. KPO is a prized form of outsourcing as it provides access to these employees and their ability to create added value. Similar to ITO and BPO, KPO allows companies to realize substantial cost reductions by offshoring domestic business functions to lower cost foreign venues. KPO differs by helping companies gain a strategic advantage over their competitors by virtue of the type of offshored processes and functions it involves (Baldia 2007).

2.2. Drivers and enablers of offshore outsourcing Offshore outsourcing has brought about a significant restructuring of the international economy and redefined relations between advanced and developing economies. The trend towards offshore outsourcing has been enabled by advances in ICT, digitization and unbundling of services production processes, lowering of trade barriers, and the narrowing of the education/skills gap between the global North and global South. Alternatively, the driver of this trend towards offshore outsourcing is firms’ desire to reduce production costs and benefit from the existence of cost differentials and uneven distribution of human resources and skills across the world, or more precisely: firms’ desire to reduce (labour) costs, access skills not available ‘at home’, focus on core competencies and specialize. These processes will be discussed further in chapter 2.3.

Advancements in ICT, and the commensurate ability to communicate and transmit information across the world almost instantaneously, have been a huge enabler of OSS. More conventional methods of utilizing competitive advantage have been marginalised, and the geographical relevance of ‘local’ markets has receded (Kramer & Porter 2011). This has enabled regions that had underdeveloped infrastructure or transportation to bypass these difficulties, and engage with international markets via service provision, instead of manufacturing or production. The regions are increasingly constituents of international regions in direct competition with other international regions, rather than with contiguous neighbours or others within close geographical proximity.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

The digitization and unbundling of services production processes is a further enabler of OSS. There is no longer a need to commit information, software or guidance to paper, or transport it with a person, but simply sent as electronic communication. Increasingly offshore services can be provided via online communication; videos, emails or any number of additional formats, advisors and experts can be contacted wherever they are in the world (Mann 2005). While there remains an assumption in developed countries that only low level processes can be offshored in this way (Glass & Saggi 2001), the reality is that transference of increasingly complex processes is now a viable option for many businesses.

The lowering of trade barriers has been a consequence of countries understanding their national laws need to conform to other global practices if they want to establish themselves in the global marketplace (Manteau 2008). To incentivise new employers to move to a developing country, and its attendant poverty and unemployment reducing benefits, there is an attempt to minimize the bureaucracy involved in establishing a company. In addition to the tax breaks and other preferential treatment that a company may receive. Several examples of countries attempts to attract investment are; China, revaluing its currency despite the short-term gain from keeping it artificially low or India has eased many of its trade barriers and agreeing to several trade agreements (Aspray et al 2006). All these developments have proved to be important enabler of offshoring, either by incentivising companies or removing restrictions to their operation.

Arguably the most substantial enabler of offshore services is the narrowing of the education/skills gap between developed and underdeveloped countries. India and china have both implemented policies for developing their offshore services, and improving their educational systems to supply the necessary number of skilled workers (Miyamoto 2003). As well as having adequate infrastructures (power, transportation systems, telecommunications) to provide good service to their IT companies. The success of India and China in retaining senior technical and business leaders is an indication of appropriate policies being in place (Aspray et al 2006). These senior personnel strengthen the investment climate for foreign investors, as well as bolstering and increasing the skills of the workforce (World Bank, 2003; UNESCO and OECD, 2003). All of which provide fertile breeding grounds for enabling offshore services.

What is driving the trend towards offshore outsourcing? Basically that would be firms’ desire to reduce production costs and benefit from the existence of cost differentials and uneven distribution of human resources and skills across the world, or more precisely: firms’ desire to reduce (labour) costs, access skills not available ‘at home’, focus on core competencies and specialize

2.3. Firms' motives to engage in services offshoring The increased accessibility of labour resources worldwide, regardless of company size, (Gartner - IT research and advisory company) has given rise to new business models that enable companies to tap into resources found abroad without losing control of the value chain and the quality of the end product. Their ability to conduct business online has ramifications for the development of the global economy, and is not restricted to larger corporations. There is a trend towards large scale outsourcing amongst larger corporations, but the ability to outsource specific, complicated tasks provides the increased capacity that smaller companies need to be competitive.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

These factors may also influence the forms that OSS will take. Complex decision-making governs resolutions to offshore; firms possess various motives and conditions which are necessary to meet (Bunyaratavej et al., 2007). These new motives are determining the direction of travel of global sourcing models i.e. sourcing from the global markets the necessary goods and services. Disparities between global markets are exploited by firms seeking access to more cost efficient employees and resources and developing countries with lower tax breaks or tariffs. These motives include, but are not limited to, securing lower labour costs, gaining access to appropriately qualified personnel (for skills, and market access), augmenting company specialisation and focusing on enhancement of core competencies. Each will be explained further in the next part of the chapter. Firms may have a particular motive (e.g. skills access) to offshore services, but they are inter-related, and difficult to separate out.

Lower labour costs

The pursuit of lower labour costs is one of the most frequent concerns behind a firm’s decision to establish offshore processes. Traditionally, these processes have been industrial or manufacturing in nature, requiring large numbers of low skilled workers. However, technological developments have enabled standardization of tasks, with face to face interaction no longer required for the operation of many back office business functions. Increasingly jobs in specialized professions (architecture, application development, R & D) are subject to offshore outsourcing. In principle, all tasks that can be telemediated can be outsourced and/or offshored. Lower labour costs remain a key factor in any company’s decisions to outsource processes (Havranek & Irsova 2011). If the decision to offshore is based on a requirement for abundant cheap labour, then a firm will prioritise a destination where it will have access to this labour (if it has the requisite skills). The incentives for companies to outsource are frequently to be found in the potential savings in labour costs. India and the Philippines can offer a 32% to 38% savings for U.S. companies (Forbes 2008) that are willing to outsource their more time (and expense) incurring activities. This is a powerful enticement for companies to investigate.

It often proves cheaper for smaller companies to outsource. Theoretically, a small company in an emerging market could establish a particular business activity but at the cost of hiring dedicated staff. It is financially preferable to simply outsource these tasks rather than undertake the burden of employing full time staff and deplete the company's scarce logistical and organisational resources. This is in marked contrast to larger companies, which have dedicated teams in place to perform business administration tasks (e.g. reimbursement) (Taylor 2011).

However, companies typically do not use outsourcing to reduce managerial or high level executive costs. This would suggest that companies do not desire to reduce wage expenditure for employees at all levels, but rather employees with the requisite technical skills (software, applications management) or low skilled employees (labour intensive/manufacturing), and in so doing minimise specific types of cost.

Qualified Personnel

Access to suitably qualified personnel also influences companies’ decisions to offshore. Academic focus has accentuated reduced labour costs as a primary motivator for offshoring. However, companies often

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 use offshoring to access talent pools, especially highly skilled and proficient workers, outside their home country (Manning et al 2008). The increased expenditure by nonwestern countries on science and engineering has paid dividends in the form of a large number of highly qualified graduates. These graduates are providing the skills and resources that are driving the growth of OSS, in addition to providing alternative suppliers, and increasing total supply capacity. The acquisition of specialized external capabilities, and scope for high level knowledge transfer, is an attractive prospect for international firms (Zanfei, 2000; Dunning, 2000) This search is driven by a scarcity of highly qualified and skilled personnel and the higher cost of specialised labour at home.

Further business justification for this search for additional qualified personnel is that by securing the services of new employees, a company is also acquiring that employee’s experience of a foreign market. This insider knowledge of a foreign market is often unavailable domestically. This reflects the shift of market penetration strategies from established to new and unknown markets (e.g., Christensen, 1997). It is cheaper to procure experience of a foreign market, rather than relying upon the expensive and time consuming process of transferring employees from a home nation.

The improvement to organizational flexibility by increasing the speed of business processes has allowed professionals located anywhere in the world to be both available and accessible. These freelancers can be hired by companies (or more often small businesses) as subcontractors and save the small business owner time due to their availability, if they have the requisite skills. This is in addition to removing the burden of paying overhead associated with payroll management, tax and other expenses.

An influential factor also is the phenomenon known as ‘brain circulation’ (Saxenian et al 2005).This is the opposite process to a ‘brain drain’. It is driven either by the difficulty of emigration to developed countries, or by growing standards of living and opportunities in home countries. The growth of intellectual capital in countries, and more importantly the decision to remain (or return home), has proved to be important for a countries development. Although debate persists whether the degrees possessed by these highly skilled workers are comparable to those of western institutions, and whether the employees are of lower quality as a result, nevertheless the move towards standardisation of higher skilled work allows for the use of less skilled personnel for lower labour costs.

The financial crisis of 2008 has accelerated the drive to offshoring as countries within Southeast Asia have offered increasingly a more secure economic environment of lower labour costs, sufficiency of suitably educated and skilled professional staff and requisite technological platforms (ORN 2008).

Specialization

Specialisation refers to the increasing tendency for firms to offshore knowledge work such as software development, engineering, product design and research and development, as opposed to routine IT work (Lewin 2006). Small companies in particular outsource work to compensate for their lack of capital and capacity. The improvements to technical processes as a result of technological progress allow for software testing etc to be performed remotely. This provides opportunities for companies to compete despite their lack of domestic capacity, offsetting these shortcomings with cheaper technical support

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 provided internationally (Brusoni 2005). This is a trend predicted to increase, as the opportunities to offshore a wider range of services grows, and firms looking to new business models, technologies and ideas explore their options.

Focus on core Competencies

OSS also provides an opportunity for a company to focus on its ‘core competencies’. This phenomenon has become associated with smaller firms, where skill sets of personnel, time and cost are central considerations. Outsourcing of bureaucratic tasks frees key personnel from performing these tasks, and they can invest more time and energy in the firm’s key business functions. The decision-making calculation for which processes to offshore depends on the business conducted. Customer relations, product design or infrastructure development is often accorded a higher priority than payroll or human resources. Focusing on the more important business processes, and outsourcing others can help a company develop a competitive edge (Leavy 2004).

2.4. Different modes of services outsourcing and offshoring Differing modes of outsourcing and offshoring are an important variable to consider. There are advantages and disadvantages of particular models. Companies which prefer a greater level of control over the supply chain might opt for the complete ownership model, rather than a service provider approach. Every program or project that is offshored can only be effective with the right model supporting it, a model based on a particular business need or scenario. Only by investigating several factors, such as country analysis, international business strategy and outsourcing strategy can a decision over the most appropriate OSS mode be made (Babu 2006). The three most common models are Joint venture offshoring, subsidiaries and outsourcing to a service provider.

A joint venture model is when an international organisation establishes ties with a local firm, either through investing in a firm or by forming an independent company in which each partner contributes resources. This is an attempt to create a mutually beneficial arrangement where the strengths of each partner are combined to compensate for their weaknesses; strong local knowledge can be complemented by the resilience of a larger organisation to provide an effective business unit. A company who is looking to ‘learn’ the intricacies of a local market can derive a lot from a local partner, and a local partner is provided opportunities to move up the value chain (Kamminga 2007). This strategic approach has been popular as it provides a gradual evolution of the firm, and paves the way for a subsidiary down the road if desired.

A subsidiary/captive offshoring model is a viable alternative to a joint venture model. A subsidiary or local office can be established if there is confidence that local market operations can be contended with. Subsidiaries operate as independent businesses, performing duties and programs for onsite teams, so their management is conducted in the same way as other firms within Global Value Chains. This model is very popular with high tech firms, if they possess the requisite qualities and can effectively harness a multicultural staff, then offshoring can be a valued part of their diversification strategies (Babu 2006). By moving some of their projects or maintenance aboard firms can have a greater global presence; it also provides an additional service to clients who may wish to offshore processes themselves.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Offshoring to service providers is the third main version of OSS. By outsourcing a project or program to a separate operator firms can avoid a deep commitment, harnessing the benefits of offshoring, while minimising the risk of doing so. Outsourcing to providers is arguably the most viable outsourcing model as it encompasses projects ranging from the very small, to multi-year contracts. Firms can put their employees at a clients disposal, giving them an increased capacity of skills required to complete a project. This model of outsourcing is typically adopted by smaller firms who benefit greatly from increased capacity, and that have a relationship with the client organisation (Farrell 2005).

It was not possible to determine accurately the types of ownership demonstrated in Figure 2.1 for the firms identified in this study, this is an issue that will require further investigation by researchers. For the feasibility of this study, the owning regions of firms have been recorded.

Overseas Country (offshore)

Complete ownership Intra-firm (captive) offshore

Shared ownership Joint venture offshore Offshore outsourcing: a) To local company Third-party ownership b) To foreign affiliate or another TNC Figure 2.1 – Different forms of offshore organisation (Source: Kleibert 2011)

2.5. Factors influencing firms offshoring location decisions Multiple factors determine the suitability of a location for offshore services; one key element is the motivation and strategic perspective of the business owners or shareholders. More significant are country specific factors. To meet the specific requirements or preferences of a company a number of potential locations must be investigated and assessed for their suitability. In essence, businesses' decision-making is conditional upon whether the firm is looking to offshore a business process, and is correspondingly seeking a suitable location (captive or outsourcing model) or, alternatively, it produces services outsourced by others and sets out parameters for a suitable business environment (Bunyaratavej et al 2008).

Availability of Adequate human capital

Firms looking to offshore activities will give preference to a location for the cost and skill levels of the local labour force, with the skills being sought dependent on the type of activity being offshored. Offshored service tasks usually require a certain amount of technological knowledge and the availability of efficient and competent IT workers for businesses to operate effectively (Markusen 2005). The success of offshore services countries often derives from the skills of its graduates and the more innovative and computer literate they are the better.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

BPO processes require different skills to ITO and KPO, although they are generally sequential in nature, with more complex tasks requiring pre-requisite basic skills to perform more complex ones. Language skills are considered the most important pre-requisite for all processes. Research suggest that despite the growth of OSS, and the parallel demand for English language communicators able to deal with native speaking customers, it is not guaranteed that these skills are available with requisite quality. It is reported that the lack of English language skills is the main reason that applicants are rejected from outsourced service jobs (Lockwood 2012). Therefore a location that possesses the necessary language skills will be given greater consideration.

Second only to language skills, in desirability for offshore services, is IT skills. With the development of greater skills, more complex processes can be outsourced. With the growing trend towards outsourcing services there is a parallel pressure on finding employees, and firms will go wherever the labour pool with requisite skills is available. There are over 1.2 million workers in the offshore sector within India, and millions of graduates produced annually, but those who plan to work in the IT sector are ’diamonds in the rough’, and unsuited to working in offshore services which require the finished product (Agarwal 2009). This is a problem throughout offshore locations, and requires careful planning and opportunities by the state or private enterprise, providing post-graduate, job specific training is cheaper in the long term for international businesses (Miyamoto & Todo 2003).

More recent trends in offshoring have reflected alternative business objectives. Higher skilled process offshoring necessitates a higher demand for skilled workers. Firms that are looking for skilled workers will prioritise a nation or city with an abundance of suitable human capital. A high level of human capital is no doubt one of the key ingredients for attracting FDI, as well as for host countries to gain maximum benefits from their activities (Miyamoto 2003).

Presence of adequate IT infrastructure

There must be an appropriate, and resilient, IT infrastructure in place to sustain offshore services. This involves the construction of a power grid which can provide a reliable power supply for offshore services, as well as ensuring high speed internet. The negative stereotyping of developing countries possessing unreliable infrastructure persists (Williams 2006), but great strides have been made, especially in high tech services, to ensure this is not the case. In the Philippines, public power and communications are not uniformly excellent, but the dedicated offshore services business parks receive priority in internet, and power, to guarantee their effectiveness (Williams 2006).

The saturation of certain Asian markets, particularly in the largest cities, has provided an incentive for companies to look to new frontiers, and an opportunity for non (or limited) offshoring countries to attract foreign investment. The success of India and the Philippines has provided a viable economic model for others to emulate, and there is an opportunity to develop their economies by servicing non domestic clients and drawing foreign investment into their embryonic service sectors. This has to go hand in hand with the necessary infrastructural improvements, and when attempting to access new markets these considerations should be borne in mind.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Political stability

The political climate of a country is one of the principal factors influencing offshoring decisions (Davies et al 2006). A working paper from the IMF (Aisen & Veiga 2013) found that political instability significantly reduces economic growth, both statistically and economically by reducing productivity, and preventing or reversing physical and human capital accumulation. Governments in politically fragile countries need to address the root causes of political stability in order to mitigate its effects on economic development, and ensure robust economic policies which may engender growth can be enacted.

Thailand’s previous experience with political instability provides an illustration of the economic impact of instability on economic affairs. Economic growth slows, on average, by 2.1 percentage points in the year of a coup, 1.3 points in the year after and 0.2 points in the year after that (Flowers 2014). The 2006 coup was anticipated by some analysts as a stabilising force for Thailand, providing some measure of control over an escalating situation: "The best case is that the army succeeds in its goal to stabilize politics, we get a reasonable and responsible interim government, elections that finally end this crazy political impasse we've had through 2006, and investors can enjoy predictable and rational policy making," (Green 2006). However, resumption of political unrest may serve to increase scepticism amongst possible investors.

Regulatory Context

When utilizing OSS, a company is transferring their liability for members of staff to an outsourcer. The staff is no longer directly employed by an organization and this creates legal and security issues that need to be addressed through the contract between the client and suppliers. This remains one of the most complex issues in outsourcing. As foreign clients Expenditure of millions of dollar in a foreign country on sensitive IT projects carries a high element of risk and investors need reassurance that confidential material will be secure (Waguespack et al 2004). At stake is the protection of intellectual property (IP). As more sophisticated and technologically advanced processes can be exported, it is vital for companies to ensure that they hold onto their product knowledge and that the value chain functions as efficiently and securely as possible. If there are expensive monitoring costs associated with operating within a country, then it will decrease the likelihood of outsourcing being located there (Asprey et al 2006).

Institutional and Policy context

The institutional and policy context of a country involves the monetary incentives (tax breaks, reduced import duties etc.), institutions (laws) governing labour and the environment and the presence of industry supporting business organisations.

The presence of monetary incentives for OSS is a consequence of government’s realising the immense potential that offshore outsourcing has in attracting overseas investment, foreign businesses and increasing domestic employment, in addition to its role in boosting the economy, and the knock on impacts of knowledge diffusion. Governments have supported fledgling (or burgeoning) industries in the

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 financial policies they have implemented. An illustration of this in India would be the removal of taxes on certain imported computer parts, hardware and other related goods, all aimed at making it as cheap and easy as possible for firms to operate (Kuruvilla & Ranganathan 2008). This is in addition to the construction of superior infrastructure, roads, power systems and dedicated technology parks or IT campuses for business to locate.

Institutional adjustments have proved to be a central strategy of many developing countries that are interested in OSS. The improvements in political, social and legal environments have given greater control to businesses, and this autonomy has opened up various sectors of the economy to the worldwide market. These reforms have been initiated in emerging countries including China, India and the Philippines (Luo & Tung, 2007). These nations are showcased to the rest of the world as good for investment, boosting trade and incoming FDI and encouraging the internationalisation of services (Lahira 2011). Many businesses have found it easier than before to enter into business arrangements with foreign clients, particularly in the realm of offshore outsourcing. Mimetic pressure from other firms currently operating in OSS will allow additional numbers of firms to follow suit (Javalgi et al 2009).

Industry supporting business organisations (such as Nasscom in India and IBPAP in the Philippines) further contribute to the success of OSS. This is done in several ways, one of which is through the organisation of workshops/seminars which endeavour to improve information dissemination, awareness generation and brand building. A second method is through the creation and maintenance of databases which register and organise software related activities as well as campaigning against software piracy and other online crime. A third methods is by establishing and maintaining relationships with the government and trying to lobby for the sector as a whole and by establishing industry standard (Kshetri & Dholakia 2009). These methods are all intended to improve the competitiveness of the offshore services industry, and encourage more firms to engage with OSS.

Additional Factors

Cultural structures are also an important component in successful OSS. It is crucial that the prevailing cultural norms, practices and customs are not inimical to the business objectives of a company based in another country or can significantly impact on cost/ price calculations.

An important example which can impact on any decision about offshore services is the potential for corruption. Corruption is defined here as involving ‘’breaking the rules by public officials for private gain’’ (Banerjee et al 2012). Firms or individuals may be expected to bribe officials in order to reduce obstacles in the market. Businesses may determine to avoid endogenous systems involving corruption or red tape which limit the productivity of capital (Lambsdorff 2003), reduce investment (Knack and Keefer 1995) and lower FDI (Wei 2000).

Potential investors in Southeast Asia have to acknowledge that although corruption is endemic it is not significantly better or worse in any country in the region. The lack of a transparent business environment would appear to be a negative factor when trying to encourage offshoring, with the

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 potential for under the table fines or fees proving prohibitive. Corruption can add up to 10% to the cost of doing business (Schoeberlein 2013). Thailand’s positioning in the Corruption Perceptions Index has

been falling over the past several years reaching a nadir of 102 in 2013 (80 in 2011, 88 in 2012). For many potential investors in offshoring businesses this is undoubtedly a major consideration and an unacceptable hurdle.

Figure 2.2 Transparency International ranking. Source: Transparency International

An alternative perspective perceives 'corruption' to be a positive factor within a business environment, with its potential to open up access to otherwise inaccessible markets, or to encourage preferential legislation or business practices. The short term gains of corruption can be substantial with business representatives keen to secure contracts or tenders utilising bribery to secure the business. Refusal to

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 comply with prevailing corrupt practices will not only be detrimental in the short term but also in the long term (Wei 2000). There is certainly a balance of advantage to be weighed trading access and operational equilibrium against the introduction of ethically questionable strategies into the business which may be difficult to control.

2.5.1. Creating suitable conditions for offshore services Since the 1990s, the complex relationship between globalisation and regional development has been the focus of extensive analysis (Hess and Young 2006). To be both valid and effective, a rigorous multi- scalar approach is required to adequately assess and interpret the complexity of global, regional, national and local development and the networks between them. The development of the Global Production Network approach (GPN) reflects this new methodology and encouraged the literature debate to progress beyond the idea of regions as ‘closed’, inaccessible, stand-alone entities (Lagendijk 2007).

This fresh perception of regions as entities where relations stretch transnationally, with porous linkages and relationships, is a key feature of GPN. This transference of analytical focus to understanding the complex relationships between actors on a global scale is widely recognised as a significant development (Yeung 2005). With this paradigm shift, the concept of ‘Strategic coupling’ has been advanced to provide a model for multi-scalar interactions in the construction of Global Production Networks. 'Strategic coupling' is currently understood to be the process by which local actors (economic and policy) influence and interact with global firms value chains and production networks to benefit local economic development. It is strategic because it is a rational and calculated process undertaken by the local actors and subject to alteration if circumstances change.

There are three processes which enable strategic coupling: The emergence of transnational communities, changes in industrial organisation and the initiatives by states and organisations (Yeung 2006). Large international firms can direct their regional offices in a production network on a global basis deploying technological changes which imbue firms with mobility and power in their interactions with other parts of the value chain (Taylor and Ashiem 2001). There is a need to investigate how strategic coupling is manifesting itself in the South East Asian context and a comprehensive approach to comprehension of the power relations between international firms and local actors.

States and local actors have traditionally endeavoured to attract as much FDI as possible, and ensure that it is retained in their locality. However, this process is complicated by the emergence of Global Production Networks with flexible territories and relationships replacing fixed geographic areas. The bargaining power of local regions has decreased with the mobility of firms, and therefore they have become increasingly dependent upon the unique business advantages and attributes of their zone

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

(Mackinnon 2012). Firms can take advantage of the distinctiveness of regions as an intrinsic part of their strategy.

In response to this, countries and regions try and create favourable conditions (Availability of Adequate human capital, Presence of adequate IT infrastructure, Political stability, Regulatory Context and Institutional and Policy context). The economic imperative for this strategy is shaped by the advantages it secures including creating employment, assisting local suppliers (of goods and other services), boosting growth of commercial businesses, allowing the workforce to compete internationally (Weisz 2011) (improving their skills and competitiveness), improving the quality of citizens' lives, and enhancing global perceptions and reputation of the country.

Fostering the growth of human capital is one of the most important pre-requisites for developing countries to start benefitting from FDI but human capital investment is not sufficient by itself to ensure developing countries will remain attractive to FDI. There must be a strong infrastructure within a country to make it attractive to outsourcers with flexible provision of labour, information and services. The socio-political infrastructure has to be conducive to OSS, protective of intellectual property rights, able to secure any material property of a company, and capable of guaranteeing amenable legislative and bureaucratic conditions.

Market friendly policy environment

The growth in volume of trade and capital moving internationally is both a consequence, and a driver, of globalization. The relaxation of trade barriers, can, when combined with market friendly policies and human capital investment, create favourable conditions for investment. Governments wish to maximize the benefits of globalization, and one way in which they can do so is through creating a flexible labour market. Liberal economic theory suggests that costs would be reduced if workers can move freely and flexibly from one employer to another (Regine 2013). Sectors that foster higher level, transferable skills are more competitive (by remaining flexible) and responsive to outsourcing demands and in consequence are the sectors that will remain economically viable.

The identification of ‘preferred’ multinational enterprises, by governments, which would actively participate with and benefit host countries, is an important step. If there is a mutually beneficial arrangement with the operating firm that ensures in exchange for human capital development and technology transfer, a supportive and nurturing environment for businesses, then this would be the preferred route.

Providing attractive tax exemption packages and preferential status for international companies will increase the amount of FDI in the short term. However, there are financial constraints to this policy, and it will not on its own attract the highest value MNEs (who possess the desired skills and technology) as tax breaks are not their sole concern (Khan et al 2011). Attracting the ‘desired’ type of company will benefit the country through skills diffusion, and enable a virtuous FDI and knowledge diffusion cycle. Policy reforms to attract the right kind of company are essential to prevent non-recurrent benefits of outsourcing and to promote long term employment and growth.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Co-ordination between formal education and market demands

To maximise inward investment and to attract the most prestigious offshoring companies targeted and responsive human resource development is key. This involves a co-ordinated and cohesive effort by the government, multinational enterprises and educational institutions to ensure there is growth in the right knowledge and skill areas, and that graduates are emerging from educational institutions ready to contribute and with minimal supplementary training needs.

There is evidence that, in the Southeast Asian manufacturing sector, there was little in the way of institutions with the capacity to deliver upgraded technical skills before the influx of FDI (Deyo 1989, Ritchie 2002). There is a parallel here with the experiences of many African countries with FDI where the growth potential was in the exploitation of natural resources and companies looking for market access. However, there was stagnant development of human capital, which can be attributed to the absence of preferred MNEs and a failure to embed appropriate and beneficial relations with educational institutions.

In marked contrast, Singapore has created a successful educational system, which produces a reliable supply of IT graduates with English language abilities. It has also engendered a supportive market environment, offering tax incentives and a modern infrastructure which has encouraged many large corporations to base their regional headquarters there. The Singaporean investment promotion agency has been active in redefinition of the educational system to make it more flexible and responsive to industry demands (Yew 2011)

Ensure positive public perceptions

Because of negative perceptions of the deleterious impact on domestic employment of OSS, countries can try and counter these damaging views by highlighting the positive impacts of efficient outsourcing. Offshoring can result in significant job increases, for example, and increasing offshoring success can lead to increased investment and the expansion of employment prospects. There is limited evidence that offshoring leads to lower employment, although there is a risk of lower skilled workers having reduced employment, but increased opportunities for higher skilled workers (Görg 2011).

2.5.2. Summary This chapter included an outline of what constitutes Offshore Services, what enables and drives the Offshoring sector, and firm’s motivations to get involved in offshoring services. It then went on to include the different modes of services outsourcing and offshoring, the factors influencing firms offshoring location decisions and how to create suitable conditions for offshore services.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Chapter 3. Methodology

3.1. Research questions Differing and contrasting consultancy ratings (World Bank 2010) have prompted interest in the question: what is Bangkok's position and prospects as a destination for outsourcing services? Bangkok is perceived as either a richly promising undeveloped outsourcing market, or one in which institutional restrictions and instability are proving to be sizeable obstacles to outsourcing. Bangkok currently holds the position of 83 in Tholon’s 2013 top 100 Outsourcing destinations. This position is anomalous within Southeast Asia’s current strong ‘outsourcing brand’, growing domestic market and progressive macro-economic environment. The Philippines (Manila - 3, Cebu city - 8), Vietnam (Ho Chi Minh - 16, Hanoi 23), Malaysia (Kuala Lumpur - 19) and Singapore (Singapore - 31) are all strong contenders in the SE Asian outsourcing market. This research aims to clarify Bangkok’s position and offer some resolution of the lack of consensus about its outsourcing potential (Zhang 2007).

To that end the following research question has been designed:

What is the nature of Bangkok's offshore services industry, and what are its explanatory factors?

In order to answer my main research question, two sub questions have been formulated:

1. What does Bangkok’s offshore services industry look like in terms of types of services produced, ownership structure, main markets served, firm size and locational patterns? 2. How conducive is Bangkok’s commerce environment to offshore services delivery?

The first sub question is necessary to identify a number of the characteristics of firms in Bangkok’s offshore services (BKK OSS). These variables are: types of services, ownership structure, size of firms, markets served and the location of firms. The second sub question is assessing the quality of factors affecting FDI/offshoring decisions. These factors are: the availability of adequate human capital resources, the presence of adequate IT structure, the regulatory context, the institutional and policy context and the stability of the business environment

3.2. Conceptual scheme The purpose of the conceptual scheme is to identify the contributing variables, and to present them in a way which highlights the perceived relationships between them. The variables have been drawn from the academic literature used in the theoretical framework. Figure 3.1 is an illustration of the relationships between the concepts and variables used in this research.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Within the International/national context, the researcher has included the five explanatory dimensions that combine to provide the factors determining the attractiveness of a location for offshoring. These five bubbles all have arrows that lead towards a central circle. These arrows indicate the direction which these explanatory factors flow. These factors have all been kept separate as they all require individual analysis due to the differing nature of the target respondents. There may be relationships between them, but due to the lack of prior research on the nature of OSS in Bangkok, the researcher was reluctant to presume connections that could be generalized.

Institutional Regulatory and policy context context

Presence of Political adequate IT Stability infrastructure

Nature of BKK- OSS Human Types of services Additional capital Factors Ownership Markets services Size of firms Location

Figure 3.1 – Conceptual scheme

The central circle contains the differing physical and organizational characteristics of Bangkok's offshore services industry. These characteristics are types of services performed, size of company, ownership, market served and location in Thailand. They have been presented in a list as each factor will have to be considered to present a satisfactory explanation of ‘what’ is present in Bangkok’s OSS. The arc (on top) represents local governance actors’ interference with the five factors affecting the nature of BKK-OSS. The researcher will attempt to identify these differing processes and factors (as well as any other dimensions that are unlisted), and then explore what were the contributing factors to choosing Thailand as the preferred location for offshoring.

Operationalization

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

The Operationalisation tables are based on the differing factors highlighted in the literature in the theoretical framework. The two fundamental concepts of the research; the nature of BKK-OSS and the explanatory factors behind BKK-OSS are broken down into their various dimensions and explained in greater detail below.

Concept Dimensions Variables Indicators ERM BPO HRM CRM Software Infrastructure Types of services ITO IT consulting Software R & D Business Consulting/ KPO Business Analytics Legal Services Thailand Asian exl. Japan Japanese Ownership The nature of Europe Bangkok’s offshore North American services Other Domestic Asia exl. Japan Japan Market served Europe North America Other 0-20 21-100 Size of firms No of employees 101-500 500> Unknown

Location Postcode

The first concept (the nature of BKK OSS) is broken down into five dimensions, each dimension is necessary to attempt to answer sub-research question one. The types of services, ownership, market serviced, number of employees and postcode are necessary to provide. These are broke down in turn, the types of service in operation by firms are numerous, and to improve the feasibility of the research these variables had to be broken down into three categories. These are BPO, ITO and KPO, and then the various dimensions. These dimensions will be broken down into their individual processes in throughout the document as necessary and a complete breakdown in the annex. Ownership and market served

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 have been broken down into their various regions. These two dimensions differ in that Thailand has been included in the ownership; this was to provide additional data on the current state of Thailand’s role in particular. The size of firms was divided into five categories, to provide data on how large the number of employees involved from certain regions, and in particular processes are. Firm location will provide information on the concentration of services, whether they are concentrated in certain regions within Thailand and in Bangkok in particular.

Concept Dimensions Variables Indicators

Cost Presence of adequate IT

infrastructure

Reliability

Ease of opening and maintaining a business

Regulatory Context Labour laws (OSI values flexible labour regulations) Beneficial to OSS Red Tape Bangkok’s commerce Extractive environment for OSS Presence and quality of supporting organisations (public Institutional and Policy and private sectors) Context Availability and quality of incentives (e.g. Tax breaks)

Stability of the business Political Stability environment

Quantity Availability of adequate Cost of Labour

human capital Quality Reliability

The second concept, (the explanatory factors behind BKK OSS), is divided into five distinctive dimensions. Each of these five dimensions is a consideration when dealing with OSS. The first dimension, availability of adequate human capital resources is divided into three variables. These variables encompass the necessary human-based factors to enable outsourcing, due to the varied nature of respondents; it was again difficult to satisfactorily identify accurate indicators when each firm has a

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 differing incentive for outsourcing. Encapsulating the specifics of each within the table was prohibitively complicated.

The regulatory context, institutional and policy context and stability of the business environment all necessitated indicators to sufficiently identify the considerations; this was enabled by the limitations of possible responses. When considering the two concepts together, they should combine to provide samples of what is occurring in Bangkok’s OSS scene, in addition to assessing the quality of the OSS promoting factors.

3.3. Research design This research will follow the pattern of an explanatory study. Explanatory research is required in this case as the public data on the nature of Bangkok’s offshore services is limited and requires further investigation (Bryman 2008). More detailed knowledge of the number, and type, of companies operating will provide a more secure basis for informed analytical comment to be made on the policy environment and suitability of Thailand for OSS. This primary stage is essential also to provide an evidence base for the second sub-research question and a more authoritative assessment of the quality of the factors influencing offshoring. The results may be difficult to generalize without indicating certain qualifications and caveats (not all companies publically listed) which will be acknowledged later in the thesis.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Research Location and reflection

The research location was in Bangkok, Thailand. Bangkok is the capital city of Thailand, and the largest and most populous city (metropolitan population is 14,000,000). Its rapid economic growth in the 1980s and 1990s stemmed from its success as a regional manufacturing hub, with large multinationals establishing a commercial presence there. As a direct consequence, Bangkok has been transformed into a large, expansive city. Bangkok was chosen as a research location because of the opportunity it provided to address the lack of data on its service offshoring landscape. Initial research into Thailand’s offshore services network had suggested it was concentrated in Bangkok, which made it the most suitable location to be based for the duration of the research.

Figure 3.1 – Thailand (Source http://www.countrywatch.com/country_profile.aspx?vcountry=170)

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Unit of Analysis

The fieldwork location was based solely in Bangkok, but the research included firms from other areas of Thailand. However, as the number of firms based outside of Bangkok was so limited, it would be inappropriate, and methodologically open to question, to extrapolate and draw strong conclusions from their choice of location. This research aims to give emphasis to current trends in Bangkok’s offshore services network but cannot claim to present a definitive and complete picture (due to time and access restrictions) of all activity.

3.4. Research techniques Data was collected for this study through a combination of qualitative and quantitative techniques. This mixed methodology approach was deployed as it provides a more reliable evidence base for any data and conclusions that are produced. It allows the researcher to corroborate findings. Mixed methodology rejects the idea that there is a hierarchy of methods (Creswell and Clark 2007), but promotes the idea that researchers who are versed in both qualitative and quantitative research will be able to tackle a wider range of projects. This mixed research approach could most appropriately be described as sequential exploratory research, which incorporates an initial stage of qualitative data collection and analysis followed by a more extensive stage of quantitative data collection and analysis (Creswell 2003). The fieldwork took place between the 20th of January and the 23rd of February 2014 in the metropolitan area of Bangkok, Thailand.

3.4.1. Quantitative The fieldwork involved collecting company data from countries' chambers of commerce, the Thailand Board of Investment (BOI) in addition to lists of top offshoring companies. These companies were then entered into an Offshoring Business Matrix (OBM), which was used to test various hypotheses.

Quantitative data was incorporated into an ‘Offshoring Business Matrix’ (OBM). The OBM is comprised of firms operating in Thailand, and consists of line of business, main markets serviced, firm size, ownership, location and postcode. To most effectively answer sub-research question one; the research had to identify what firms were operating in Thailand, whether they were involved in BPO, ITO and KPO in addition to the other variables. These variables were then compared in varying configurations, to identify certain characteristics such as largest ownership region, leading employers and geographical location, in addition to other variations.

3.4.2. Qualitative In conducting an explanatory study, the adoption of qualitative techniques proves especially useful for gathering data on flexible and delicate social constructs (people’s values, perceptions and beliefs and ideas on a phenomenon). If the process of research is understood as the progressive reduction of uncertainty, then it is only through gradual revelation of the research phenomenon that the most valid questions be elucidated. The responses to these questions provide the data from which conclusions can be drawn (Sofaer 2000).

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

In this study, five semi structured interviews were conducted. This method provides space for participants to express themselves, to engage with the questions and answer these based on their interpretation. It also provides room for the interviewer to ask questions based on their responses (Bryman 2008). The interview guide was tailored for each individual respondent. The justification for this was that the participants were in very differing professions. Prior to my departure for the research location, I had made preliminary contact with numerous individuals in academia, business and government circles in order to maximise opportunities for interviews with them, but this proved to be a problematic approach. As a result, I had to try and speak to individuals while in Bangkok but this initiative also met with limited success. In addition to these individual meetings, qualitative information was gathered from online forums, media outlets, reports, articles etc.

Purposive Sampling has been used in this research; this is due to the requirement for an informed participant to be able to contribute towards the research questions (Bryman 2008). This allowed for snowball sampling, seeking to use original participants to gain further access to the target population. It must be acknowledged that this type of sampling excludes a statistically representative sample (Bryman 2008). There is an inherent bias in this approach as I was targeting individuals and businesses with whom to speak. However, the time restraints in place had a pronounced impact upon the success of this research strategy. Despite this targeted approach, gaining interviews with individuals involved in offshoring proved challenging.

3.4.3. Secondary data There is a range of online resources that discuss offshoring in Thailand. Internet searches were used to identify relevant forums, media, lectures and reports that have been fruitful in gaining a further insight into Thailand’s offshore services landscape.

3.5. Ethical considerations, challenges and constraints

3.5.1. Ethical Considerations Ethical considerations depend on the researcher being able to proceed with their project free from presumption, prejudice and bias. Ethical standards should be central to research and shape the design, conduct and post-research stages. Bryman (2012) notes that the main elements in discussion of ethics have barely changed over the last several decades, and that, 'Participation should base itself on informed consent, be voluntary, confidential and anonymous and ensure that the research is worthwhile and does not risk adverse consequences (harm, physical, social, financial etc) for participants’ (Ritchie et al 2013). However, in practice no researcher intends to break these rules, but different circumstances require different approaches. By working in a thoughtful and conscientious way, reflecting throughout, it is possible to maintain appropriate conduct when conducting research.

My approach to the research required taking a neutral stance to wider processes such as globalisation, capitalism and specifically the contemporary political situation in Thailand. My main concern was the anonymity and confidentiality of the participants, as individuals needed to feel secure to speak freely about actions of government and enterprise. I conducted all interviews, the locations for which I asked

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 the participants to decide, with a deferential, courteous and professional approach to individuals and was careful to be non-critical and non-judgemental of government actions. Through this deferential, non-critical approach I hoped to make participants feel sufficiently relaxed and unchallenged to be confident enough to speak frankly about the issues I was interested in.

The sensitivity of my interview topics was a key ethical consideration, as they included questions about social and political stability which were especially delicate given the seriousness of the political unrest throughout Thailand during the time of research.

3.5.2. Epistemological and Ontological Position The epistemological and ontological positioning of a researcher guides their perspective in the conduction of their research. Ontology deals with ‘the nature and relations of being’, while epistemology is the ‘study or a theory of the nature and grounds of knowledge, especially with reference to its limits and validity’ (Merriam Webster 2013). I believe my research would fall more into the post positivist category. While positivism does not acknowledge the potential for an inherent researcher bias, post positivism accepts that it is impossible for a researcher to distance themselves completely from their background, knowledge and values in the search for objectivity. By acknowledging the impact of researchers individual circumstance on the data collected, post-positivists are seeking objectivity. The nature of reality is imperfect, and it can only be known through acknowledging these imperfections. (Robson and Colin 2002)

Figure 3.2 - Ontology and Epistemology Table – UvA (2013)

3.5.3. Challenges and Constraints One of the biggest challenges I faced when conducting research was access. There was awareness prior to the start of the research in Thailand that study in the political climate would be a challenge, but it proved more difficult than originally anticipated. The researcher can only speculate that the sensitivity of the research combined with the political situation impeded attempts to conduct interviews. Snowball

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 sampling attempts proved unproductive, with individuals either unwilling to assist, or concerned that knowledge of their participation would prove detrimental. Establishing fruitful lines of communication proved to be problematic which further limited breakthroughs in arranging interviews.

Political Situation in Thailand

Political stability is but one of the factors that influence a company's decision to invest or offshore in/to a country. However, the extent to which it is a consideration depends on the severity of the unrest. The civil unrest within Thailand remained a significant consideration throughout the research. It involved regular ‘shutdowns’ of the city, which could present an obstacle to the mobility of the researcher, their safety and also influence, though difficult to quantify or specify, some of the responses receive from participants.

The impact of the current political situation on outsourcing in Thailand during this research period (early to mid-2014) has to be acknowledged. Elections were planned for early February but these did not materialize. The large scale anti-government protests that were attempting to remove the government, and suspend the rule of parliament (Peel, 2014) have been superseded by the coup d'état. As the political turmoil has continued, with the declaration of martial law, and internet and media restrictions, neither Thailand nor Bangkok have provided an attractive environment for outsourcing.

Consequently, the civil unrest has implications for the research process (hampering collection of data), and for the research results themselves. The impact on the attractiveness of Bangkok’s economy to foreign investment, and for the flows of foreign direct investment into the country is amongst myriad factors which need to be gauged when considering Thailand's position.

3.5.4. Reliability The reliability of a study is in its potential repeatability, and whether the concepts used are coherent. A number of potential biases and limitations have been highlighted for their impact in the data collection process (Rosenfeld 2009).

Sampling Bias – The participants in the research were specifically chosen for their knowledge of Thailand, and the offshoring economic ventures in particular. However, a significant weakness in this approach is that the qualitative participants are not representative of the whole spectrum of individuals involved in offshoring. To establish a fully inclusive range of participants would require contacts and resources beyond the capacity of the researcher. There has also to be an explicit acknowledgement that respondents' country of origin, politics, vocation and other facets of individuals' lives and circumstances influence their perceptions and attitudes towards Thailand’s offshoring network.

Selection Bias- Selection bias is inherent bias in the methods chosen to select participants. This is a particular issue in social sciences, but as explained in 3.5.2, the intention was to use snowball sampling to encourage targeted participants to recommend other potential participants. There is no control over the representativeness of these individuals. The main criterion would be that they possessed knowledge of offshoring.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Social Acceptability Bias – The responses of interview participants will be influenced by the presence of an interviewer. There is a risk of people saying what they think you want to hear, or will avoid speaking negatively about a particular subject if it may reflect poorly on them, their organisation or their country.

Response Bias – A more specific form of social acceptability bias, some individuals don’t want to answer specific questions or participate in further discussion on a topic. This was a concern when undertaking this particular research project. It was essential to avoid critical or negative lines of questioning as culturally individuals were unwilling to discuss any (perceived) shortcomings of Thailand, ignoring them to focus on positives. This cultural inhibition generally applied to any sensitive issue, but in the context of the anti-government protests influenced respondents' positivity or negativity about the future of Thai offshoring.

Recall Bias – The reactions of individuals, whether in person or online, will be biased by their own experiences and memories.

Interviewer bias - People give different answers depending on who the interviewer is (or who they think the interviewer is). The preconceptions of the interviewer guide the design of the interview (semi- structured in this research), and the wording and question design can influence responses unduly. The researcher may focus on one area to the detriment of others, failing to give the participant room in which to express themselves, and elaborate on what is of central importance to them.

Generalisations – Individuals have different concepts of what is included in services offshoring, what is deemed ‘success’, and on its relative merits. This research is not an exhaustive and fully comprehensive study from which concrete generalisations can be drawn.

Lack of existing data – The limited existing studies on Thailand’s offshore services network made formulating an appropriate and feasible research project difficult. To overcome this, the qualitative portion of this research was guided by the theoretical basis, including what affects suitability for OSS, and attracting FDI.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Chapter 4. Thailand’s Offshore Services Landscape

This chapter will provide an explanation of the data sources used in the research, the methods, their limitations, their validity and the data appreciation.

4.1. Data sources and methods To provide an effective means of analysing quantitative data, it was indispensable to construct a table into which firms and their characteristics could be filled. This table is referred to in this document as the Offshoring Business Matrix (OBM). The OBM comprises 264 firms in Thailand involved in BPO, ITO and KPO. The firms and their characteristics [Types of services, Ownership, Market served, Size of firms and Location] are drawn from a variety of sources: the Thailand Board of Investment (BOI) firms database;, the International Chamber of Commerce (ICC), the Chambers of Commerce of America, Australia, Belgium-Luxembourg, Britain, Canada, Denmark, France, Germany, Hong Kong, Israel, Italy, Japan, Korea, The Netherlands, New Zealand, Norway, Switzerland and Russia; the 2013 top outsourcing firms list, and Thai business directories and business associations in addition to the websites of individual companies.

The Thailand BOI was chosen as a source for firm data as the overwhelming number of foreign companies operating in Thailand will register to access tax incentives, visas, work permits and to waive certain restrictions on ownership by foreign entities. This is in addition to their role in coordinating foreign investment, and providing potential local suppliers and joint ventures, which encourages membership of both Thai and International firms. This data source provided the majority of the firms in the OBM, as it provides a high level of reliability as businesses can be traced relatively easily, and future studies can compare the same resource in the future for comparison (test-retest reliability). (Cozby 2001)

Chambers of commerce were also used as a data source as members are heavily incentivised to join, due to the networking opportunities they present, and for their support when abroad, which encouraged a high level of membership. Every Chamber of commerce provide a free members' directory, which allows other chamber members to identify a new member and approach them if they are interested in a product or wish to promote their own service. This directory provides contact information, the line of business, and often the company size and their ownership, all of which allowed for categorisation and investigation. It was for this reason that chambers of commerce were used for data collection. There is a strong degree of reliability to this collection method also owing to the easy availability of company registry, which allow for repeat viewings.

The top outsourcing businesses' website, and individual company websites were used to provide more entries for the OBM, as it provides information on some of the largest multinational firms in the world. These firms were checked for locations in Thailand, and the processes they conducted there. Many provided information on the size of their staff, the ownership, location, and the intended market, all of which was useful in acquiring more firm information for the OBM. This is a repeatable process, as other researchers can follow the same procedure with relative convenience.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Thai businesses were taken from the Thailand BOI, and business directories and business associations. Business directories and websites provide search and categorisation tools which allow a researcher to isolate and search for specific sectors. Any results were then vetted to make sure they targeted international markets, and any additional criteria that were required. Three business directories were used to add firms to the OBM. A data source list has been included in the appendices which can be consulted.

4.1.1. Limitations However, there are limitations to this methodology. The first is the potential bias of the researcher. As the data collection points were chosen by a researcher, who is limited by language, access and any potential sampling biases, in addition to lack of existing data, it has to be acknowledged that there is a possible inherent bias. This may have led, inadvertently, to an over-representation of international firms in the OBM, as the majority of firms were drawn from associations with an international perspective, and an under-representation of ‘Rest of the world’ [China, Korea et al] companies as data was more problematic to access.

The second limitation of this research method is that it is not a fully comprehensive list of firms operating in Thailand. There were several chambers of commerce from which no company data could be acquired including the Chinese Chamber of Commerce, Hong Kong Chamber of Commerce and the South African Chamber of Commerce. There are almost certainly offshoring businesses which are not registered with the Thailand BOI. Qualitative data collection indicated that there are firms who are operating outside of the BOI remit, which makes detection of these firms and data collection very problematic. Furthermore, it was apparent that some companies in the OBM may no longer be involved in the same processes as registered. If a firm stops a certain process, or have become defunct then it would not automatically be known, and would require reinvestigation.

The third limitation of the OBM methodology is that the researcher cannot guarantee that the size, location, market served and ownership will remain constant. Companies may retain an offshoring interest but its characteristics will remain in flux and there is no automatic way of being aware if there characteristics have changed. Therefore this research cannot assure the reader that all data is correct at the time of reading. Findings, results and conclusions can only therefore be tentative and in reality probably offer a range of insights into aspects of Thailand's and Bangkok's offshoring landscape rather than a comprehensive and unchallengeable description and analysis.

4.1.2. Validity Validity is the extent to which the researcher measures what they plan to measure. There are several types of validity that have been applied to this research method. The businesses selection methodology satisfies ‘Face Validity’, which requires a method to ‘on the face of it’, measure what it is intending to

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 measure. This is a basic validity requirement, and if a study cannot measure this criteria than it will be difficult to fulfil other validity criteria (Carter and Porter 2000). This study fulfils these criteria by drawing on a variety of data sources to add firms to the model. Irrespective of how these were chosen, it appears to measure what it is supposed to measure. The intent was to produce a table which included as many offshore involved firms as possible, and at face value it succeeds in meeting these criteria.

A study must also satisfy ‘content validity’, which is the extent to which a measure adequately represents all facets of a study. The OBM categories: line of business, main market served, firm size, ownership and location were chosen in order to provide a large amount of useful data to ensure that the objectives of the study could be accomplished. These five categories provide sufficient information about firms to be valid, as a number of companies' facets are considered (Columbia 2014). Ownership and market served are particularly important criteria when studying the emergence of services offshoring. Business size and location are additional variables of interest when surveying any industry.

Criterion-related validity is the extent to which the instruments that have been developed are useful as an indicator of a specific trait or behaviour, either currently or in the future. The aim of the OBM is to provide an insight into Bangkok’s offshoring landscape, its scale and current trends of offshoring in Thailand (Knapp 1998).

4.1.3. Data appreciation The process for deriving the required information was applicable across all of the data sources. The Thailand BOI firm database provides a list of business organisations, and the processes that each company is involved in. The researcher used this list of processes to identify whether a firm's business activity was in KPO, BPO or ITO. If a firm was involved in more than one of these forms of offshoring, then scale of activity was the determinant of which category was used to place a firm into a line of business. In addition to ownership of the company, the postcode is also included in the registered information, so that information was used to complete the postcode requirement. Company size data was often taken from the same source, but if necessary was identified through inquiries to individual firms, or through individual firm websites. If information on employees was still elusive then it was placed in the unknown category. Markets serviced were drawn from information provided on company websites, where there was often a list of firms who were partners, or regions which were serviced, and these were used to determine the category into which markets served were placed.

The same data collection technique was repeated for the chambers of commerce, which produce lists of registered firms, processes involved with, postcodes and ownership. For the top 100 listed outsourcing firms, individual websites had to be visited to extract details of local offices, which often have developed their own websites from which additional data could be mined.

4.1.4. Selection Criteria Firms were chosen for the OBM, first, through identification in a relevant data source (BOI website, CoC, Offshore Services firm list etc). Foreign chambers of commerce operating in Thailand provide a list (in most, but not all cases) of their firms working within the Kingdom. These lists can be divided by ‘activity type’, and categories such as ‘Accounting, Consultancy, Computing & IT and Financial services’ can be

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 investigated to identify firms operating for foreign markets. The larger CoC within Thailand, such as the US (AMCHAM) provide detailed information that is accessible even to non-members. Within the Thailand BOI website there is a promoted company database providing a list of foreign firms operating in Thailand, this website cannot be searched by ‘category’ so easily, and so required individual identification and investigation of firms to determine their desired market. The desired market was determined either by the description of the firm (market served explicitly mentioned) or by vising the website of the firm and investigating references or comments by investors/users of the service. Information was corroborated by comparing the two data sources (original and website) to see if the information provided in the data source matched that provided by the company itself. However, it must be acknowledged that a large number of firms in the OBM produce services for the domestic as well as the offshore market (dual model). An illustration of this would be firms such as ‘ABC Tech’, a Norwegian firm who have opened a subsidiary in Bangkok to serve both their home market, but also the domestic Thai market.

To delineate the five categories used in the OBM, a similar method was used as elaborated on above. The line of business of a firm is written either in the CoC list (US, UK, Japan, New Zealand), Thai BOI websites etc, along with information on the location and ownership (% foreign owned, % Thai owned). This information was used to fill in three of the five categories in the OBM. Information on the firm size was more difficult to ascertain, it was often taken from the BOI or a company website (information on number of programmers, solicitors, expats etc working in an office), but the information occasionally had to be requested from a firm. This information was not always given freely, but smaller offices were often very helpful in their responses. The method of doube checking information was again a comparison between the information provided on individual firm websites compared to the information provided by official sources. Information such as location or line of business were simpler to verify than number of employees, or all markets served where there was only one source of information used.

4.2. Bangkok’s OSS: Basic characteristics

The OBM was constructed to paint a picture of Bangkok’s offshore services landscape, and try and gauge how developed it is. The results collected suggest that, when compared to the ‘pace-setters’ in OSS such as India and the Philippines, then Bangkok, and Thailand, remains in a relatively embryonic stage. An illustration of which is the loss of 2.1 million jobs transferred from Europe and North America (Economist 2013) to outsourcing in India and the Philippines since 2004. There were 125 locations offering ITO and BPO services in 2013 (A.T. Kearney 2013), but very few were capable of hitting the heights of India with its supply of IT and related field graduates, coupled with its language skills. Within Thailand, there are far fewer individuals involved in OSS (employment or auxiliary functions), and less overt government support provided to OSS firms. However, there is an increasingly varied, and advanced, series of processes being offshored which would suggest that there is an increasing recognition of the value of OSS, and a growing acceptance of its role.

The distribution of services produced in Thailand is varied, there were nine processes included in the OBM initially; several proved to be common practices, the rest were preferred by fewer firms. The

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 popularity of processes in descending order from most firms involved is: Economic resource management (ERM), Human resource management (HRM), Infrastructure, Legal, Software, Business consulting, IT consulting Customer resource management (CRM) and software R & D. The four largest processes (ERM, HRM, Infrastructure and Legal), all have a similar amount of firms involved (54 to 57). The other processes have between forty two and eighteen firms involved.

The foremost owning region is Thailand, which has the most firms involved in BPO, ITO and KPO processes. North America is the second largest owning region, coming second in the number of firms involved in ITO and KPO, and the third largest in BPO. Europe is the third largest, and is the second largest provider in BPO, and third in ITO and KPO. These three regions dominate BPO, with a significant gap between them and the other owning regions. However, there is a less pronounced difference in ITO and KPO services, with the other owning regions being less represented, but with a smaller gap between them and the leading three leading regions.

The largest market served is Asia excluding Japan, with one hundred and sixty eight firms targeting the region. This is a particularly pronounced trend in ITO and KPO, with roughly fifty percent of firms (from all ownership regions) servicing domestic Asia excluding Japan in those two processes. In BPO, there is greater variety in the markets served, with Europe and North America rivalling Domestic Asia as the preferred market. Japan is an interesting case, with Japanese firms largely targeting the Japanese market, with limited involvement from the other owning regions. Only one European firm is targeting the Japanese market throughout all the processes.

The majority of firms operating in Thailand have between twenty one and one hundred employees (one hundred and twenty firms). This is a trend that can be seen in the bulk of processes, and particularly evident in Legal Consulting (sixty eight percent of firms with between twenty one and one hundred employees), but every process except multiple process KPO and software have a majority of firms in that employee category. However, a substantial number of processes also employ between one hundred and five hundred employees (seventy one firms), Business consulting, ERM, HRM and multiple process ITO all possess significant numbers of firms within that employee category. Firms with five hundred plus employees are relatively rare, however they are mainly found in BPO, with ERM, HRM and multiple process BPO.

Bangkok is the major economic driver within Thailand and it is home to many regional headquarters of the international firms operating within Thailand and through Southeast Asia. As a result of this, there is a reasonable probability that most firms involved in offshore services will be based in Bangkok. This location would permit companies to take advantage of the infrastructure and associated benefits of working within a capital city. Figure 4.9 is a breakdown of all postcodes in the OBM by processes to determine what postcodes are involved in what processes, but also what proportion of firms in the OBM are Bangkok based.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

40 KPO ITO

30 BPO

10110 10120 10150 10230 10240 10250 10260 10310 10320 10330 10400 10500 10540 10550 10600 10900 11000 11120 12000 12130 50100 50200 50210 50230 10100

Figure 4.9 Location and line of business

The Figure 4.9 Y-axis has the number of firms, and categorisation of how many are involved in BPO, ITO and KPO while the X-axis has the postcode in which those processes are conducted. The most popular postcode for all processes is 10110, with BPO alone having forty firms involved. Five postcodes in total make up the majority of firm locations. 10110 (Sukhumvit), 10500 (Silom), 10330 (Pathumwan), 10120 (Bang Kho Laem) and 10400 (Phahonyothin) are the most populated postcodes in descending order.

The dominance of five postcodes in Bangkok’s offshore services network would suggest that Bangkok is overwhelmingly the area which offshoring firms choose for their location. The theoretical framework suggests that regions are increasingly the economic drivers of states, and the pre-eminence of the greater Bangkok region in offshore services would support that basis. There is no metropolitan body that can compete with Bangkok as an offshore services hub; and this is attributable to its distinctiveness as the main repository of human capital, government and business in Thailand.

4.3. Bangkok’s OSS: Probing relations The OBM was constructed also to look for links and correspondences between the five variables; line of business, markets served, firm size, ownership and location. It is possible, on the basis of the relevant literature, to hypothesise links between some of the variables. Figures 4.1-4.11 were compiled to

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 determine whether one variable significantly influences another. If the data does not confirm the proposed hypothesis, then it raises the interesting question as to why practice is not confirming theory, an indicator that further investigation is required to determine the reasons why.

Initially, ownership patterns in different lines of business are analysed. Figures 4.1 – 4.3 show BPO, ITO and KPO by their respective ownership, to try and discern any potential connections, and ascertain if certain regions show a preference for a particular process. If a region shows a preference for KPO over BPO, it would be an indicator that a region prefers to outsource higher value-added processes and vice versa BPO preference would indicate a preference for lower value-added processes.

0 ERM HRM CRM

THAI Asian Exl. Japan Japanese European North American ROW

Figure 4.1 Business Process Outsourcing (BPO) processes by regional ownership

The breakdown of outsourced business processes by region is shown in Figure 4.1. The x-axis categorisation is by Economic Resource Management (ERM), Human Resources Management (HRM) and Customer Resource Management (CRM) (ERM: Finance & accounting/ Procurement/ logistics/ supply chain management CRM: Marketing & sales/ contact centres/call centres HRM: Training/ talent management/ payroll/ recruiting).

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

The Y-axis shows the number of BPO processes conducted by firms. A significant result of the BPO OBM is the lack of CRM, with it having almost 50% fewer firms involved than ERM and HRM. In addition to this, there are zero Japanese firms engaged in CRM, but a substantial amount of Thai and North American firms.

There are similar numbers of companies involved in ERM and HRM, and the breakdown by region does not show great variation. European firms form the largest region involved in ERM, with Thai and North American firms being the second and third largest regions involved respectively. Japanese, Asian, excluding Japan, and the Rest of the World (ROW), are all present in similar numbers, but substantially fewer than the other regions. Within HRM, the largest region represented is North American owned firms, with European firms closely following. Thailand and Asia, excluding Japan, have equal numbers of firms, slightly more than ROW, but Japanese firms are only marginally involved.

0 Software Infrastructure IT consulting Software R & D THAI Asian Exl. Japan Japanese European North American ROW

Figure 4.2 Information Technology Outsourcing (ITO) processes by regional ownership

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

The breakdown of outsourced Information technology processes by region is shown in Figure 4.2. The X- axis category is categorised by process; software, infrastructure, IT consulting and software R & D. The Y- axis shows the number of processes. Software R & D is the least common process, with almost 50% fewer firms involved when compared to the other three ITO processes. There are zero Asian excluding Japan firms involved in software R & D, and very few from ROW, North America and Japanese. However there are eight Thai and six European firms respectively involved in software R & D.

Infrastructure is the most common ITO process, with Thai, Japanese, European and North American firms all having at least ten firms involved in infrastructure. Asia excluding Japan and ROW has less than half as many firms involved in infrastructure offshoring. Software is the second most common process, with Thailand, Japan, European and North American firms having almost equal representation of involved firms. Asia excluding Japan and ROW each has three firms involved. IT consulting is the third most common process, with Thailand the best represented region. It has 13 firms involved, ahead of Europe and North America who have eight each. The other regions have eight collectively.

0 BU LEG

THAI Asian Exl. Japan Japanese European North American ROW

Figure 4.3 Knowledge Process Outsourcing (KPO) processes by regional ownership

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

The breakdown of outsourced knowledge processes by region is shown in Figure 4.3. The X-axis category is categorised by process; Business Consulting and Legal Services. The Y-axis shows the number of processes. Business consulting is the least common process, with 38 firms involved, while ROW is the most common region represented. Thailand, North America and Europe have seven, seven and six firms correspondingly. Asia excluding Japan has four firms, and Japan have three firms.

Legal services have 55 firms involved, with Thailand the most frequently occurring region at 23. This is considerably higher than the second most frequent region, Europe, which has 16 representatives. ROW, Asia excluding Japan, Japan and North America have a combined total of 18 firms operating.

4.3.1. Ownership and markets serviced Figures 4.4 - 4.6 show a breakdown of BPO, ITO and KPO-markets served by ownership. This series of tables were constructed to see whether or not there is a potential relationship between processes and a specific market that they intend to serve. There is a reasonable expectation that there is a correlation between ownership and markets served with companies intending to service the domestic and ownership markets. Businesses can choose a particular location to establish a more substantial presence in the region, in addition to the lower cost of processes. The prominence of Thailand in the markets served can be explained as a desire to fulfil both these criteria. However, the influence of the largest international firms may be so considerable that several markets are serviced out of the Thailand base, not just one or two.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

0 Asia Europe Japan Multi North America Other Thailand

Domestic Asia exl. Japan Japan Europe North America Other

Figure 4.4 BPO: Market served by ownership

The Y-axis shows the main market served and the X-axis shows the owning region in figure 4.4. The leading owning region is Thailand, and Domestic Asia excluding Japan is the largest market served by Thai firms with seventeen firms involved. Arguably the most remarkable aspect of the results was the strong showing of Domestic Asia exl Japan ahead of Europe and North America.

North America and Europe are the joint second largest owning regions, Europe is the largest market served with eighteen firms, with domestic Asia excluding Japan the second largest with sixteen. The largest market served by American owned firms is domestic Asia with sixteen, North America is the second largest with thirteen, and Europe is the third largest with nine.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

0 Asia Europe Japan Multi North America Other Thailand

Domestic Asia exl. Japan Japan Europe North America Other

Figure 4.5 ITO: Market served by ownership

The Y-axis shows the main market served and the X-axis shows the owning region. The major owning region is Thailand, with the largest market served by Thai firms Asia excluding Japan. The second largest ITO ownership region is North America, with Asia excluding Japan being the largest market served within it. Europe and Japan have slightly fewer ITO firms operating, with the rest of the world (other owned) and Asia excluding Japan being the least represented ownership regions.

European owned ITO firms overwhelmingly serve Asia excluding Japan and European markets. There is no Japanese or rest of the world markets served, and only one serving a North American market. Japanese owned ITO firms follow a similar pattern, serving Japanese and Asia excluding Japanese markets primarily, with small representation for European and North American serving firms. Again, there are no rest of the world serving firms.

The largest combined ITO market served is Asia excluding Japan, which has strong market representation across all ownership regions. The second largest combined market served is European, followed by North American and Rest of the world respectively.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

0 Asia Europe Japan Multi North America Other Thailand

Domestic Asia exl. Japan Japan Europe North America Other

Figure 4.6 KPO: Market served by ownership

The Y-axis shows the main market served and the X-axis shows the owning region in figure 4.6. The prime owning region is Thailand, with thirty-five firms in total. Nineteen of those firms are serving Domestic Asia excluding Japan, Europe, North America and Other have six, five and four firms respectively. North America is the second largest owning region, and Domestic Asia excluding Japan is the largest market served by North American firms. Europe is the third largest owning region, Japan is the fourth largest owning region and multinational firms are the fifth largest.

4.3.2. Line of business, ownership and firm size Figure 4.7 is a breakdown of all processes by the number of employees involved. BPO and ITO processes typically require a greater number of employed personnel, due to the requirements of call centres, marketing and sales etc. and labour intensive software and infrastructure development and management. Consequently, it can be hypothesised that KPO would require smaller numbers of employees, as it needs higher skilled individuals for specialised tasks. Firms who are engaged in multiple processes will require larger workforces to support the different avenues they are involved in.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

0-20 100-500 21-100 500> Unknown

Figure 4.7 Number of employees by process

The X-axis of figure 4.7 show a classification of all the processes in the BPO, and the Y-Axis shows how many employees are involved in those processes. Firms who engage in multiple processes have been included in a category of their own.

The largest number of firms with employees involved in a process is in Legal outsourcing with 45 operating firms, but there are also large numbers of firms involved in multi process ITO, ERM, HRM and business consulting (39, 38 and 35, 35 respectively). The remaining processes have significantly fewer firms involved. Legal processes are predominantly populated by firms with between twenty one and one hundred employees, but ERM, HRM and Multi process ITO firms have a higher proportion of firms with between one hundred and five hundred employees.

It is probable that despite having more firms involved in a process, these processes do not have the largest number of employees. The three (most likely) most populated processes by {total number of employees} are ERM, HRM and multi process firms in BPO (despite small number of firms, there are a high number of employees per firm). The five largest processes by number of firms involved are Legal, ERM, multi process ITO, HRM and Business consulting respectively. The remaining processes have

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 significantly fewer firms involved. Special mention must be given to multi process BPO firms, which has five firms with five hundred plus employees, which makes it one of the areas with most employees.

Figure 4.8 shows the number of employees by ownership, and attempts to highlight any potential link between region and the number of employees involved in any outsourcing process. This table intends to determine which region is the largest services outsourcer employer within Thailand. World regions with high average wages will outsource processes as a cost saving measure, subsequently it can be anticipated there will be a higher proportion of BPO and ITO from developed regions. A result of this will be that Europe, Japan and North America

Unknown 500> 21-100 100-500 0-20

Figure 4.8 Number of Employees by ownership

The Y-axis of figure 4.8 illustrates the number of firms whom possess a certain quantity of employees. The X-axis shows the world region which owns the firm.

4.3.3. Location To try and identify if there is a relationship between processes (BPO, ITO and KPO) and geographical location, Figure 4.10 is a postcode map of Bangkok with the five most common postcodes broken down into process. Literature supports the view that BPO services are lower –value-added that ITO and KPO services (Mehta et al 2006). This may have implications for the locations chosen by these businesses; the

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 researcher expects firms engaged in ITO and KPO to be more centrally located than their BPO peers, with lower value-added services being located in areas with cheaper rent, and ITO/KPO being located in central real estate locations with higher rental costs.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Figure 4.10 Central Bangkok Postcode map by line of business

Figure 4.10 shows a map of Central Bangkok, with pie charts broken down into BPO, ITO and KPO within the five most commonly occurring postcodes. The size of the pie charts is indicative of how many offshoring firms are operating from within that postcode.

The literature indicates that higher value KPO and ITO processes would be concentrated in the central areas of the city, and the results would appear to justify that hypothesis (Kochman 2008). Postcodes 10330, 10400 and 10500 are very central, and each has a majority of firms involved in ITO and KPO. However, a caveat to this is that while BPO is the minority in postcode 10330, it has 46% of the firms involved in BPO. An 8% difference is substantial, but not as large a gap as anticipated. Postcode 10500 is much more supportive of the theoretical literature, with 75% of firms involved in ITO and KPO, with KPO alone making up 45% of firms. Postcode 10400 also has 75% of firms involved in ITO and KPO, but in contrast to 10500, ITO processes make up 42% of all processes.

Postcode 10110 is further out from the centre of Bangkok, and it is populated mostly by BPO services, with 56% of the firms involved. This would support the theory that BPO firms are less value-adding, and therefore inclined to be located in a less expensive part of the city. Postcode 10110 is also the most popular district for firms. This could be attributed to Thailand’s less developed offshoring services landscape, with BPO firms being the best represented.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

0 10110 10120 10310 10330 10400 10500 10540 10600 10900 11120

Thailand Asian Exl. Japan Japanese European North American ROW

Figure 4.11 – Postcode and Ownership

Figure 4.11 is attempting to see the breakdown of ownership in the most interesting postcodes that are identified by figures 4.9 and 4.10. In this figure, the ten most commonly represented postcodes drawn from the quantitative research are along the x axis, with the ownership (split by world region) on the Y axis. As illustrated by Figure 4.9 and 4.91, there are five main postcodes in Bangkok where offshoring firms are operating, and figure 4.92 is attempting to see the breakdown of ownership in those postcodes.

Europe is well represented in the top five postcodes, suggesting it is perhaps the largest provider of firms in the offshoring services sector within Bangkok. This could be credited to the broad involvement of Europe throughout all processes, Europe’s strong showing However, as figures 4.4-4.6 take into account all the postcodes, Thailand is the largest owning region in Thailand.

4.4. Concluding remarks

The theoretical background to the research suggested that while Thailand had potential as an OSS providing country, it was still in an emergent stage with regards to the firms operating there, and the types of services they were engaged in. The data gathered within the OBM is an attempt to quantify Thailand’s offshore services landscape. The categorisation of firms into: Types of services, Ownership, Market served, Size of firms and Location was intended to provide comparative points between firms,

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 and allow for different relations between them to be investigated. This chapter intended to provide some information as to how far along the OSS developmental path Thailand has travelled.

One key facet of the OBM is the influence of Europe on Thailand’s offshore services. . It is the most frequently encountered region of company ownership in Thailand, and in addition to having the most firms, Europe is also the largest employer. It is well represented amongst all of the BPO, ITO and KPO processes, indicating the degree of interest in both lower added-value and higher value-added processes displayed by European firms. On the other hand, European firms are only the most numerous for two processes, ITO software, and BPO ERM (ERM: Finance & accounting/ Procurement/ logistics/ supply chain management). This suggests Europe as a region is not utilising Thailand as a high value-added outsourcing destination, but a more general outsourcing destination. This may be attributable to personal preferences of business owners (pre-existing knowledge or business relationships within Thailand), rather than a targeted response to Thailand’s suitability for services offshoring.

The literature suggested there would be a concentration of more advanced services in the central regions of Bangkok, with less complex outsourcing taking part in the less expensive districts. This was largely borne out by the findings, with the more central regions being primarily involved in ITO and KPO, and the largest concentration of BPO being further out. However, the total numbers of firms in central postcodes were less than the more outlying postcodes, indicating that cheaper rental costs were an appealing prospect for all types of service firms, but with a larger BPO presence. Bangkok was overwhelmingly the location of choice for firms, with twenty one of twenty five postcodes being in the Bangkok metropolitan area.

To re-engage with the theoretical basis of the project, Thailand’s current state in OSS is rosier than those presented by the consultancy firm listings. While Thailand cannot compete with the success of the frontrunners of India and the Philippines, the number of firms involvd in OSS, and the variety of tasks they perform, suggests that Thailand is firmly amongst the ‘second-string’ of countries involved in OSS. Where Thailand differs, is in the lack of official strategy of OSS. The firm distribution does not indicate a coherent offshoring strategy, but that of firms engaging in whatever processes are possible, but with no focus on the development of a particular sector.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Chapter 5. Explanatory factors of Thailand’s Offshore services Network

This chapter aims to develop a better understanding of Thailand’s suitability to offshore services and what it offers to entice potential offshoring firms to locate there. It does so by exploring a range of contributing variables and by providing an insight into their suitability.

5.1. Notes on data and methodology Following a literature review, several key participants of Bangkok’s offshore services network were identified. These were employees of firms involved in offshoring, the academic community and the Thailand Board of Investment (BOI). It was only possible, despite frequent attempts to establish contacts, to secure interviews with a few targeted individuals. The researcher can only speculate that the civil unrest or sensitivity of the research material deterred additional participants. There will be a section of this chapter dedicated to the interview difficulties, and how this was compensated for. Despite this setback, the researcher aimed to meet and interview individuals who were as informed as possible about Thailand's services offshoring to ensure high quality qualitative data was collected to support the study.

These offshoring stakeholders were chosen for their familiarity with Thailand, and its offshoring landscape. They are collated in Figure 5.1. Generally, qualitative sampling strategies do not seek to provide a statistical interpretation of data gathered, but rather aim to form categories of data, and theoretical explanations based on the textual data. This analysis will be centred on the theory highlighted earlier (Presence of adequate IT structure, Regulatory context, Institutional and policy context, Stability of the business environment, Availability of adequate human capital), and these variables then formed the basis of the questionnaires.

Interviewee Code Location Job Role Sector P1 Bangkok Academic Education P2 Bangkok Senior Manager Thai BOI P3 Bangkok Professional OSS firm P4 Germany Regional Manager Thai BOI P5 Belgium Foreign Consultant OSS firm Figure 5.1 Summary data of interviewees

5.1.1. Access Difficulty

There were repeated attempts over an extended period of time to try and conduct enough interviews to provide an insight into Thailand’s offshoring services network. However, arranging and conducting interviews proved to be extremely problematic, and despite the researchers best efforts only a limited number of interviews were conducted. Access difficulties encountered can be partly attributed to the

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 government shutdown that occurred in Thailand during field research, with many government offices being temporarily shut or operating with a reduced staff. This limited the number of institutions that could be approached and the academic and private spheres also proved challenging to access.

The researcher had a substantially shortened research period owing to unforeseen circumstances. This was also an impediment to the accomplishment of a higher volume and range of interviews. To compensate for this early return from the field, a two pronged approach was adopted. This involved, firstly, inviting Bangkok based actors in OSS for interview by Skype and secondly, approaching relevant and informed potential interview candidates in the Netherlands/Europe. By speaking to individuals in Europe, as well as Thailand, there was an attempt to extend and supplement the existing data.

5.1.2. Interview difficulties There were attempts to contact interview participants through several different avenues; these were email, telephone and social media. A formal letter was sent with a supporting document from an academic supervisor, however there were few positive responses, and the most common response to an enquiry was an unwillingness to conduct an interview. The negative responses received most commonly fell into three categories:

The first category of responses was concerns over the confidentiality and sensitivity of what the research was enquiring about. This response was received frequently from employees who worked for firms who were outsourcing, or by outside consultants who were involved in bridging the gap between. The responses often highlighted their unwillingness to talk about business practices, or to talk about corporate strategies that were deemed too delicate to be divulged, even with a guarantee of confidentiality and anonymity. Government employees were also often unwilling to discuss information they thought could portray Thailand in a negative light, or that could be interpreted as criticism of the current economic development plan.

Another frequent negative response was that people did not want to discuss Thailand, due to the political unrest having an adverse effect on their sector. This response was primarily encountered when attempting to conduct interviews with academics and government employees. It could be ventured that the unwillingness to be interviewed is largely attributable to the desire to portray Thailand in a positive light, and not appear critical due to their positionality. In academics it was often to avoid a knee-jerk reaction to current circumstances, and a concern that the discussion would be focussed too much on the current unrest, detracting from the progress Thailand has made. The political unrest in Thailand has created a heightened sense of unease institutionally, and in the public and private spheres, which proved the biggest hindrance to effective qualitative data gathering.

The third common response to an interview enquiry was a concern from respondents that they could only provide a superficial answer to questions. This appeared not to be a response to the questions themselves, but a wider concern about commenting on Thailand, its positioning in global networks, and its economic development. This response was common from non-Thailand based research participants, European and North American respondents particularly frequently. This was not unexpected, as knowledge of Thailand’s offshore services landscape is a very particular topic. However, as potential

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 participants were selected for their links with Thailand, this was not envisaged to be as big a hindrance as it eventually proved to be.

5.1.3. Additional Data To try and compensate for the lack of interviews, data was collected through several other sources to try and provide further insight into the issues at stake. Data was taken from media sources, lectures in Thai universities and online forums/chat-rooms. These sources were chosen to provide a good range of options: capturing a variety of perspectives on Thailand, its economy and its offshore services network. The intention being that some triangulation of the different issues can be attempted (Rothbauer 2008). This data has been added to that drawn from interviews to try and provide a satisfactory insight into Thailand’s suitability for offshore services.

The ‘usefulness’ of the additional data was determined by large scale reading of documents, newspapers (The Bangkok Post/The Nation/The Guardian), websites and forums (Thai Visa/Expat Forums), in addition to attending lectures and consulting with academics. These sources are valuable alternatives to interviews as they will present a varied perspective on Thailand’s offshore services network. This is important as differing sectors encounter different problems, or receive differing levels of support. A wide as possible range of contributors will reveal how various strata of the OSS network are faring. The kind of information retrieved via these methods is secondary data. This is a riskier strategy for collecting on information as it is drawn from a less reliable source (Myers 1997). This does not necessarily apply to more ‘trusted’ documents such as online newspapers or consultancies, but the online forums and chatrooms.

5.2. Explanatory factors of Bangkok’s OSS The five dimensions that contribute to the suitability of a country to offshore services were drawn from the literature. They are: presence of adequate IT structure, regulatory context, the institutional/policy context, stability of the business environment and the availability of adequate human capital. Data gathered, and interviews conducted, had these five dimensions at the forefront throughout the data collection process. Responses will aim to provide an insight into the suitability of Thailand to offshore services.

5.2.1. Presence of adequate IT infrastructure As discussed in chapter 2.3, there is an essential requirement for offshore services firms to be able to operate confidently and continuously in regions supported by a robust, modern and high-speed IT system (Leavy 2004). The success of offshore services leaders such as India and the Philippines is based on their human resource base, which further enhanced the attractiveness of their IT infrastructure. While their non IT infrastructure has remained underdeveloped (particularly in India), this has not prevented offshoring firms investing and flourishing, with technological advancements allowing data to be transferred worldwide almost instantaneously.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Respondents emphasised how efficient and effective IT infrastructures can secure a competitive advantage for firms by significantly lowering organisational and labour costs. The OSS firm employee and foreign consultant expressed reservations over Thailand’s suitability in this field, citing India, Philippines and Eastern Europe as preferred destinations if IT infrastructure was a primary motivation.

‘’IT infrastructure has to be flexible to respond to different demands of different firms, by and large Thai providers lack the organisational agility to adapt rapidly’’ (Interviewee P5)

The BOI respondent emphasised the expansion of IT usage in Thailand, and the growing skilled workforce in the public and private sectors. The scalability of the IT infrastructure was considered to be limited to smaller operations, and the overall dependability of services (for smaller offshoring services firms in particular) not yet sufficient to instil great confidence.

The academic respondent presented the view that firms trying to operate without ensuring satisfactory IT infrastructure were ‘’shooting themselves in the foot’’ (Interviewee P1), there was a particular risk for smaller firms to experience detrimental effects if they were over-reliant upon external IT assistance. Outsourcing firms needed to ensure there were infrastructural elements (policies, processes and ownership rules) which ensured accuracy of data, and rules and standards that ensured security of data.

Thailand’s position at 35 in the World Economic forum ‘Global Competitiveness’ report 2012-13 could be interpreted as an encouraging indicator of Thailand’s readiness for more complex OSS. However, by investigating the indicators behind the rankings, they suggest that Thailand still has a significant amount of improvement required. It is not in the top 50 countries in any of the seven indicators of ‘Technological Readiness’ (WEF 2013). The biggest problem within the IT infrastructure was Thailand’s low position in internet usage, with Thailand placing 94th out of 144 countries in the report. Access to the internet, and an understanding of its growing role in service provision, is the fundamental basis of a viable OSS network. Thailand’s low position is an undoubted problem here.

In addition to this internet access issue, the low quality of internet is a further complication. An international competitiveness ranking of 84th on internet speed [kb/s per user] (WEF 2013) is always going to prove a major hindrance to OSS work. Successful OSS requires a minimisation of these types of risk. A major selling point of OSS is its speed and convenience, if a country cannot guarantee these factors then two of the major incentivising features are removed and it becomes less likely to occur. Ratings from reputable sources provide a measure against which firms can contrast country performance, and influence their offshoring decisions (Aron 2005).

IT infrastructure needs to be easy to upgrade or upscale, to be compatible with the most advanced platforms and responsive to the demands of an international clientele. There will be various different interfaces and systems that are necessary to interact with, and competent IT personnel, who will understand the needs of businesses and organisations, are essential for any location to assure its suitable to offshore services. However, the data gathered suggests Thailand has not yet developed its IT infrastructure to this point, it is not flexible enough in its responsiveness and adaptability, and graduates

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 are not yet sufficiently competitive on a global scale to propel Thailand to become one of the main OSS destinations.

5.2.2. Regulatory context A topic which generated a considerable amount of comment and discussion was government regulations, which many participants considered inimical to businesses and their successful operation. Foreign business owners believed themselves to be placed under considerable pressure to fulfil the quota of Thai employees required for work permits. These business owners are taken from interviews and the online forums. The regulations, even for BOI registered firms (due to capital constraints), continue to create daily issues for employers. In several comments, individuals presented the view that it was the government bureaucracy and restrictions which were preventing FDI inflows, rather than the current political climate. These comments offered a controversial perspective especially as the majority of commentators emphasised the political unrest rather than more fundamental structural issues. These contributors considered themselves to be ‘serious’ business owners, investing in long term, non- hospitality, large scale operations.

‘’I know a few people who would like to invest, it’s not the political unrest that’s stopping them either, it’s the visas and work permits’’ (Thaivisa forum)

Prospective firms or investors can be deterred by the restrictive government regulations in place; the prevailing feeling was that despite the efforts of government to supports businesses there remains a nationalist element to the government regulations that promotes high employment to the detriment of the effective operation of foreign owned businesses.

The OBM revealed that Legal Consulting is one of the most popular processes in Thailand, which tends to corroborate the view presented by several participants that regulations prove inhibiting. This would indicate that firms seeking to operate within Thailand have to seek specialized legal advice to ensure effective operation, and to avoid falling foul of the regulations in place. Excessive regulatory controls may be a particular consideration in attempts to expand OSS, with current BOI policy placing an emphasis on six key sectors for the country’s development. OSS is not one of the six sectors that are being considered (energy saving and alternative energy, advanced technology (in manufacturing), manufacture of eco-friendly materials and products, mega-projects in water resource management, transportation, and logistics, tourism and real estate and use of agricultural products as raw materials)

One BOI participant (European based) expressed his frustration at this limited approach by the BOI in general. While the BOI is focusing its efforts on these six areas, the interviewee was being hampered in his efforts to attract FDI in more advanced processes to Thailand, as without incentives which encouraged growth in OSS, Thailand was not proving to be competitive.

’Thailand is actively involved in attracting FDI, there is support from the government and it is a desirable location for businesses. However there is only so much that Thailand can do, especially in the services industry, when competing with India, China and the Philippines. Thailand can’t win a bidding war with

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

those countries, and while it doesn’t remain a priority for the government, then change is unlikely’’. (Interviewee P4)

Respondents raised concerns over Thai government regulations proving detrimental to OSS. This was particularly the case for smaller firms, who were more likely to fall foul of regulations, and found it difficult to fulfill the work permit and Thai employee demands placed on them. Thailand was not deemed a ‘suitable’ location for OSS by many contributors, with the exception of low skilled, labour intensive processes (ERM & HRM particularly) which allowed firms to employ large numbers of Thai employees and fulfill the requirements requiring four Thai employees to every foreign employee. That requirement was mentioned by all participants as one of the largest stumbling blocks, and greatest sources of resentment, from foreign employers.

Thailand ranks highly on the ‘number of procedures to start a business’, coming in at 29th out of 144. There are reasonably good avenues and government support in getting through the bureaucratic avenues. The Doingbusiness.org website also rates Thailand as 18th based on the World bank’s evaluation of convenience of doing business. These indications are measured on business convenience, overheads, laws and regulations and general obstacles to business. All of which suggests Thailand’s suitability to foreign business. Thailand is also ranked 6th in Asia and 3rd in ASEAN in terms of being the most convenient place to do business. However, when measured in the ‘number of days required to open a business’, Thailand scores much lower at 99th in the world (WEF 2013). This is to do with the bureaucratic restrictions in place, but also an issue with the expense incurred in opening a business in Thailand:

‘’Unlike in an emerging frontier market like Cambodia, a more developed market like Thailand doesn’t make it as easy for just any entrepreneur to come and start just any business on a shoestring’’ – (Nomadcapitalist.com)

There remains a high failure rate of foreign businesses opening in Thailand, partly due to the large numbers of expats who have moved to Thailand for the high quality of life, and opened a business help support them. However, in contrast to the Philippines where foreigners are encouraged to open outsourcing businesses targeting customers in their origin countries, most Thai businesses cater to local markets in Bangkok and wider Thailand. This partly explains their failure, with a less welcoming administrative environment for businesses to operate in.

Some of the key rules and regulations pertaining to foreign businesses wanting to open up operations in Thailand can be drawn from the Thailand BOI website. Some of these are incentivising for opening a business in Thailand. They fall into four main categories; Tax incentives [e.g. Additional 25 percent deduction of the cost of installation or construction of facilities], Non-Tax incentives [e.g. Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities], Guarantees [e.g. The State will not undertake a new activity in competition with the promoted person’s] and Protection [In the case where the promoted person encounters any problem or obstacles in the course of carrying out the promoted activity, the Chairman will have the power to render any

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 appropriate assistance]. These are some ways in which the BOI will support new businesses to open, and establish themselves.

However, not all rules and regulations are positive for foreign businesses. An illustration of this is in the extensive list of jobs that cannot be performed by foreigners. These restrictions are most common in industry and manufacturing, but also include occupations such as accountancy, legal services, architecture, engineering and advertising. These restrictions are categorised as ‘Businesses in which Thais are not ready to compete in undertakings with foreigners’. A certificate of exception to the prohibited professions can be acquired with the permission of the Board of Investment. These limited professions are often those tasks which foreign firms wish to offshore. It presents an additional obstacle to offshore outsourcing in Thailand, which when contrasted to India or the Philippines, would makes Thailand a less attractive proposition.

The regulatory context needs to be conducive to the offshore services sector, encouraging growth and removing obstacles to its successful implementation. The various official and ‘unofficial’ regulations that need to be understood, and navigated, are not insurmountable obstacles when deciding to offshore services. Thailand’s great location and active government support suggest it has great potential as a location. However, the biggest issue Thailand faces in this sphere is the competitiveness of more advanced offshoring countries. If government support, coupled with easing of regulations, matches or overtakes those of India or the Philippines then Thailand will be a more attractive location. At the moment, this is not the case.

5.2.3. Institutional and policy context The institutional and policy context is a principal consideration of a country when deciding on an offshoring location. One key theme of the respondents was the role of the Thai government in the economy, and the direction which the government is guiding the economy is fundamental to the success or stalling of the Thai economy. Traditionally capitalism in Thailand was dominated by large, family- owned conglomerates. These firms had a domestic orientation, and the international focus was simply on export activities, the majority of which was light manufacturing industries (agribusiness and food). However the 1997 Asian financial crisis altered this traditional model and the contemporary face of Thai business is one with a stronger regional, and even global presence, and there are some industry specific competitive advantages that are beyond low wages (where Thailand already cannot compete with Cambodia and China).

Despite the changing focus of Thai businesses globally, Thailand needs to continue innovating to fulfil its promise and further its development. However, the current Thailand BOI initiatives are not promoting the further development of the Thai services industry, but remains contend to advance the manufacturing and electronics industry, to the detriment of its fledgling service sector. This can be seen in the BOI vision on connectivity: Thailand 2020, which is an over-arching government driven initiative to reinvigorate the Thai economy. Its focus on relocating the manufacturing sector, as opposed to the promotion of more technologically developed industries and R & D, is increasing the risk of Thailand being caught in the middle income trap (Jitsuchon 2012).

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

‘’The problem is people are uncomfortable with the present government. It doesn't look very stable and not very business friendly either. There are better opportunities elsewhere so why bother’’ – (Teakdoor forum)

An illustration of the Thai government’s lack of progress in promoting the growth of non-financial multinationals is their sole representative in the ASEAN top 100 (non-financial) multinational firms, compared to eleven from Singapore and six by Malaysia (UNCTAD 2009). Figure 5.2 is demonstrating that Thai firms are largely limited in their worldwide presence, compared to regional competitors, even with the modernising face of Thai firm.

Country UNCTAD List BCG Global Challengers List 2008 2010 2006 2011 Singapore 7 9 - -

Malaysia 6 4 1 1

China 13 9 24 33 Hong Kong 16 18 - -

India 5 8 18 20 Thailand 1 0 2 4

Figure 5.2 – Leading Emerging Market Multinational Enterprises. Source: World Investment Report UNCTAD (2008,2010); Boston Consulting Group Global Challenges (2006).

The growth potential of strategic coupling, if sufficient government support is provided, can be seen in the case study of Delta Electronics Thailand (DET). Thailand was a major inward FDI destination in the 1980’s (especially in electronics), a consequence of which was Taiwan’s Delta electronics group opening DET as a local subsidiary. DET was formed in 1988, and between the period of 1988-2010 moved its way upstream in the value chain; from low skilled production and maintenance, to accumulating technological capabilities by the 1990’s, then progressed into R & D by the early 2000’s, and then downstream value chain expansion by 2009. With sufficient government support to attract FDI, Thai subsidiaries, or foreign firms will provide opportunities for employment, and knowledge diffusion, which can benefit Thailand’s economic development in the short and long term.

One alleged phenomenon occurring that requires further investigation, Thai companies operating through tax havens. This makes it difficult to ascertain ownership of firms, creating the possibility of Thai firms to be operating that appear to be foreign owned, however, verification of this is difficult, and its impact upon the Thai economy is difficult to authenticate.

The US Department of Commerce service in Thailand placed Thailand on its ‘priority watch list’ in 2011 for IP security. This was due to concerns over the amount of IP protection provided for foreign firms working in Thailand, with low levels of enforcement and insufficient market access for firms who rely

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 upon intellectual property protection. ‘’Piracy and counterfeiting are widespread throughout Thailand, and the industry has reported growing challenge in the areas of internet, cable, and signal piracy’’ (Interviewee P4). This lack of security in such a fundamental OSS sector is corroborated by consultancy rankings, with Thailand ranking 101st out of 144 countries in intellectual property protection (WEF 2013).

Attempts to improve the Thai education system followed a process of ‘’educational policy borrowing” (Phillips & Ochs 2004), with Thai authorities keen not to mimic other countries educational systems, but to cherry pick the best practices to apply in Thailand. The promotion of technology in education was a key initiative adopted, an illustration of which was the Yingluck government’s policy to distribute computer tablets to all primary school children. The acknowledgement that technology, and computer literature children in particular, was essential to Thailand’s development can be inferred through these policies.

Friedman (Friedman 2005) in his work on globalization argues that those countries which do not adequately train their population for knowledge based economic activities run the risk of being left unable to compete effectively in a globalised economy. With 12,000 schools in Thailand possessing internet connection, there is great potential to be realised in these students having familiarity with the internet. However, currently only 41% of Thai Teachers were using ICT in school by 2008, suggesting that despite opportunity, there remains a lack of uptake (Gerald et al 2013).

The Thai government is also trying to improve the market conditions for IT infrastructure provision. They are attempting to achieve this by providing guarantees to companies working in Thailand (property, tax exemptions etc.). Primarily, stable economic and political conditions are the most desirable conditions for firms, but as Thailand cannot currently guarantee this, the incentives provided play a counterbalance to this instability. However, the competitiveness challenges that Thailand face remain considerable. Excessive red tape, corruption and security concerns undermine the institutional framework that businesses need to operate effectively. These issues, coupled with low basic educational standards and less than a quarter of the population accessing the Internet on a regular basis, continue to hamper competitiveness (WEF 2013).

The institutional and policy context of a country needs to ensure that there are strong institutions to buoy and protect companies, and effective policies to influence the growth of OSS. The different strengths and weaknesses of institutions will affect the uptake and successful establish of OSS firms. The data gathered suggest that Thailand is moving in the right direction at policy level, with the government recognising the need for a reinvigoration of the Thai economy, focussed at more advanced services. However it is suffering from a lack of protection for intellectual property rights, and erratic enforcement of those laws in place, against of backdrop of insufficient institutional thickness. Greater protection for intellectual property will result in an improved international business reputation, and more firm relocation.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

5.2.4. Stability of the business environment The current political unrest in Thailand has created an environment of uncertainly, while there is an acknowledgement of the many positive characteristics that Thailand possesses, these positive comments have been tempered by concerns over the risk. The prevailing mood was one of concern, with the past decade illustrating a deteriorating and increasingly divided country.

‘’Thailand is not as attractive as ten years back, the political situation and risk management say that. You need to weigh up the advantages and dis-advantages, Thailand has some excellent incentives for businesses, but it will continue to lose both international and domestic investment while unrest continues.’’ (Interviewee P1)

The appears to be an acceptance that any FDI flows to Thailand are at risk due to the tumultuous political climate, and that investors have been waiting to see whether or now the situation becomes calmer before making financial commitments.

A common thread throughout the respondents was the lack of stability within the business environment, and how Thailand has lost private investments worth up to 30 billion Baht in the ASEAN region alone (FT June 2014) due to uncertainty over slow economic growth, and the unsteady political situation. This change in attitude is demonstrated in a survey was conducted by the Centre for International Trade Studies, which compared attitudes of Thai businessmen between 2013 and 2014: With 480 Thai investors worth seventy-seven billion Baht wishing to relocate their business in 2013, with that number tripling (1440) after the political unrest escalated (CITS 2014). The economy shrank 2.1 percent in the first three months of 2014, and continued political unrest could force Thailand into recession for the rest of 2014.

‘’Years of political turmoil have sapped Thailand’s growth rate, which is now consistently behind other South East Asian nations it once powered. The large infrastructure projects that were planned to tap into Thailand’s potential as a regional hub have failed to materialise.’’ (Interviewee P1)

The political instability being mentioned so frequently in comments was not limited to the public demonstrations and the coup d'état, but also concerns over the alleged corruption in Thailand, with ‘clean’ and ‘response’ government being two issues that were highlighted as requiring consideration. The ‘red tape’ was perceived to be hindering social and economic development, and the need for ‘good’ governance was tied up in the need to consolidate democracy, and the economic stability that it would entail.

The risk associated with the political unrest in Thailand was a regular theme throughout the research, but respondents indicated that their views on the risks had changed as they became more experienced in the field. There was a suggestion that firms with limited offshoring experience in Thailand would be at greater risks than those who were familiar with the political and cultural landscape, and that experience of Thailand brought with it an acceptance that political turmoil could erupt, and you had to be prepared

These knock on economic effects of the political turmoil can be seen by recent valuation of the Baht against the US dollar. Results show it had dropped to a three year low as a consequence of the political

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 unrest. In addition to this, the main stock index dropped 9.1 per cent over the November-December period as civil unrest grew (Lee 2014). Foreign investment is made with a reasonable belief that their money will be placed into a stable economic and political environment. The postponement of the 2tn baht infrastructure programme (that has been delayed by the coup) was concerning to offshoring firms, as they stood to benefit from Thailand’s vision of being a hub for SE Asia. Construction of better ports, airports, roads and railways has been put on hiatus, and the coup means further progress cannot be signed off by a caretaker government which possesses only limited financial powers (Peel, 2014).

The stability of the business environment will greatly influence a company’s decision on where to locate their OSS. A company needs to be confident that its workforce, and property, will be secure in a location and not at risk of damage or interference. A stable governmental system encourages firms to invest with confidence, but the continuing unrest within Thailand suggest that there will be reticence from firms when faced with the opportunity to invest or offshore. When Thailand demonstrates stability over an extended period of time, greater trust will be placed in its suitability for offshore services.

5.2.5. Availability of adequate Human Capital The presence of adequate and appropriate Human Capital is arguably the most central consideration raised by participants. Participants frequently suggested one of the greatest stumbling blocks to OSS was that of language, with potential employees in services needing a high standard of both written and spoken English (and different languages depending on ownership and market served) ‘’I wonder anyhow how Thailand is ever going to be able to compete in outsourcing as compared to India, where English is already lingua franca, while in Thailand English language capabilities are not exactly up to par’’ (Thaivisa forum). This was often included on CVs, but the quality of written and spoken English was frequently not of the required standard. ‘’I outsource a lot of work to India and Eastern Europe, work gets done fast and well with minimal glitches due to the level of English. Thai staff are generally far below the level of other countries’’ (Interviewee P3). There was admittance that despite the influence of government [strategic coupling], and technological advances, that the human capital was still insufficient to suit the needs of businesses ‘’no matter how technology advances, the human quality is lagging behind within Thailand’ (Thaivisa forum)’.

There was positivity about Thai staff in services, with a sense that Thailand’s cultural attitude towards customer service was an undoubted plus in low level outsourced functions (calls centres, etc) ‘’The sense of service in Thailand is amazing and it is very, very important point to us as a company. We are initially supposed to deliver only care and maintenance out of Thailand but we are actually today able to deliver much more, thanks to the creativity and the sense of innovation of all staff’’ (Interviewee P5). However, in more complex outsourced processes this advantage is neutered somewhat as interaction with clients is not the primary aim of the process.

There was a particular desire from contributors to find reliable, qualified IT staff. This was observed to have been difficult regardless of the geographical location when trying to plan a business, with the best and brightest always in demand. However, there was an admission that the available IT graduates in the

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Thai job market were insufficiently qualified to the needs of the services industry and not suitable for more senior positions as a result:

‘’I've started several companies in Thailand and other Asian countries. Yes, it is difficult to find educated and experienced staff, but that's a result of the education system here. Thai staffs I have worked with are mostly just very polite, nice and well meaning. Just haven't really been taught anything about initiative or proactivity. That's not what the education system here was designed for’’ (Interviewee P3)

The lack of qualified IT graduates attests to further observer comments about the complications of retaining staff, with the demand great enough to encourage employees to leave positions easily, as further employment is quickly available, and often more lucrative. This hampers the effective organisation of business, particularly amongst small and medium sized enterprises, where a leaving employee has greater ramifications. These comments were common throughout the remarks made by both Thai and foreign business persons. Nevertheless, there were also positive attitudes towards the cost-saving benefits of working in Thailand, with many commentators highlighting the low wages, even for high-skilled individuals, when compared to an equivalent product in more developed countries.

‘’I have no experience of Thai IT engineers, but I have with couple of Thai managers who are using Indian outsource companies and tell me how much better they are than Thai staff, which is very worrying’’ (Teakdoor Forum)

The increase in numbers of graduates in IT related fields was suggested as an indicator of Thailand’s commitment to increasing the skill set of its graduates, but there was an admission that there remains a shortage of graduates suited to offshore services, and that Thailand was not competitive with regional competitors in ICT although there were positive signs in the strengthening of the IT infrastructure. One explanation for this uncertainty about Thailand’s and Bangkok’s IT infrastructure was the turnover of IT employees resigning from their positions. ‘’I think it comes down to finding skilful engineers, it's quite a challenge here, not enough of them and they can be expensive and therefore it makes it impossible to expand a business or retain skilled workers’’ (Interviewee P1). If a project was partially completed this represented a major disruption and was a worrying trend for employers as replacement staff invariably insisted on restarting the project from the beginning.

Available human capital, with desirable skills, is a fundamental prerequisite of successful OSS. The skills of potential employees need to be in line with current trends in OSS, with English and IT literacy the minimum requirement. More advanced processes require more specialised knowledge, and in sufficient number for it to be viable. Thailand, despite positive comments on the nature of employees, lacks a critical mass of skilled IT and language skilled employees who can provide a pool for OSS firms. A result of this lack of staff is the difficulties of retaining them once found, and their expensive nature as a consequence. Thailand has work to do in ensuring a successful relationship between universities and the business world to help bridge this gap.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

5.3. Conclusion

Respondents were keen to stress how important the presence of adequate IT structures was to the effective operation of OSS, with the suitability of a location to offshore services being closely linked to its ability to promote IT. However, respondents also largely indicated that while Thailand is fulfilling some of the demands of OSS, it is not of sufficient quantity or reliability to make it a hub. There are not enough skilled IT graduates to fuel growth in more advanced processes, and the small pool of graduates means the cost of labour is relatively high as a result. As identified in Chapter four, the comparative lack of ITO services is a result of this lack of qualified IT graduates required.

The regulatory context in Thailand was also perceived to be unsuitable to widespread OSS, with participants considering Thailand unsuitable for foreign firms to operate in particular. Labour laws were emphasized as a central reason for this, with prohibitive regulations and red tape offsetting the benefits provided by the BOI, and the comparatively low cost of labour (compared to western states). Nevertheless, the strong showing of Legal consulting firms identified in chapter four is an indicator that firms can operate successfully in Thailand if they consult specialist advice, and a market has grown around providing this advice. The supporting institutions are focused on increasing FDI to Thailand in general, achieving this through the use of tax breaks and waiving visa and labour restrictions, but respondents did not believe this was a common occurrence, smothering the opportunities for smaller, non-Thai businesses. While the government promotes alternative, lower skilled, industries to offshore services, it will remain a difficult location for firms (smaller firms in particular) to operate.

The stability of the social and political environment was also deemed by participants to be unsuitable for large scale offshore services. There was praise for the high quality of life, and desirability of Thailand as a location for firms and employees to be based, but an admission that whereas lower skilled, or manual processes, could retain their employees in the face of political unrest, more advanced processes were vulnerable to an employee exodus if political circumstances deteriorated. An environment of uncertainty, exacerbated by the current wave of unrest, was proving detrimental to OSS, with respondents believing the country to be more divided currently than a decade ago.

Literature presented the view that Thailand has great potential for OSS, with it being a potential regional hub and showing increasing complexity in its economic output. However, interviewees, and secondary sources have suggested that Thailand’s regionally uncompetitive IT infrastructure, complex and unsuitable regulatory context and unstable social and political environment were preventing Thailand from engaging with the current wave of offshore services, and fulfilling this potential. Nevertheless, participants and data acknowledged the presence of advanced ITO and KPO processes, and that despite its current troubles; Thailand remains a location with great potential for OSS if its current obstacles can be overcome.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Chapter 6. Conclusions and recommendations

6.1. Research Motivation Globalisation, in conjunction with technological progress in communications and computing, has radically reconfigured existing value chains and resulted in a new global division of labour. This fundamental restructure of international trade and business networks has provided an opportunity for developing countries to engage in BPO, ITO and KPO processes, creating new value chains from which they can increase employment and revenue and access knowledge diffusion (strategic coupling). Several regions have benefited from this trend, with the Philippines, Eastern Europe and India all prominent in offshore economic developments. With a growing proportion of their countries’ GDP the result of growth in the sector, offshoring is gradually becoming a viable economic cornerstone for developing nations.

One of the most salient questions for students of development economics is what makes locations suitable for OSS? How does their policy environment and human capital contribute to the growth, or absence of offshoring?

By identifying what makes countries suitable for offshoring, and what policies attract FDI, other developing countries could take steps to grow their own offshoring network, and enjoy the accompanying positive economic and social effects. Generally speaking the development and prospects for OSS in Thailand, and in its capital Bangkok, has been under-researched and there is a need for further investigation to determine whether or not Thailand is taking advantage of the opportunities that are presented. So, this research has aimed to answer the question:

‘’what is the nature of Bangkok's offshore services industry, and what are its explanatory factors?’’

6.2. Concluding Remarks The study attempted to establish what offshoring firms are present in Thailand, their characteristics, and how suitable Thailand is for offshoring services to operate. The degree of suitability was determined by investigating the factors that influence FDI suitability, and the strengths and weaknesses of Thailand in that context. The OBM was created and analysed to create a picture of Thailand’s offshoring services landscape and to identify any potential linkages between the five variables included in this model.

Summarily, Thailand’s current OSS landscape is nascent. It is primarily composed of moderately developed business process outsourcing (BPO) services. These services tend to be less advanced online infrastructural maintenance or time consuming administrative tasks which are relatively straightforward to outsource. However, there are firms operating more advanced offshore service provision in Bangkok (ITO and KPO), suggesting that it is not limited solely to low skilled OSS tasks. The existence of these more developed processes indicates there is a desire within, and outside, Thailand for these services to be supplied. However, they remain in an emergent state due to human capital, infrastructural and institutional constraints which limit their viability on a wider scale. The consultancy rankings identified in

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 the introduction presented a conservative view of Thailand’s contemporary OSS landscape, but with potential for growth. The findings of this study suggests that the current landscape is better than predicted, however the growth potential will remain unfulfilled without concerted efforts to improve Thailand’s suitability.

The findings of chapter five generally support the distribution of firms identified in the OBM in chapter four. The four leading processes (Economic Resource Management [ERM], Human Resource Management [HRM], Infrastructure and Legal services) indicate that Thailand is still primarily involved in the BPO stage of offshore services. The substantial numbers of firms, and employees, involved in the less technologically and human capital demanding ERM and HRM services would suggest this is the case. However, the presence of Infrastructure (ITO) and Legal services (KPO) amongst the most popular processes suggests that there is a growing acknowledgement amongst firms that Thailand can attract and support more advanced processes. There are fewer employees involved in these services, but this is a consequence of the requirement for higher skilled employees in fewer numbers. Thailand is the largest owner of outsourcing businesses but these are primarily smaller firms involved in the least skilled offshoring services. Thailand’s OSS growth will depend to an unprecedented extent on international companies investing in higher skilled offshoring services.

The lack of firms involved in CRM, and R & D in the OBM is linked to the lack of appropriate human capital identified in chapter five. Interviewees, and additional data, corroborate these findings, with the human capital shortcomings being particularly limiting in these two processes. CRM and software R & D require specialised skills and initiative to effectively operate, and unless foreign firms are involved in these processes, the opportunities for strategic coupling are limited.

While the qualitative data presented a slightly pessimistic view of Thailand’s suitability for OSS, there was optimism as to its future viability. Many of the responses were related to current political and economic circumstances, and a stabilisation within Thailand, coupled with its growing human capital, will enable Thailand to benefit, and continue benefitting from OSS. Uncertainties remain in the research in the qualitative section. A greater number of interviews from individuals working in OSS would help to identify additional processes, and firms, to be added to the OBM. They would also provoke further questions as to the current state of Bangkok’s entry into the globalised marketplace.

This study has contributed to the academic debate on services offshoring by exploring Thailand’s current position within the sector, and its viability as a future OSS hub amidst the ‘new wave’ of service provision. The overwhelming majority of academic focus in OSS has gone to India and the Philippines as the frontrunners in an increasingly dynamic sector. However, with over 100 OSS locations being available worldwide, a concerted effort to investigate and catalogue countries and activities involved would provide greater insight into current trends of globalisation. Specifically, how globalisation and technological advancements are influencing the ‘new wave’ of service provision. This research has aimed to contribute to this debate.

A focus of this study, and one which warrants consideration in future research, is the primacy of institutions in determining the viability and success of OSS. Thailand’s Board of Investment plays a key

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 supporting role for foreign businesses, providing incentives and managing many of the bureaucratic obstacles that exist when attempting to engage in businesses abroad. Yet it lacks the capacity to propel Thailand into a more desirable OSS location in its current guise. Without an effective institutional context to support and nurture businesses, in addition to playing a liaising role with the academic world, it is not possible to effectively promote OSS. India and the Philippines both have strongly established institutional support for OSS; with preferential infrastructural support and targeted incentivisation schemes. The strength of the incentivisation and institutional process within a country/region would be a valuable comparative tool for researchers involved in OSS to establish.

Greater recognition is needed when investigating offshoring, of the vulnerability of the sector. Fundamentally, OSS requires several supportive social and structural factors to be in place to enable effective implementation. Despite the success stories of OSS, there is no guarantee that the conditions that make it a viable economic option will remain. Traditionally, engaging in OSS was a solid financial strategy, you could access the same skills required in your business, but for a much lower price. However, current wage trends in India suggest that one of the major incentivising factors in OSS has gradually less appeal, as wages in OSS countries rise. The salary of IT professionals in the US is five times that of an Indian counterpart currently, but over the next 4-5 years this has will drop to three times the wage (Outsourcing India 2012). Increase in the real wage within Indian IT is a threat to the viability of India as an offshoring hub, as one of the major pillors of its success is being eroded. Recognition of these threats to OSS success need to be borne in mind when investigating the phenomenon of offshore service provision.

6.3. Policy recommendations There are three main policy recommendations that would improve the environment and uptake for OSS in Thailand given the results of the fieldwork and analysis. The first recommendation is for a change in the actions of the Thai government - To be far more proactive in promoting offshore service related industries to create a more nurturing environment for firms. Thailand can take advantage of its geographical location, and high quality of life by creating a policy environment that increases its suitability for offshoring firms, in addition to boosting the related industries. The BOI is taking steps in this direction, but they have found it difficult to remain attractive when faced with competition from China (incentivizing firms), India and the Philippines (greater human capital). However, the government has not prioritized increasing number of OSS, but relying on increasing their traditional manufacturing base.

The second recommendation is that the educational institutions of Thailand need to increase their links with businesses. The gulf between the skills of graduates and the required skills of firms has proved extremely problematic in attracting FDI in services. Firms offshore processes that are appropriate to the relative human capital of the population, a result of this has been that Thailand is of greater interest to firms in lower value-added BPO, than higher-value added ITO and KPO. A more coherent and synchronised strategy by universities and firms would provide dividends in the future, with graduates who are ready for action in international firms, and competitive on the global stage. The current political

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 situation in Thailand has made a cohesive strategy increasingly important, as retaining investor confidence is extremely important during times of uncertainty. By creating closer relationship with business, this confidence can be reinforced and FDI within Thailand will be retained. The competition for OSS, especially in the South East Asia region, is fierce, and the Thai government and educational institutions need to pull in the same direction to ensure Thailand can benefit from this new global division of labour.

The third recommendation of this paper is that the local subsidiaries of international firms, whether in manufacturing or services outsourcing start upgrading by either developing higher technology products or by offering increasingly sophisticated services for international firms to engage with. There is a need to upgrade further within the global value chains, take the initiative and attempt to diversify into R & D, alongside more advanced KPO and ITO. Local subsidiaries or Thai firms do not want to remain low down in the value chain forever, and by seizing the opportunity to move processes further downstream, as well as enhancing their own processes, there is an opportunity to use strategic coupling to advance their own position.

6.4. Recommendations for further research This research has only provided an insight into Thailand’s offshore services landscape. With the OBM being based on five dimensions, there are fertile grounds for future researchers to expand and incorporate other facets of OSS. This would provide a more complete picture of how far Thailand has engaged with the new wave of services provision, and contribute to the debate on globalisation and the new global division of labour. The presence of more advanced ITO and KPO suggests Thailand is growing as an outsourcing destination, and future research can assess if this is a trend which is set to continue.

Thailand’s OSS landscape suggests it is amongst the ‘second tier’ of countries involved in offshore service provision, behind the frontrunners of India and the Philippines. While there is substantial and ongoing research into what provides suitable conditions for OSS (English language skills, IT proficiency), there remains a lack of research as to what hampers its development, and any unifying threads between countries with less developed OSS. Some of the characteristics of Thailand’s OSS landscape identified in this research can provide a baseline upon which other (underdeveloped) countries can be assessed to see if there is any common themes or issues. If a common theme presents itself, it would provide further tools with which to assess OSS and globalisation.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Literature List

A.T. Kearney (2011) Offshoring opportunities Amid Economic Turbulence – Global services location index 2011. Available at: https://www.atkearney.com/paper/- /asset_publisher/dVxv4Hz2h8bS/content/offshoring-opportunities-amid-economic-turbulence/10192. Last accessed at: 15/08/2014

A.T. Kearney (2013) A wealth of Choices: From anywhere on earth to no location at all. Global services location index. Available online at: http://www.atkearney.com/documents/10192/5082922/A+Wealth+of+Choices.pdf/61c80111-41b2- 4411-ad1e-db4a3d6d5f0d

A.T. Kearney. (2009). The shifting geography of offshoring. Available: http://www.atkearney.com/documents/10192/fda82529-b60a-4fae-8d92-22cfd69b95b3. Last accessed 17/01/2014.

Agarwal, R (2009) Knowledge Process Outsourcing: India’s Emergence as a Global Leader. Asian social science, Vol 5, No 1.

Aisen, A & Veiga, F (2013) How does political instability affect economic growth? European Journal of Political Economy March 2013, 29(1), 151-167

Allied Digital. (2010). Six key factors for outsourcing. Available: http://itonews.eu/files/f1289395538.pdf. Last accessed 17/01/2014.

Aron et al (2005) Just Right Outsourcing: Understanding and Managing Risk. Journal of Management Information Systems

Aspray et al (2006). - Globalization and Offshoring of Software. http://www.acm.org/globalizationreport/overview.pdf - Last accessed on 15/08/2014

Avgerou, C (2007) experience from Britain and India. Information and Organization 11, 25–43

Babu, M (2006) Offshoring IT services: A Framework for Managing Outsourced Projects. Tata McGraw- Hill, New Delhi

Bair, J (2008) Analysing global economic organization: Economy and Society 37, 3: 339-364,

Baldia, S (2007) Thinking Outside the BPO - KPO to India Business & Technology Review (2007). Available at: http://works.bepress.com/sonia_baldia/15

Banerjee et al (2012) ‘Corruption’. MIT Press. Social science research network

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Black, T. R. (1999). Doing quantitative research in the social sciences: An integrated approach to research design, measurement, and statistics. Thousand Oaks, CA: SAGE Publications, Inc. (p. 118)

Bloomberg. (2013). Economic growth forecast cut again link:http://www.bangkokpost.com/business/news/389894/economic-forecast-slashed. Last accessed 17/01/2014.

Brusoni, S. (2005) The Limits to Specialization: Problem Solving and Coordination in ‘Modular Networks’ Organization Studies 26(12), p.1885-1907.

Bryman, A (2008) Social Research Methods. OUP Oxford / Bryman, A (2012) Social Research Methods, Oxford University Press

Bunyaratavej et al (2007) ‘Services cultural alignment in offshoring: The impact of cultural dimensions on offshoring location choices’ Journal of Operations Management, 2010, Vol.28(3), pp.186-193

Bunyaratavej et al (2008) Multinational investment and host country development: Location efficiencies for services offshoring. Journal of World Business 43 227–242

Calderon, J (2013). Philippine BPO industry to hit $25b. Inside Investor

Carter DE & Porter S (2000) The Research Process in Nursing. Fourth edition, Oxford, Blackwell Science. 29-42.

Columbia (2014) Quantitative methods in social sciences Available online at: http://ccnmtl.columbia.edu/projects/qmss/measurement/validity_and_reliability.html. Last accessed 15/08/2014

Cozby, P.C. (2001). Measurement Concepts. Methods in Behavioral Research (7th ed.).

Creswell & Clark (2007) Designing and Conducting Mixed Methods. Sage Publications, Paperback

Creswell (2003) RESEARCH DESIGN Qualitative, Quantitative and Mixed Methods Approaches. Sage Publications

Davies et al (2006) - IT OFFSHORING: History, Prospects and Challenges. Journal of the Association for Information Systems Vol. 7 No. 11, pp. 770-795

Deyo (1989) Political Economy of the New Asian Industrialism – Business and Economics. Cornell University Press

Dunning (2000) The eclectic paradigm as an envelope for economic and business theories of MNE activity. International Business Review 9 (2000) 163–190

Dunning, J.H (2002) Relational assets, networks and international business activity- Co-operative strategies and alliances 569-594

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Economist. (2013). On the turn. Available: http://www.economist.com/news/special- report/21569571-india-no-longer-automatic-choice-it-services-and-back-office-work-turn

Farrell, D (2005) Offshoring: Value Creation through Economic Change. Journal of Management Studies. Volume 42, Issue 3, 675–683

Farrell, D. et al. (2006) Sizing the Emerging Global Labor Market: Rational Behavior from Both Companies and Countries Can Help It Work More Efficiently. Academy of Management Perspectives 20.4,p.23-34.

Financial Express (2008) India's outsourcing revenue to hit $50 bn. Available at: http://archive.financialexpress.com/news/indias-outsourcing-revenue-to-hit-50-bn/266661

Flowers, A (2014) How Thailand’s Coup Could Affect Its Economy. Can be found online at: http://fivethirtyeight.com/datalab/how-thailands-coup-could-affect-its-economy/

Forbes (2008) - http://www.forbes.com/2008/11/29/cio-sitel-shankardass-tech-cio- cx_es_1201sitel.html

Friedman, S (2005) International Journal of Urban and Regional Research. Volume 29, Issue 4, pp 945– 959

FT (2010) Thailand: Salute to the past - http://www.ft.com/intl/cms/s/0/0a34455e-f147-11e3-9fb0- 00144feabdc0.html#axzz3A1eqLBNc (June 2014)

Gerald W. Fry, Hui Bi, (2013) The evolution of educational reform in Thailand: the Thai educational parado, Journal of Educational Administration, Vol. 51 Iss: 3, pp.290 - 319

Gereffi et al (2001) Introduction: Globalisation, Value Chains and Development. IDS Bulletin Volume 32, Issue 3, pages 1–8,

Gereffi, G (2005). The new offshoring of jobs and global development. Jamaica: International Institute for Labour Studies. pp 1-17.

Glass, F & Saggi, M (2001) Innovation and wage effects of international outsourcing. European Economic Review 45 67-86

Green, A (2006) Thai Stocks Seen Recovering From Losses Tied to Military Coup. Bloomberg. 21 September 2006. Available at: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGpFqnPR4vJI&refer=asia

Hess, B & Hagen, P (2006). Sex differences in indirect aggression: Psychological evidence from young adults. Evolution and Human Behaviour, 27, 231-245

Holger, G (2011) Globalization, offshoring and jobs WTO. Available at: http://www.wto.org/english/res_e/booksp_e/glob_soc_sus_e_chap1_e.pdf. Last accessed 15/08/2014

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Jennifer, S (2013) - http://blog.transparency.org/2013/12/17/does-fighting-corruption-really-make- business-sense/. Accessed on 15/08/2014

Jitsuchon, S (2012) ‘Thailand in a Middle-income Trap’ TDRI Quarterly Review

Justina, L (2013). "Baht Falls to a Three-Year Low, Stocks Drop on Political Unrest". Bloomberg. Retrieved 25 December 2013

Kamminga, M (2007) Management control patterns in joint venture relationships: A model and an exploratory study. Accounting, Organizations and Society Volume 32, Issues 1–2, 2007, Pages 131–154

Khan, S U. Niazi, M. Ahmad, R (2011) Factors influencing clients in the selection of offshore software outsourcing vendors: An exploratory study using a systematic literature review. Journal of Systems and Software. Volume 84, Issue 4. 686–699

Kleibert, J M (2011) Understanding contemporary globalisation: The global shift in financial service delivery. Masters Thesis - the University of Amsterdam

Knack, S & keefer, P (1995) ‘Institutions and economic performance: Cross-country tests using alternative institutional measures’. Economics and politics, volume 7. No 3.

Knapp TR (1998) Quantitative Nursing Research. Thousand Oaks, Sage publishing.

Kochman, M (2008) Beyond BPO. Can be found at: http://www.computerworlduk.com/in- depth/outsourcing/1483/beyond-bpo-the-move-to-knowledge-process-outsourcing/ Last accessed 30/08/2014

Kramer, M & Porter, M (2011) Creating Shared Value. Harvard business review

Kshetri, N & Dholakia, N (2009) Professional and Trade Associations in a Nascent and Formative Sector of a Developing Economy: A Case Study of the NASSCOM Effect on the Indian Offshoring Industry. Journal of International Management vol. 15, no.2. 225-239.

Kuruvilla, S & Ranganathan, A (2008) Economic Development Strategies and Macro- and Micro-level Human Resource Policies: The Case of India’s “Outsourcing” Industry. Industrial and Labor Relations Review 62(1), 39-72.

Lagendijk, A (2007) Clusters in Urban and regional development. Urban studies, 44, 9, 1861-1863 Routledge

Lambsdorff, J (2003) ‘How corruption affects economic development’ University of Passau press

Leavy, B. (2004). Outsourcing strategies: opportunities and risk. Strategy and Leadership, 32 (6) : 20-25.

Lewin. C. (2006) Offshoring Work: Business Hype or the Onset of Fundamental Transformation? Long Range Planning, Vol 39.3, p. 221-239.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Linder & Strulik (2014) The great Divergence: A network approach. Available at: http://ssrn.com/abstract=2407865. Last accessed 15/08/2014

Lockwood, J (2012) Are We Getting the Right People for the Job? A Study of English Language Recruitment Assessment Practices in the Business Processing Outsourcing Sector, International Journal of Business Communication April 2012 vol. 49 no. 2 107-127

Luo, Y & Tung, R (2007) International expansion of emerging market enterprises: A springboard perspective. Journal of International Business Studies. 481-498.

Mackinnon, D (2012) Beyond strategic coupling: reassessing the firm-region nexus in global production networks. Journal of Economic Geography 12. 227–245

Mann, CL (2005) Offshore outsourcing and the globalization of US services: Why now, how important, and what policy implications. The United States and the world economy

Manning et al. (2008) A Dynamic Perspective on Next-Generation Offshoring: The Global Sourcing of Science and Engineering Talent, Academy of Management Perspectives 22.3, p.35-54

Manteau, Cristina (2008) Economic effects of globailization: Lessons from trade models. Economic Bulletin, Banco de Portugal

Markusen, J (2005) Modelling the Offshoring of white-collar services: From comparative advantage to the new theories of trade and FDI. Can be found online at: http://www.nber.org/papers/w11827.pdf. Last accessed 15/08/2014.

Massini et al (2010) Outsourcing and Offshoring of Business Services: Challenges to Theory, Management and Geography of Innovation, Regional Studies, 46:9, 1219-1242

Mehta et al (2006) - Challenges and opportunities of business process outsourcing in India. Journal of Labor Research Volume 27, Issue 3 , pp 323-338

Miyamoto (2003) Internationalization of commercial services: global dispersion. The Seventh International Conference on Global Business and Economic Development

Mulder, M.I & Heintz, J.L. (2007) Offshore outsourcing: now available for architects - TU Delft, The Netherlands

Myers, M. D. (1997) Qualitative Research in Information Systems. MIS Quarterly. Volume 21, Issue 2, pp. 241-242.

Nadeem, S. (2009). The cultural politics of outsourcing in India. British Sociological association. 3 (1), pp102-122.

Narula, R & Zanfei, A (2000) Globalisation of Innovation: The Role of Multinational Enterprises. Dept. of International Economics & Management, Copenhagen Business School

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Nasscom. (2006) Catalysing change. Available: https://www.nasscomfoundation.org/images/resources/2006_Catalysing%20Change%20Report.pdf.

Nasscom. (2009). Annual Report 2009. Available: http://www.scribd.com/doc/155144952/NASSCOM- Annual-Report-2009#scribd.

Nicholson & Sahay (2001) Some political and cultural issues in the globalisation of software development: case

OECD (2008) The Global Competition for Talent: Mobility of the Highly Skilled. Accessible on: http://www.oecd.org/sti/inno/41362303.pdf. Last Accessed 15/08/2014

Outsourcing India. (2012). Rising Costs Threaten India's Hold on Offshore IT. Available: http://www.outsourcing-india.biz/rising-costs-threaten-india-s-hold-on-offshore-it

Paul, H. (2012). China Edges Out U.S. as Top Foreign-Investment Draw Amid World Decline. Available: http://online.wsj.com/news/articles/SB10001424052970203406404578074683825139320. Last accessed 17/01/2014.

Peat, J (2002) Health Services Research: A Handbook of Quantitative Methods. London, Sage publishing.

Peel, M. (2014). Thailand: collision course. Available: http://www.ft.com/intl/cms/s/0/93a9352c-7854- 11e3-a14800144feabdc0.html?siteedition=uk. Last accessed 17/01/2014( 2013)

Pomeranz (2000) The great divergence: China, Europe, and the making of the modern world economy, Princeton, NJ.

Pradhan, J.P. (2006) ‘Rise of Service Sector and Outward Foreign Direct Investment from Indian Economy: Trends, Patterns, and Determinants’, GITAM Journal of Management, 4 (1), pp. 70–97.

Regine, P (2013) Strategic contextualisation: free movement, labour migration policies and the governance of foreign workers in Europe. Policy Studies, Vol.34 (2), pp.122-141

Ritchie et al (2013) Qualitative Research Practice: A Guide for Social Science Students and researchers. SAGE Publications

Robson, Colin (2002). Real World Research, A Resource for Social Scientists and Practitioner-Researchers (Second Edition). Malden: Blackwell. p. 624

Rohde, F (2004) The next step for the CEO: Moving IT-enabled services outsourcing to the strategic agenda, International Journal of Accounting Information Systems http://www.sciencedirect.com/science/article/pii/S1467089504000466

Rothbauer, P (2008) Triangulation. The SAGE Encyclopedia of Qualitative Research Methods. Sage Publications. 892-894.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Saxenian, et al (2005) From Brain Drain to Brain Circulation: Transnational Communities and Regional Upgrading in India and China. Studies in Comparative International Development, 40.2, p. 35-61;

Sheffield University (2001). Analysing data using SPSS. Available: https://students.shu.ac.uk/lits/it/documents/pdf/questionnaire_analysis_using_spss.pdf. Last accessed 17/01/2014.

Slaughter, J & May, B (2012). ‘Legal regimes governing Foreign Direct Investment (FDI) in host countries’. Advocates for International Development

Sofaer (2000) Qualitative methods: what are they and why use them? Health Services Research 34: 1101-18.

Statistical Services Centre. (2001). Approaches to the Analysis of Survey Data . Available: http://www.reading.ac.uk/ssc/n/resources/Docs/Approaches_to_the_analysis_of_survey_data.pdf. Last accessed 17/01/2014.

Tas, J. & Sunder, S. (2004) Financial Services Business Process Outsourcing, Communications of the ACM, Vol 47, No. 5

Taylor and Asheim (2001) The Concept of the Firm in Economic Geography. Economic Geography, Volume 77, Issue 4, pages 315–328

Taylor, N (2011) Outsourcing of certain market access tasks is limited by concerns that using vendors will give rivals a competitive advantage: http://www.outsourcing-pharma.com/Commercial- Services/Competitive-concerns-limit-market-access-outsourcing

Tholons (2014) - http://www.tholons.com/nl_pdf/Whitepaper_December_2013.pdf. Last Accessed on 15/08/2014

Tomas Havranek & Zuzana Irsova (2011). "Which Foreigners are Worth Wooing? A Meta-Analysis of Vertical Spillovers from FDI. Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague

UNCTAD (2002) Trade and development report. Available at: http://unctad.org/en/docs/tdr2002_en.pdf. Last accessed on 15/08/2014

UNCTAD (2002) World Investment Report 2002 Transnational Corporations and Export Competitiveness. Availble at: http://unctad.org/en/docs/wir2002_en.pdf. Last accessed on 15/08/2014

UNCTAD (2010). Foreign direct investment, the transfer and diffusion of technology, and sustainable development

Vocativ (2014) - http://www.vocativ.com/world/ukraine-world/ukraines-booming-sector-jeopardy- amid-political-instability-war/

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Waguespack et al (2004) - Technological development and political stability: Patenting in Latin America and the Caribbean. Research Policy 34 (2005) 1570–1590

WEF - World Economic Forum. (2014). The Global Competitiveness Report 2013 - 2014. Available: http://www.weforum.org/reports/global-competitiveness-report-2013-2014. Last accessed 15/01/2015.

Wei, S-J (2000) ‘Corruption in Economic Transition and Development: Grease or Sand?’ Harvard University Press

Weisz, J (2011) Importance of human capital and its education in raising competitiveness from the ‘’strategy EU 2020’’ perspective. Studies about education. issue 4. 137•144

Williams, J. H. (2006) Electricity reform in developing and transition countries: A reappraisal. Volume 31, Issues 7, 815–844

World Bank (2003) Human Capital formation and foreign direct investment in developing countries: UNESCO and OECD: Available at: http://www.oecd.org/dev/5888700.pdf. Last accessed 15/08/2014

World Bank. (2010). Investing Across Borders. Available: http://iab.worldbank.org/~/media/FPDKM/IAB/Documents/IAB-report.pdf. Last accessed 17/01/2014

Yeung, H (2005) Rethinking relational economic geography. Transactions of the Institute of British Geographers Volume 30, Issue 1, pages 37–51,

Yew, L K (2011) Hard Truths to Keep Singapore Going. Straits Times Press

Zhang, H. (2007). Outsourcing risks analysis. In: Advances in multiple criteria decision making. China: School of economics and Management. pp195-201.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Data Sources Thailand Board of investment - http://www.boi.go.th/index.php?page=form_promoted_companies

International chamber of commerce (ICC) – http://www.iccwbo.org/

American Chamber of commerce (CoC) -http://www.amchamthailand.com/acct/asp/default.asp

Australian Coc - http://www.austchamthailand.com/

Belgium-Luxembourg CoC - http://www.ntccthailand.org/

British CoC - http://members.bccthai.com/bcct/asp/default.asp

Canadian CoC – http://www.tccc.or.th/

Danish CoC - http://www.dancham.or.th/

French CoC – http://www.francothaicc.com/en/

Germany CoC – http://www.gtcc.org/

Hong Kong CoC - [email protected]

Israel CoC - http://www.thaisraelcc.com/index.php?entry=entry070217-001602

Italy CoC – http://www.thaitch.org/

Japan CoC - http://www.jcc.or.th/

South Korea CoC - http://www.korchamthai.com/

The Netherlands CoC - http://www.ntccthailand.org/

New Zealand CoC – http://www.nztcc.org/

Norway CoC – http://www.norcham.com/

Switzerland CoC – http://www.swissthai.com/

Russia CoC - http://www.trcc.or.th/

2013 Top outsourcing firms list - (https://www.iaop.org/Content/19/165/3612),

Thailand Businesses Directories - http://www.thaibd.com/main.html, http://www.thaiwebsites.com/businessdirectories.asp and http://www.thailandbusinessdirectory.net/

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

ThaiVisa Forum - http://www.thaivisa.com/forum/topic/730337-share-your-problems-of-recruiting- decent-thai-staff/

ThaiVisa Forum - http://www.thaivisa.com/forum/topic/713854-political-turmoil-scares-away-thai- investors/

English News Website - http://englishnews.thaipbs.or.th/political-turmoil-scares-away-thai-investors/

Social Europe Website - http://www.social-europe.eu/2014/01/thailands-middle-class/

Jittery (Thailand) - http://jittery.com/thailand

CITS 2014 - http://www.citsonline.utcc.ac.th/index.php/en/articles/2014

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Chapter 7. Appendix

7.1. Firm List

General Electric International Operations company D & B Thailand

Merck Limited Duensing Kippen Limited Supa Boondee Workshop

Infobip LTD HNP Legal LTD Administration outsourcing co., LTD

ISM Technology Recruitment HONOR Audit and Advisory Baker Tilly Thailand co,. LTD

Brink’s Global Technology (BGT) Sunbelt Asia Deloitte

Accenture Solutions Company Limited Brand Now Limited EY corporate services limited

Control Data (Thailand) Ltd. Crimson Grant Thompson

Fingi CHANDLER & THONG-EK Mazars (Thailand) LTD LAW OFFICES LIMITED

DST Worldwide Services (Thailand) Limited DATAMAX CO., LTD. MSNA LTD.

EMC Information Systems (Thailand) Ltd. DLA PIPER (THAILAND) PWC LIMITED

Geoprise Technologies Co., Ltd. ROUSE & CO. RSM Advisory INTERNATIONAL THAILAND LTD. Kian Gwan (Thailand) Public Co., Ltd. SIAM PREMIER Grayling INTERNATIONAL LAW OFFICE Hewlett-Packard (Thailand) Ltd. TILLEKE & GIBBINS Hill Knowlton Strategies INTERNATIONAL LTD.

Mycos Technologies Co.,Ltd Allen & Overy (Thailand) ICPA (Thailand) limited Co., Ltd.

NCR (Thailand) Ltd. Axis Consultants (Thailand) Red Bird global services co., Ltd Limited Oracle Corporation (Thailand) Company Limited Baker & McKenzie Ltd. Star Translation and software (Thailand) co., LTD

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

SAS Software (Thailand) Co., Ltd. Bangkok International TNS Research Internationa Associates Ltd (Thailand) Ltd.

Tectura (Thailand) Ltd. Clifford Chance (Thailand) Veritas Graphics Limited

C.S.I. GROUP DLA Piper (Thailand) CLY International Limited Limited Mirait Technologies Herbert Smith Freehills Adecco Consulting Ltd. (Thailand) Limited DESIGN LAB CO., LTD. International Legal AMROP/ Gattie-Tan Soo Jin Counsellors Thailand Ltd. Recruitment (Thailand) Co., Ltd FERNRIDGE CO., LTD. Mackenzie Smith Co., Ltd Black Ink Group (Thailand) Co., Ltd. KDDI(THAILAND) LTD. Mayer Brown JSM Boyden Associates (Thailand) Ltd. (Thailand) Limited M・SOFT (THAIALND) CO., LTD. Navinlaw Grant Thornton

NEC CORPORATION (THAILAND) LTD. The Legists Ltd. Heidrick & Struggles Recruitment

NTT COMMUNICATIONS (THAILAND) CO., LTD. Tilleke & Gibbins JAC International Recruitment International Ltd Ltd.

THAI EXEO CORPORATION LIMITED Watson, Farley & Williams ManpowerGroup

TRANSCOSMOS (THAILAND) CO., LTD. Association of Life Partners Opus Recruitment Ltd./ Horton Ltd. International

Reflex Solutions (Thailand) Co., Ltd. Barclays Capital Securities P.R. Recruitment & Business (Thailand) Ltd Management Co. Ltd

SDL Coreharbour Ltd. TRANSEARCH The InfoTech Works Limited IBD Intergroup., Ltd. ARIYA TAX & CORPORATE SERVICES LTD.

Venda Software Development Ltd Bolliger & Company BRAIN CONSULTING CO., LTD. Consulting Ltd.

YES Technologies (Thailand) Co Ltd Kelvin Chia (Thailand) Co., KELLY SERVICES STAFFING & Ltd (KCT) RECRUITMENT (THAILAND) CO., LTD. J & N Enterprise Limcharoen (Bangkok) Co., KPMG PHOOMCHAI TAX LTD. Ltd. AMC CONVERGENT IT (Thailand) Co., Ltd McWalden & Bailey TOKYO CONSULTING FIRM CO., LTD.

Servcorp Co., Ltd. SBC International Law ACCA Associates Co., Ltd Clarity IT Co., Ltd. TMF (Thailand) Limited Administration Outsourcing Co., Ltd.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Dataconsult Ltd. dta international PKF Tax and Consulting Services (Thailand) Co., Ltd. (Thailand) Ltd. Excel Bangkok Co Ltd Frost & Sullivan (Thailand) RSM Advisory (Thailand) Limited Co., Ltd.

Marlo Group (Thailand) Ltd AD Asia Consulting Co.,Ltd BT Siam Ltd.

SafeComs Network Security Consulting Co., Ltd. Dwp Crestcom-Traincom Ltd.

D&L Consultants HBO+EMTB Bed Buzz Co., Ltd. Strategum AEC South East Asia Co., Grayling (Thailand) Co.,Ltd. Ltd BIN THAI COMMUNICATION CO., LTD. John W. Hancock & Hill+Knowlton Strategies Thailand Associates Limited

MONO TECHNOLOGY PCL. Macquarie Securities IMS Health Inc. Thailand Thailand Limited

Magic Software JNP Legal Co.,Ltd Chao Group Limited Osite Network (Thailand) Co., Ltd. Linklaters (Thailand) Ltd. Crown Agents

Londal Consulting Towers Watson (Thailand) Logistics Bureau (Asia) Ltd. Limited Picture This Studio Co. Ltd. Control Risks Management and Executive Recruitment Consultants Ltd.

2 3 PERSPECTIVE CO Boonsom & Manoch MRI Worldwide Recruitment Interlaw Ltd. (Thailand) Ltd

2NETWORK (THAILAND) CO., LTD. Dej-Udom & Associates P.R. Recruitment & Business Ltd. Management Co. Ltd

ABC TECH International Legal Pacific 2000 Recruitment Co., Ltd. Counsellors Thailand Ltd. E for L Aim Public Company Limited Berlitz Bangkok Ltd. TRANSEARCH

ACCELLENCE (THAILAND) LTD. Thailand Insurance CSL Services

AL'BIZ CORPORATION CO., LTD. Baldwin Boyle Group deVere Group

ANT WEBSYSTEMS CO., LTD. Bamrung Suvicha Apisakdi Global Investments (Far East) Ltd. Law Associates (BSA Law) arkavis siam Hume Management MBMG Group Consultants Limited ASIAINFO-LINKAGE (THAILAND) LTD. R.M. Pacific Partners Montpelier (Thailand) Ltd. AUN THAI LABORATORIES CO., LTD South Asia Law PFM-International AVIA SATCOM CO., LTD. Coverage PFS International Consultants Co.,

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

Ltd. AYUTTHAYA TECHNOLOGY SERVICE CO., LTD. Interactive Group Co. Ltd. Professional Portfolio International Ltd. BAKURI CO., LTD. Premier Thai Lawyers Singapore Telecommunications Ltd.

BERYL 8 PLUS CO., LTD. SEARCH Gummy Bear Recruitment Company

BIZ FRONTIER CO., LTD. Legal Advisory Council POHIT Corp. Limited BLUE INTELLIGENCE (THAILAND) CO., LTD. Pan Asia Insurance Brokers Wirtschaftspruefer (Thailand) Co., (PAIB) Company Limited Ltd CARGO ASIA (THAILAND) CO., LTD. Jipyong First Select Co. Ltd BUZZWOO ASIA CO., LTD. LAW & ROAD CO.,LTD. RSM Advisory (Thailand) Ltd.

BUZZCITY (THAILAND) LTD. Natee International Law Bangkok International Audit Co., Office Ltd. Ltd. CLICKNEXT CO., LTD. TEAM GROUP Antares Group CGMATIC CO., LTD. Deacons (Price Sanond Caswell/MMT Nominees Pty Ltd Prabhas & Wynne) CCM SYSTEMS CO., LTD McEvily and Associates ClasG (Thailand) Limited COGNIZANT TECHNOLOGY SOLUTIONS (THAILAND) CO., LTD. Skywave Solutions Bladerunner Consulting Asia Co. Ltd. NTT DATA Eurasis (Thailand) Co., Ltd. Lang Suan House Co.,Ltd. NEC Meinhardt (Thailand) Ltd. Lee Hecht Harrison | DBM Thailand Co, Ltd Ericsson Kamthorn Surachet & PeopleServe Asia Ltd. Somsak Ltd. Atos LawPlus Ltd. Total Training Innovations (Thailand) Co., Ltd. Huawei ABeam Consulting Parker Bridge Recruitment Co., (Thailand) Ltd Ltd. Alcatel-Lucent BIO-INNOVA AND Altus Page Kirkland SYNCHRON CO., LTD. Oracle Corporation ACS Thailand AON Thailand Ltd. SAP Thailand Ltd. Wipro Limited BDO Advisory Limited AMIVOICE THAI CO., LTD. Credenda Associates Sutlet BE CONCEPT CO., LTD. HLB (Thailand) Ltd. BRS CAREERAM CO., LTD. Crestcom - Ra-Kahng SUMITOMO MITSUI BANKING Associates Ltd. CORPORATION CK-SOLUTIONS CO., LTD. TOPTALENTASIA THE ROYAL BANK OF SCOTLAND N.V.,BANGKOK BRANCH CHIANGMAI LANNA BUSINESS SERVICES LTD. Weber Shandwick OptAsia Capital Company Limited CONTROL-A SOLUTIONS CO., LTD. Menumate HUMAN RESOURCES DEVELOPMENT SERVICE OF KOREA CONTACT CENTER SOLUTION (THAILAND) CO., LTD. Citi Thailand Rödl & Partner, Ltd.

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

IBM John Jenner International Advantage Recruitment (thailand) Ltd. ltd Fujitsu Caelan Wright & Associates Limited

7.2. Provisional interview guide

7.2.1. Basic questions to provide background information of interviewees:

- Name, company/organisation name, date - What are the tasks/business functions you perform within Thailand? - Since when have you operated in Bangkok/Thailand? - How large a department/ how many employees are there in the company?

7.2.2. Further information - May differ on respondent

- What was the primary motivation for utilising Bangkok as a location for offshore services? (cheaper labour costs/ high quality of life etc) - What is the ownership structure in operation? - How was the ownership structure established? - Are there incentives for performing operations in Bangkok? What would you suggest are the motivating reasons for firms who wish to engage in OSS provision in in Bangkok/Thailand - Are there structural (bureaucratic/institutional) reasons for why Bangkok was chosen? Is contact with government? - How is the current political situation impacting on your organization? - What improvements (infrastructural or otherwise) would improve the attractiveness of Thailand to OSS?

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

7.3. Offshoring Business Matrix

J &EnterpriseJ N Technologies YES (Thailand) Ltd Co DevelopmentVenda Software Ltd Works Limited The InfoTech SDL Solutions (Thailand)Reflex Ltd. Co., TRANSCOSMOS (THAILAND) LTD. CO., LIMITED CORPORATION THAI EXEO (THAILAND) LTD. CO., COMMUNICATIONS NTT (THAILAND) LTD. CORPORATION NEC M KDDI(THAILAND) LTD. LTD. CO., FERNRIDGE LTD. CO., LAB DESIGN Mirait Technologies GROUP C.S.I. (Thailand)Tectura Ltd. SAS (Thailand) Software Ltd. Co., (Thailand) Corporation Oracle Company Limited (Thailand)NCR Ltd. Technologies Co.,Ltd Mycos Hewlett-Packard (Thailand) Ltd. Kian Gwan (Thailand) Public Ltd. Co., Geoprise Ltd. Technologies Co., Systems Information EMC (Thailand) Ltd. DST Worldwide Services (Thailand) Limited Fingi (Thailand) Data Control Ltd. Accenture Solutions Company Limited Brink’s Global Technology (BGT) ISM Technology Recruitment Infobip LTD Merck Limited General International Electric Operations company Company ・ SOFT (THAIALND) LTD. CO., I I I I I I I I I I I I * Software Technology Outsourcing – Information ITO BusinessLine of I I I I I I I I I I I I I I I I I I I I I I Infrastructure** I I I I I I I I I I consultingIT I I I I & R D Software I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Japan AsiaDomestic exl. Main Markets Serviced I I I I I I I I I I Japan I I I I I I I I I I Europe I I I I 500> I I I I I I Unknown Middle Low Middle Low Middle Low Middle Low Unknown Middle Low Middle High Middle High Middle Low Middle High Unknown Middle High Middle High Middle High Unknown Middle Low Middle High High Unknown Middle High Middle High High High Unknown Middle High High Middle High Middle High Unknown Middle High Middle Low Middle Low Middle Low Middle High Firm Size I I I I Thailand Ownership I I I I Asian Japan Exl. I I I I I I I I I I Japanese I I I I I I I European I I I I I I I I I I I I I AmericanNorth I Other BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Location Postcode 10260 10120 10330 10110 10400 10260 10110 10500 10500 10110 10120 10330 10500 10600 10500 10500 10110 10110 10500 10330 50200 10500 10330 11000 10330 10110 10110 10120 10500 10600 10500 10330 10110 10250

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 SAP Thailand Ltd. Corporation Oracle Alcatel-Lucent Huawei Atos Ericsson NEC DATA NTT (THAILAND) LTD. CO., SOLUTIONS TECHNOLOGY COGNIZANT SYSTEMS LTD CCM CO., LTD. CO., CGMATIC LTD. CO., CLICKNEXT (THAILAND) LTD. BUZZCITY BUZZWOO ASIA LTD. CO., CARGO ASIA (THAILAND) LTD. CO., (THAILAND) LTD. CO., INTELLIGENCE BLUE LTD. CO., FRONTIER BIZ LTD. 8CO., PLUS BERYL LTD. CO., BAKURI LTD. CO., SERVICE AYUTTHAYA TECHNOLOGY AVIA SATCOM LTD. CO., LTD CO., THAI LABORATORIES AUN (THAILAND) ASIAINFO-LINKAGE LTD. arkavis siam LTD. WEBSYSTEMSANT CO., LTD. CO., CORPORATION AL'BIZ (THAILAND) LTD. ACCELLENCE Aim L for PublicE Company Limited TECH ABC (THAILAND) LTD. 2NETWORK CO., CO 2 3 PERSPECTIVE Picture This Ltd. Studio Co. ConsultingLondal (Thailand)Osite Network Ltd. Co., Magic Software PCL. TECHNOLOGY MONO LTD. CO., THAI COMMUNICATION BIN Strategum D&L Consultants Security Network ConsultingSafeComs Ltd. Co., Marlo Group (Thailand) Ltd Ltd Bangkok Co Excel Ltd. Dataconsult Ltd. Co., Clarity IT Ltd. Servcorp Co., (Thailand) IT Ltd AMC Co., CONVERGENT Company I I I I I I I I I I I I I I I I I I I I I I I I I * Software Technology Outsourcing – Information ITO BusinessLine of I I I I I I I I I I I I I I I I I I I I I I I I I I I I Infrastructure** I I I I I I I I I I I I I I I I I I I I I I I consultingIT I I I I I I I I I I I I & R D Software I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Japan AsiaDomestic exl. Main Markets Serviced I I I I I I I Japan I I I I I I I I I I I I I I I I I I I I I Europe I I I I I I I I I I I I AmericaNorth I I I I I I I I I I Other I I I I I I I I I I I I I I I I 0-20 Firm Size I I I I I I I I I I I I I I I I I I I I I 21-100 I I I I I I I I 100-500 500> I Unknown Middle Low Middle High Middle High Middle High Middle Low Middle High Middle High Middle High Middle High Middle Low Low Middle Low Low Low Low Low Low Low Low Low Middle Low Middle Low Middle Low Middle Low Low Low Middle Low Low Middle Low Unknown Low Middle High Middle Low Middle Low Middle Low Middle Low Low Middle Low Middle Low Middle Low Middle Low Low Low Middle Low Middle Low Middle Low Firm Size I I I I I I I I I I I I I I I I I I I I I I Ownership I I I Asian Japan Exl. I I I I I Japanese I I I I I I I I I I I European I I I I I AmericanNorth I I I I I Other BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Chiang Mai BKK BKK BKK BKK Chiang Mai Prachatipat BKK BKK BKK BKK Chiang Mai BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Pakkred BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Location Postcode 10500 10120 10110 10330 10310 10900 10110 10500 10120 10230 10310 10400 10500 50200 10500 10240 10600 10310 50100 12130 10120 10500 10400 10400 50230 10310 11120 10110 10110 10120 10110 10110 10110 10330 10900 11120 10540 10400 10900 10110 10310 10310 10500 10330 10330 10500

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015

AD Asia Consulting Co.,Ltd Frost & Sullivan (Thailand) Ltd. Co., dta international (Thailand) Ltd. Co., TMF (Thailand) Limited Ltd Co., Associates International SBC Law McWalden & Bailey Limcharoen (Bangkok) Ltd. Co., Kelvin (Thailand) Chia Ltd (KCT) Co., Bolliger & Company Consulting Ltd. Intergroup.,IBD Ltd. Coreharbour Ltd. Securities Capital Barclays (Thailand) Ltd Partners Life Ltd. of Association Watson, Farley & Williams Tilleke & Gibbins International Ltd The Legists Ltd. Navinlaw Mayer Brown JSM (Thailand) Limited Mackenzie Smith Ltd Co., International Counsellors Legal Thailand Ltd. Herbert Smith Freehills (Thailand) Limited DLA Piper (Thailand) Limited (Thailand) Chance Clifford Limited Bangkok Ltd International Associates &Baker McKenzie Ltd. Axis Consultants (Thailand) Limited Allen & Overy (Thailand) Ltd. Co., LTD. INTERNATIONAL & GIBBINS TILLEKE LAW OFFICE SIAM INTERNATIONAL PREMIER LTD. THAILAND INTERNATIONAL & CO. ROUSE (THAILAND)DLA PIPER LIMITED DATAMAX LTD. CO., LIMITED &LAW OFFICES THONG-EK CHANDLER Crimson LimitedBrand Now Sunbelt Asia AuditHONOR and Advisory LTD co,. HNP LTD Legal Duensing Kippen Limited D & Thailand B Company I I I I I I I I I I I I I Business Consulting/ Business Analtyics/ Marketing Intelligence KPO – Knowledge Outsourcing Process BusinessLine of I I I I I I I I I I I I I I I I I I I I I I I I I I I ServicesLegal I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Japan AsiaDomestic exl. Main Markets Serviced I I I I I I Japan I I I I I I I I I I I I I I I I I I I I I Europe I I I I I I I I I I I I I I AmericaNorth I I I I I I Other I I I I 0-20 Firm Size I I I I I I I I I I I I I I I I I I I 21-100 I I I I I I I I I I 100-500 I 500> I I I I I I Unknown Middle High Middle High Low Unknown Low Middle Low Low Middle Low Unknown Middle Low Middle Low Middle High Unknown Middle Low Middle High Middle Low Middle Low Middle Low Middle Low Middle Low Middle Low Middle Low Middle Low Low Middle Low Middle Low Middle Low Middle High Middle High Middle High High Unknown Middle High Middle Low Unknown Middle Low Middle High Middle Low Middle High Unknown Firm Size I I I I I I I I I I I I I I Thailand Ownership I I I I I I I Asian Japan Exl. I I Japanese I I I I I I I I I I I I I I I European I I I I I I I AmericanNorth I Other BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Pathumtani BKK BKK BKK BKK BKK BKK Location Postcode 10250 10500 10110 10330 10500 10110 10500 10500 10120 10400 10500 10330 10500 10330 10120 10500 11120 10500 10110 10120 10500 10120 10330 10500 10500 10120 10330 10120 10500 10110 10120 10310 10500 12000 10110 10400 10330 10500 10500 10120

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 Wipro Limited ACS Thailand LTD. CO., AND SYNCHRON BIO-INNOVA ABeam Consulting (Thailand) Ltd LawPlus Ltd. Kamthorn Surachet & Somsak Ltd. Meinhardt (Thailand) Ltd. Eurasis (Thailand) Ltd. Co., Skywave Solutions McEvily and Associates (PriceDeacons Sanond Prabhas & Wynne) TEAM GROUP Ltd. Office International Law Natee LAW & ROAD CO.,LTD. Jipyong Pan Asia Insurance Brokers (PAIB) Company Limited AdvisoryLegal Council Limited SEARCH Premier Thai Lawyers Ltd. GroupInteractive Co. Coverage South Asia Law Partners Pacific R.M. Hume Management Consultants Limited Bamrung Suvicha Apisakdi (BSA Associates Law) Law Baldwin Group Boyle Thailand Insurance Services Berlitz Bangkok Ltd. International Counsellors Legal Thailand Ltd. Ltd. &Dej-Udom Associates & Manoch Interlaw Ltd. Boonsom Risks Control (Thailand) Watson Towers Limited Linklaters (Thailand) Ltd. Co.,Ltd Legal JNP Macquarie Securities Thailand Limited Limited & Associates Hancock John W. Ltd SouthAEC Asia Co., East HBO+EMTB Dwp Company I I I I I I I I I I I I I I I I I I I I I I Business Consulting/ Business Analtyics/ Marketing Intelligence KPO – Knowledge Outsourcing Process BusinessLine of 3 I I I I I I I I I I I I I I I I I I ServicesLegal I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Japan AsiaDomestic exl. Main Markets Serviced I I I Japan I I I I I I I I I I I I I I I I I I Europe I I I I I I I I I I I I I AmericaNorth I I I I I I I I I I I I I I I I I I I I I I Other I I I I I 0-20 Firm Size I I I I I I I I I I I I I I I I I I I I I I 21-100 I I I I I I I I 100-500 I I 500> I I I Unknown High Middle Low Middle Low Middle High Low Middle Low Middle High Middle Low Middle Low Middle Low Middle Low High Middle Low Middle Low Middle Low Middle Low Low Low Middle Low Middle Low Middle Low Low Middle Low Low Middle Low Middle Low Unknown Unknown Middle Low Middle Low Middle Low Middle Low Middle High Middle High Middle Low Middle High Unknown Middle High Middle High Middle High Firm Size I I I I I I I I I I I I I I I I Thailand Ownership I I I I I Asian Japan Exl. I I Japanese I I I I I I I European I I I I AmericanNorth I I I I I I I I I I I I I Other BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Location Postcode 10120 10250 10110 10330 10500 10600 10400 10330 10110 10110 10120 10230 10330 10310 10110 10110 10310 10110 10500 10110 10110 10500 10400 10500 10330 10500 10500 10110 10120 10500 10500 10550 10330 10330 10110 10330 10330 10110 10330 10500

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 ManpowerGroup InternationalJAC Recruitment Ltd. Heidrick & Struggles Recruitment Grant Thornton Boyden (Thailand) Associates Ltd. Ink GroupBlack (Thailand) Ltd. Co., AMROP/ Jin Recruitment Soo Gattie-Tan (Thailand) Ltd Co., ConsultingAdecco Ltd. International Limited CLY Veritas Graphics InternationaResearch TNS (Thailand) Ltd. Star Translation (Thailand) and software LTD co., Red Bird global Ltd services co., ICPA (Thailand) limited Hill Knowlton Strategies Grayling RSM Advisory PWC MSNA LTD. Mazars (Thailand) LTD Grant Thompson services limitedcorporate EY Deloitte Baker Tilly Thailand Administration outsourcing LTD co., Supa Workshop Boondee Company I I I I I I I I I I (Enterprise resource management) * ERM BPO – Business process outsourcing BusinessLine of (Customer relationship Management)*** I I I I I I I I I I I I I I I (Human resource Management)** HRM CRM Domestic Asia exl. Japan Domestic Asia exl. I I I I I I Main Markets Serviced I I I I I I I I I I I I I I i Japan I I Europe I I I I I I I I I I I North America I I I I I I I I I Other I 0-20 Firm Size I I I I I I 21-100 I I I I I I I I I 100-500 I I I I 500> I I I I I I I Unknown Middle High High Unknown Middle High Middle High Middle High Unknown Middle High Middle Low Middle Low Unknown Middle Low Middle Low Middle Low Middle Low Unknown Middle High High Unknown Middle High Middle High High High Middle High Unknown Unknown Firm Size I I Thailand Ownership I I Asian Japan Exl. I Japanese I I I I I I I I I I European I I I I I I I I I I I I North American Other Bkk BKK BKK BKK BKK BKK BKK Nonthaburi BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Nonthaburi Location Postcode 10500 10110 10330 10330 10330 10330 10110 11120 10600 10110 10500 10110 10330 10150 10330 10500 10120 10120 10320 10120 10330 10110 10120 10120 10330 11000

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 Montpelier (Thailand) Ltd. MBMG Group Global Investments (Far East) Ltd. deVere Group CSL TRANSEARCH 2000 RecruitmentPacific Ltd. Co., RecruitmentP.R. & Business Management Ltd Co. WorldwideMRI Recruitment (Thailand) Ltd Management and Executive Recruitment Consultants Ltd. BureauLogistics (Asia) Ltd. AgentsCrown GroupChao Limited IMS ThailandHealth Inc. Hill+Knowlton Strategies Thailand Grayling (Thailand) Co.,Ltd. Bed Ltd.Buzz Co., Ltd. Crestcom-Traincom SiamBT Ltd. RSM Advisory (Thailand) Limited PKF and Tax Consulting Services (Thailand) Ltd. Administration Outsourcing Ltd. Co., ACCA LTD. FIRM CO., CONSULTING TOKYO KPMG PHOOMCHAI TAX LTD. (THAILAND) LTD. CO., STAFFING SERVICES & KELLY RECRUITMENT LTD. CO., CONSULTING BRAIN ARIYA TAX LTD. &SERVICES CORPORATE TRANSEARCH RecruitmentP.R. & Business Management Ltd Co. Opus Recruitment Horton InternationalLtd./ Company I I I I I I I I I I I I I I I (Enterprise resource management) * ERM BPO – Business process outsourcing BusinessLine of I I I I I I I I I I I I (Human resource Management)** HRM I I I I I I (Customer relationship Management)*** CRM I I I I I I I I I I I I I I I I I I I I I I I I Japan Domestic Asia exl. Main Markets Serviced I I I I Japan I I I I I I I I I I I I I I I I Europe I I I I I I I I I I North America I I I I Other I 0-20 Firm Size I I I I I I I I I I I I 21-100 I I I I I I I I I I I I I I I 100-500 I 500> I I Unknown Middle High Middle Low Unknown High Middle Low Middle High Middle High Middle High Middle High Middle Low Middle Low Middle High Middle Low Middle Low Middle High Unknown Middle Low Middle Low Middle High Middle Low Middle Low Middle High Middle High Middle Low Middle High Middle High Middle High Low Middle Low Middle High Middle High Firm Size I I I I I I Thailand Ownership I Asian Japan Exl. I I I I I Japanese I I I I I I I I I I I I I I I European I I I I I I North American I I I I Other BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Location Postcode 10110 10110 10110 10110 10110 10500 10330 10320 10330 10110 10330 10110 10110 10110 10330 10500 10110 10110 10330 10120 10500 10330 10110 10500 10120 10120 10500 10110 10500 10320 10500

Bangkok’s Offshore Services Landscape MSc IDS David Jerome 2015 Fujitsu IBM (THAILAND) LTD. CO., SOLUTION CENTER CONTACT LTD. CO., SOLUTIONS CONTROL-A LTD. SERVICES BUSINESS CHIANGMAI LANNA LTD. CO., CK-SOLUTIONS LTD. CAREERAM CO., LTD. CO., CONCEPT BE LTD. THAI CO., AMIVOICE Advantage Recruitment (thailand) ltd &Rödl Partner, Ltd. OF KOREA SERVICE DEVELOPMENT HUMAN RESOURCES OptAsia Company LimitedCapital N.V.,BANGKOKBANK OFBRANCH ROYAL THE SCOTLAND CORPORATION BANKING MITSUI SUMITOMO BRS Sutlet John Jenner International Ltd. ThailandCiti Menumate Weber Shandwick TOPTALENTASIA Ltd. Ra-Kahng - Associates Crestcom (Thailand)HLB Ltd. Credenda Associates WrightCaelan Limited & Associates AdvisoryBDO Limited AON Thailand Ltd. Altus Page Kirkland Parker Bridge Recruitment Ltd. Co., TrainingTotal (Thailand)Innovations Ltd. Co., PeopleServe Asia Ltd. Hecht HarrisonLee | DBM Thailand Ltd Co, Lang Suan House Co.,Ltd. Bladerunner Consulting Ltd. Asia Co. (Thailand)ClasG Limited Caswell/MMT Nominees Pty Ltd Antares Group Bangkok International Audit Ltd. Co., RSM Advisory (Thailand) Ltd. Ltd First Select Co. Wirtschaftspruefer (Thailand) Ltd Co., Corp. POHIT Gummy Recruitment Bear Company Singapore Telecommunications Ltd. International Ltd. Portfolio Professional PFS InternationalLtd. Consultants Co., PFM-International Company I I I I I I I I I I I I I I I I I I I I I I I I I (Enterprise resource management) * ERM BPO – Business outsourcingprocess BusinessLine of I I I I I I I I I I I I I I I I I I I I (Human resource Management)** HRM I I I I I I I I I I I I I (Customer relationship Management)*** CRM I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Japan AsiaDomestic exl. Main Markets Serviced I I I I I I I I I I I Japan I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Europe I I I I I I I I I I I I I I I I I I I I I I I I AmericaNorth I I I I I I I I I I I I I I I I I I I I I I I Other I I I I 0-20 Firm Size I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I 21-100 I I I I I I I 100-500 I I I I I 500> I I Unknown Middle High High Middle Low Middle Low Middle Low Middle Low Low Middle Low Middle Low Middle Low Middle Low Low Low Middle Low Middle High Middle Low Middle Low Middle Low High Middle Low Middle Low Middle Low Middle Low Middle Low Middle Low Middle High High High Middle Low Middle Low Unknown Middle Low High Middle Low Middle Low Middle Low Middle Low Middle Low Middle High Middle High Low Middle Low Unknown Middle Low Middle High Middle Low Middle High Middle Low Firm Size I I I I I I I I I I I I I I I I I I I I Thailand Ownership I I I I I I I I I I Asian Japan Exl. I I I Japanese I I I I I European I I I I I I I I I AmericanNorth I I I I I I I I Other BKK BKK BKK BKK Chiang Mai BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Samutprakarn BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK BKK Chiang Mai Location Postcode 10110 10400 10330 10900 50100 10110 10900 10110 10110 10110 10120 10400 10330 10120 10120 10120 10110 10540 10110 10260 10500 10110 10110 10500 10110 10110 10110 10330 10110 10110 10260 10330 10110 10330 10110 10330 10110 10110 10400 10120 10110 10110 10100 10500 10330 10110 10110 50210