April 1, 2019
Jonathan De Luzuriaga – Spring Valley Tech and Outsourcing
April 1, 2019
In today’s podcast, we interviewed Jonathan De Luzuriaga, the founder, and president of Spring Valley which is a center of innovation that is based in Roxas City and the Philippines answer to Silicon Valley.
I’m honored to be invited to Spring Valley and have the interview here. His 30 years of experience shares a lot of insight into how the birth of Spring Valley Tech began and outsourcing itself.
Derek Gallimore: Welcome to the Outsource Accelerator podcast. This is a short format podcast where we explore business and outsourcing mastery. My name is Derek Gallimore and I am really excited to bring you the leading podcast in outsourcing.
Derek Gallimore: Hi, and welcome to another episode of the Outsource Accelerator podcast. My name is Derek Gallimore and this is episode number 219 welcome. So today I’m excited to have back Jonathan De Luzuriaga. He is the super, super experienced in outsourcing. We actually previously interviewed him in episode 211 if you want to go back and hear his origin story. But Jonathan is the founder and president of Spring Valley, which is the Philippines answer to a Silicon Valley. Of course, it is a center of innovation is a really exciting place. I’m actually interviewing Jonathan from Spring Valley, so I’m honored to be a guest of his there. And Jonathan was also the executive director of IT-BPAP, which of course is the official, association for outsourcing here in the Philippines. He’s currently the president of the PSI, which is the Software Association for the Philippines and also the president for NOCP, which is the, provincial association for the Internet communications technology sectors here in the Philippines. So super connected, super interesting guy, to have conversation with them. I’m honored to be invited to Spring Valley and interviewing him here, so I trust you will enjoy this. If you’re on any of the show notes, as always, go to outsource accelerated.com/219. Enjoy.
Derek Gallimore: Hi and welcome back everybody today. I am lucky enough and excited to be joined by Jonathan De Luzuriaga. Hi Jonathan. How are you?
Jonathan De Luzuriaga: I’m very good. Derek.
Derek Gallimore: Master, otherwise known as Jdl.
Derek Gallimore: Known well amongst the outsourcing industry. Um, and I’m absolutely honored to, to have you on the show, but also honored and humbled to be a guest in your Spring Valley here today and yesterday as well.
Jonathan De Luzuriaga: Pleasure is ours. Derek, you’re always welcome here. You know, that, you know, thanks for taking the time to have this little chat with us and discover, you know, the amount of insanity that we’re doing here in a very nice place called Spring Valley.
Derek Gallimore: Yeah, it’s super, super inspiring. And we’re of course going to get into that. Now we’re going to deep dive into what exactly Spring Valley is and, and, its mission and also what it means for the Philippines, also the world out there. Um, but I suppose in way of introduction, do you want to, do you want to, if people haven’t listened to the previous podcast on you, um, just introduce yourself and how you came to be here in Spring Valley.
Jonathan De Luzuriaga: So I’m an old hat on the, entire IT BPM outsourcing industry of the Philippines. I’m currently holding on to several positions. They, they actually sound sexier than they actually are. So I am the president of the Philippines Software Industry Association. Probably one of the oldest industry associations in the Philippines. Been around for 30 years, been led by a great number of champions in the technology space in the country. Just fairly recently. I was elected as the president of the National ICT Confederation of the Philippines that, it’s been going on for 10 years. It’s composed of about 81 ICT councils all over the Philippines, across all the three major islands. You know, very exciting stuff that’s happening there. By virtue of my presidency with the PSIA. I also sit on the board of the IT and Business Processing Association of the Philippines, which is the Mother Association of all ICT and ICT enabled the, associations here in the country. So glad to be here again.
Derek Gallimore: Thank you. And yeah, that’s, that’s um, you’re a busy guy. Clearly a busy guy. And so just to give people an introduction into Spring Valley, um, I’ll give you a sort of a, an outsider’s introduction. It, it’s not in Manila, like most stuff in the Philippines kind of kicks around Manila or Cebu, but we’re sitting in, um, Roxas City, which, people might be at an orientated. It’s about three hours away from Boracay, the, the famous point beaches of Boracay. Um, but otherwise it’s maybe not knowing as much as, as other major centers. Um, but then there is Spring Valley here, so, so why Roxas City and, and then how to Spring Valley sit into, I’m sorry, how did Spring Valley sit into this location?
Jonathan De Luzuriaga: Well thanks for, for put things in perspective in terms of their location. So we’re, we’re, we are in this island called Panay. Nobody has actually created a, a study at, but I think we’re right smack in the middle of the country. So it gives us the claim to being at the heart of the Philippines.
Derek Gallimore: Let’s make it official.
Jonathan De Luzuriaga: In fact, if you look at the island shape, it actually looks like a heart. So I dunno if it wasn’t done by design obviously. So we are three hours to Boracay by land. And then to our right is actually two more sets of islands that are beautiful. One is it Sicogon. Yeah. One is a Gigantes Island. This island and south from where we are is actually Ilo ilo, which is a very bustling, outsourcing location as well. We’ve got a lot of, the third part outsourcers calling Ilo Ilo home now.
Jonathan De Luzuriaga: And it’s a part of the expansion plans have a great majority of, of a outsourcing companies that are located in the metropolitan areas. That being said, why here? Right? I mean, that’s, that’s the most logical question to ask me. In fact, I get asked that a lot. So let me first rewind. Why even put a Spring Valley? So about four years ago, I got elected as the president of the Philippines Software Industry Association. And you know, I thought to myself, I was having coffee somewhere in the Bonifacio Global City. I ask myself, am I just going to go through this term without actually doing something significant in my life? And, you know, the God given opportunity that, that I was presented by heading the hundred and 60 plus a delegation, that is called the PSI membership. So just like it started thinking like a startup and I said, what problem am I really trying to solve?
Jonathan De Luzuriaga: So there’s the academe industry gap, obviously, which is, you know, it’s, it’s not a surprise to everyone. You know, often times what the academe produces. It’s not what the industry requires. So there has to be some level of intervention when it comes to talent development. The second piece is that, again, and I mentioned this during the previous podcasts that you know, they’re the Philippines is so services oriented. You know, we, we don’t get high on our own supply, right? So something has to be done about that as well. And third is probably our biggest, there’s no real identified venue for all of these interventions to happen. So I started looking all over the world for a particular model and what I saw is that I need to develop something like the Silicon Valley in the US so I have to come up with a very nice name.
Jonathan De Luzuriaga: And they came up with Spring Valley. We spring actually stands for something which I adopted from the Philippine Software Industry Association. There’s a group, a special interest group within the PSIA that’s called spring, that Ph, and it stands for software products incubation group. So I called up the guys running this, you know, Joey Gurango Aroc Mighty of the BSA. And I said, hey, could I steal the word spring? You know, there were more than happy to make me use it. And they said, you know, we don’t have rights over that. Anyway, it’s going to be totally distinct and separate. So I got spring valley and now the, the larger part of the problem is where am I going to put this? So obviously it’s quite challenging to put, you know, a venue where you know, your creative juices would need to run 24 by seven if you put it in a, in an area as challenging as let’s say, Metro Manila.
Jonathan De Luzuriaga: So you’ve got, you’re looking to spend about two or three hours on the road just because of traffic and the noise is there and this is too much competition. The people, you know, could technically switch, switch over to a new function, practically overnight. So he said, you know, I need to do this in the countryside. Hopefully that formula will work. So I had a, some sort of a checklist on my head saying, you know, I need something that is very a political, it’s not attached to any a government initiative or government personalities. And second is that, you know, I need a meeting of the minds, a meeting of value sets. We something like this needs to be long term. We can’t look at this just like any other ordinary business wherein, you could project a significant ROI in a very short period of time. And the third is probably the most critical one is that if nobody believes in this insanity, then I would need to then I would need to, bankroll this ourselves. And in a Philippine setting, the only real collateral, if you’re going to take out loans, it’s going to be land.
Derek Gallimore: And it’s true just on that, you know, silicon valley is famed and probably infamous for throwing cash at stuff and not necessarily wanting a return. The investment climate is a little bit, it’s not quite there yet. As you know, it doesn’t have that same supportive vibe of startups. People are keen to see their ROI. People, you know, it’s a far more kind of conservative investment basis now, which no judgments, it’s probably a better way to be honest. But um, yeah. How do you find that the sort of an investment mentor?
Jonathan De Luzuriaga: Philippines, the Philippines is weather, you know, several, global financial crisis because of, being very ultra conservative when it comes to the way, the way we run our financials, you know, the economy has been up and up. It’s currently being challenged a little bit, but you know, we’re still way up there compared to some of our Asian neighbors and you’re, you’re correct. You know, we’re, we’re not there yet and we’re not there yet because nobody really has attempted something that’s out of the box. You know, if we’re going to do exactly what Singapore is doing or a Malaysia and Indonesia, Thailand, or even some of the more technologically advanced nations like South Korea and Japan, then you know, that puts us in a very, challenging position because these people have been planting the seeds since the 1970s and you know, in as much as we were the success story of Asia when it comes to outsourcing, when 2000, when the, when the late nineties ended in 2000 came in, in the flood gates are open in everybody and his brother who was, had the significant brand in outsourcing came to the country.
Derek Gallimore: But you know, that, that’s, that’s a very volatile, position to be in as a nation. Hence, somebody has to be, you know, to be gung ho and, you know, look at challenging the norm and going against the grain. That’s exactly what they’re doing here in Spring Valley. By coming up with a venue we’re in, you know, we, we have an incubation space. We take care of our own development team that basically helps start ups from not only in the Philippines but the rest of the world. And then we’ve got, we’re strongly dabbling into IOT and AI and seeing to it that the marriage between hardware and software will happen. Now that being said, you know, it might sound too far away from the traditional a track record of the Philippines, which is in contact centers and BPO and outsourcing. Well, apparently once a startup becomes an established company, they will still be needing all of the support services. Right? So, you know, we’ve got one located here, which is one of the respected a third party service providers in the Philippines called E-performax and it seems like they’re happy camper right now. And hopefully we could see more people and more players come into the, come into the atmosphere so that we could, you know, altogether face the right, the right direction in attracting the next wave of growth for the Philippine IT BPM sector.
Derek Gallimore: And as a, as an executive summary then, what is the, the elevator pitch of Spring Valley? Who does it what’s it’s mission? Who does it serve and you know, what does it, what does the aiming to do once it’s moonshot?
Jonathan De Luzuriaga: We aim to be the largest integrated technology and innovation hub in the country and we are servicing to innovators within the local atmosphere. But apparently in this came as a surprise. This wasn’t really pre then, but you know, I’ve been attracting, we’ve been getting a lot of traction from patient startups that find it difficult to get their hands on talented technology individuals. So, you know, it’s all about the burn rate, right? When you’re, when you’re starting something new, you know, you’ve got a handful of cash in front of you and you know, apparently when you go to the valley, your burn rate is so much slower than we were near going to do. Your, your technology play in let’s say Japan or Korea or in Singapore.
Derek Gallimore: Yeah. And again, that, that’s a massive advantage of the Philippines, isn’t it? You know, and people, I mean this is, I’m trying to preach to the audience and I’m trying to preach to western businesses like um, you know you are saving more money, let’s be sort of brutally frank about it, but the opportunities that presents as is phenomenal isn’t it? Because if it cuts your burn rate by four ranks or it enables you to build a team twice as big and still maintain quality but also still have access to animators and coders and it’s incredibly powerful isn’t it?
Jonathan De Luzuriaga: That’s why you were saying you’re excited to be here in the valley who are actually more excited that you’re here because I think the niche that you’re, you’re trying to look into, which is the small medium companies, they have, you know, actually a more dire need for solutions to be placed in front of them. And I think a place like Spring Valley is a perfect match with, you know, what an Outsource Accelerators actually preaching out there. It’s just that again, we are, there’s a lot of challenges in terms of country marketing and branding and more folks like you who would be coming out there and basically preaching this to, to everyone who dares listen is going to definitely contribute positively to what we do here. You know, we have no qualms as a nation providing all the services and the experience in order to make, you know, other entities in different countries more successful. But, we just have to get that word out there that yes, there are certain places like Spring Valley here in the Philippines that, that could be the answer to your challenges.
Jonathan De Luzuriaga: Yeah, absolutely. And I think, you know, it is the, the fortune 500 and the big companies that really, um, put outsourcing into a box and outsourcing’s typically process outsourcing. It’s a customer services voice. Um, but really SMEs, they don’t really, they’re not really aware of that whole sphere and really SMEs, if they look to outsource, they’re just like, well, we have five guys in a room. We need a sixth guy or girl. Um, and they’re going to do what we do and they’re going to work alongside us and we need them to be agile and able, and that’s, you know, I think that is the next wave and the new frontier. And this is where your innovation labs and the sort of, um, solutions that you’re providing is, is both worldclass but also an incredible opportunity for both the Philippines and the SMEs. You know,
Jonathan De Luzuriaga: I think the analogy that I’d like to use is that when you’re walking down, you know, Manhattan and UCO, very expensive looking restaurant, right? And you know that you’re, you’re probably thinking that they’re going to be spending an arm and a leg for, for a steak there for a glass of wine. If that’s not your thing, you’re not going to walk into that door. Right. But you would also want to experience what the people who, who could afford to go in there are experiencing. And I think that’s where spring valley comes in. We’re in, you know, for the smaller medium enterprises that would want to get a taste of what the fortune 500 companies are actually going through or getting from outsource services, they could basically get that. But it’s going to be bite size, but it’s going to be specific. It’s going to be a bit more personal than usual, and hopefully it can contribute to their growth as well. It’s now time to market is practically, you know, one of the, determinants of whether your business is going to be successful or not. And hopefully the Spring Valley could be part of that journey
Derek Gallimore: Spring Valley, a lot of these incubators, it’s kind of tech, it’s all the theory, all it’s all coding, but your really sort of going deep into IOT, um, which is I learned a new word this weekend. Megatronics which is the kind of combination of software, hardware. What else?, manufacturing and you know,
Jonathan De Luzuriaga: basically, aiming for efficiency that,
Derek Gallimore: yeah, yeah. But also, you know, melding the, the sort of software and the virtual world with the physical manufacturing world. It’s a pretty complex sector. Yeah. And it’s one that I’ve just been introduced to this weekend at Spring Valley. Um, even though I obviously use IOT as a consumer, but, um, why did you choose IOT and, and can you tell us a little bit about that journey because I understand you’ve got a pretty spanking lab on the way.
Jonathan De Luzuriaga: Well, the world is getting more and more connected and it doesn’t really matter if you’re a fortune 500 company or you’re a two seat, you know, company in Jersey, the expectations of your clients are the same. Right? And in fact, people are getting more and more, accustom to, you know, being being serviced by smaller and more agile companies. With that being said, there’s a special focus though we’re getting into this. You use the term moonshot. If we’re just going to adhere to what we could see and we could experience as we speak, then we’re still going to be 10 years behind. So we really needed to push, push the needle on this one and see what what the world’s going to be like five, 10 years from now. What customers would be looking for. Right? and the cost differentials are unbelievable, you know, sometimes you know, it, it makes, it makes, it makes for a very, very good conversation, definitely.
Jonathan De Luzuriaga: But a look at the, the expectation of the traditional modern day customer. Now I want a everything good and bright and beautiful and I also want it for free. So you know,
Derek Gallimore: how intersection, because
Jonathan De Luzuriaga: How you answered that, right? I mean, just just approaching that from a traditional standpoint would really make you lose your hair, Derek. So, you know, the, the solution is really to find, you know what that a thin gray area is between running a good business and actually catering to the ever changing to the ever changing a mood of your, of the customers that you’re servicing. And I guess, you know being small and agile and you know, a little bit more forward thinking than the next guy would give a distinct advantage to a place like Spring Valley.
Derek Gallimore: And then, so, you know, I kind of get the concept, but if people are out there listening in the West, how can it apply to them? How would they engage with someone like you such as Spring Valley? Um, how does, how does, this isn’t an infomercial, but how does the relationship a kind of form and, and what is the offering
Jonathan De Luzuriaga: Apparently, the traditional way of using a cookie cutter approach, no longer applies for the future, especially for the future that has technology and innovation, infused in it. So it’s almost like there’s a certain layer of consulting always that happens in we, we all have to behave like startups in the end, you know, I have a problem, I want it solved. They sit down with us, they sit down with my team, I bring in the software team, I bring in the solutioning team, I bring in the hardware team and we discuss, you know, what the pain points are and eventually come up with a more creative way to address their problem. And it’s usually not the type that will break the bank. You know, people would be surprised at how, how much, problems could be solved without actually, you know, selling your soul. And, you know, I guess all of the updates we’re, we’re, we’re announcing it to the world through social media. You could even drop me an email at JDL@springvalley.tech if need be. But thank you for bringing the word out.
Derek Gallimore: Yeah, no, absolutely. And of course we’ll put all of this in the show notes and I really encourage people to check out Spring Valley. And you know, again, it’s just to see the incredible sort of vast, the skill sets and, and, um, incredible labor force and opportunities in the Philippines that people can tap into. And again, anyone can now, wherever they’re sitting anywhere in the world. And I think this is the incredible power of the new globalized world and economy that we’re sitting in. It’s super, super exciting.
Jonathan De Luzuriaga: I think it’s worth mentioning that while we’re doing this podcast, we’re both wearing beachwear. Weather’s perfect outside food here is excellent as well. So I said additional bonus, the seafood capital, no less the seafood capital of the Philippines.
Derek Gallimore: Fantastic. And um, where do you see this going in, in five years? And where is Spring Valley heading, we’ll end it on again a glorious note.
Jonathan De Luzuriaga: Tackling this from from the far view that you know, we will all become global citizens in the end. I think there’s going to be a lot of synergies between, you know, Chinese manufacturing companies that, you know, would want to really touch base with the West. You know, we were being eyed by well this relationship is more or less been established already, but you know, Japanese companies who have built technology and it would want to reach out to the West has found the Philippines are very worthwhile ally base. We were more or less have a better understanding of, you know, the western mindset and of course communication here is not really an issue, be it from a technology standpoint or from your traditional BPO and outsourcing standpoint, but includes the contact center activities. So I guess within the next 5, 10 years, you’re going to see a mary mix of different cultures here in the valley. Just trying to solve hopefully the world’s problems, problems in terms of, you know, energy in waste management, you know, and you know, even strife and conflict. Hopefully we could, we could find the solution here.
Derek Gallimore: Super exciting. And again, just if anyone wants to get in contact with you or learn more about Spring Valley.
Jonathan De Luzuriaga: it’s a JDL@springvalley.tech and, our Facebook page is a Spring Valley technology and innovation.
Derek Gallimore: Fantastic. Thanks JDL.
Jonathan De Luzuriaga: Thank you Derek.
Derek Gallimore: Okay. That was Jonathan De Luzuriaga of Spring Valley. And more if you want to get in touch with Jonathan or know anything about what we’ve mentioned in this podcast, go to our show notes, which is outsourceaccelerator.com/219. And as always, if you want to get in touch with us, send us an email to firstname.lastname@example.org. See you next time.