Showing posts with label Business Process Outsourcing. Show all posts
Showing posts with label Business Process Outsourcing. Show all posts

4/4/11

Business Process Outsourcing Industry of the Philippines


The Business Process Outsourcing Industry is so huge that it had become a major source of income for a lot people. While the total amount of income may pale compared to the total Gross Domestic Product (GDP) of its top provider, it can easily count as one of the largest provider of employment for many countries. The 2008 figure of the Philippines for instance, shows that 435,000 people work in the industry. This can perhaps translate to about 100,000 families in the Philippines being fed by the industry.

Like most countries, approximately 90% of the money in the Philippines is concentrated to 10% of its population. Having an industry that provides employment of source of living for many people is therefore something that should be supported by any government.

6/19/07

6/12/07

LATEST IN OUTSOURCING: PREMIERE OUTSOURCING DESTINATION TO OUTSOURCE OFFSHORE

A bit unbelievable but true.

Faced with brain drain, Indian CIO's will now look at offshore outsourcing companies for their IT needs. The current situation is that the demand for IT skills far outweighs its supply.
"Local service providers lack adequate focus on the Indian domestic market, widening the demand-supply gap by not allocating enough quality resources for Indian customers," said Linda Cohen, vice president of Gartner's IT sourcing group."
In my opinion, the Indians are way to classy to become a victim of their own success. If the trend continues, I can see a lot of Indian businessmen setting IT businesses in the Philippines and its neighboring countries. Foreign IT developers will surely benefit from the new employment opportunity. However, Indian companies can be seen as the largest profit takers in this situation.

6/8/07

TELECOM INDUSTRY TO OUTSOURCE $1... err, $1 TRILLION WORTH OF SERVICES

If the story is accurate, it seems that the Telecom industry's move to outsource a large amount of its business processes will be done to insure its own survival.
"With increased competition and lower-margin products cutting into their profitability, wireline and wireless carriers will be spending nearly USD 1.4 trillion over the next five years on outsourced services in order to reduce costs, according to Insight's newly-released market analysis report titled "Service Bureaus, Outsourcing and Telecommunications Networks 2007-2012."

Well, let's look at it this way, before Voice Over IP (VOIP) was introduced, the consumers all over the world spent a lot of money on long distance and related phone charges. The telecom companies all over the world then made a lot of money. Now, they have to cut down on costs through outsourcing in order to be able to keep up with the times. Though I symphatize end even worry for the employees who will be forced to look for other jobs, a large part of me rejoices at the thought that the consumers are ultimately benefiting.

Reduced communication costs will further result to more economic activity and create more jobs for the economy. That should be good enough for all of us.

6/5/07

US FIRMS PREFER THE PHILIPPINES FOR FINANCE AND OTHER BPO SERVICES

This is hardly surprising for some of us in the outsourcing industry. For quite sometime now, there are big American companies that has been using the Philippines as their base for their finance and other outsourcing requirements.

One big difference is that most of the finance and other BPO work were being done by their own employees. This is something that some US companies may try to keep confidential but some of them house their finance departments in the country. Furthermore, I was informed that some US accounting firms have also established working relationships with their Filipino counterparts and had the locals work on some of their processes.



Here are some selected quotes from a related article posted in a provincial news source:
Mr. Gary Reddick, Senior Vice President of AIG Worldwide Life Insurance, shared why his company selected, and is now running a business process operation in, the Philippines, stating “By locating in the Philippines, we are able to leverage AIG’s strong local presence in an environment that is highly conducive to US-focused outsourcing operations.”
AIG American General is the second largest life insurer in the United States. In 2002, it formed AIG-BPSI as a joint venture between AIG General and Philamlife, the largest and most diversified insurance company in the Philippines. AIG-BPSI was to provide outsourced backroom processing as well as contact center services to AIG and its various customers worldwide. AIG-BPSI launched full operations in January 2003. In April 2006, AIG American General completely bought out Philamlife interests in AIG-BPSI.

Mr. Reddick also noted that AIG selected the Philippines because of the country’s advantages over alternative Asian sites: Labor costs equivalent to China; lower and more stable than India; prevalence of spoken American English; cultural and social affinity with the US; modern and stable infrastructure such as water, power, roads, telecommunications; large pool of qualified college graduates seeking white-collar employment; access to specialized skills aligned with US professional standards; government support and tax breaks for the industry; and more familiar environment for expatriate trainers and managers than other Asian alternatives. He added that having a local partner like Philamlife helped a great deal.

6/4/07

ALL ROADS LEAD TO OUTSOURCING'S GROWTH

Despite criticisms and the occasional lampoon, most estimates indicate that business process outsourcing’s growth is unstoppable within the next few years. For example, a survey of investment management companies revealed that 31% are set to increase its administrative and back office outsourcing within the next two years. In addition, a study done by India’s department of commerce showed that its Engineering Process Outsourcing (EPO) industry is very likely to grow tenfold within seven years and reach an annual revenue figure of $30 Billion. The global EPO market is projected to reach $110~140 Billion by 2015.




Looking closely, outsourcing has evolved from being a mere cost saving measure to become a better way of doing business. For instance, Airbus sees outsourcing as a way to access technologies that are outside of the company’s existing know how. It seeks to avail of gains in carbon fiber composite technology by increasing the involvement of Japanese companies in its aircraft manufacturing process.

These developments will undoubtedly increase fears and hatred of offshore outsourcing. However, putting a halt to outsourcing is not the proper action to take, at this point. With so many gains (that can be attributed to outsourcing) being reported by a lot of companies, failure to seriously consider outsourcing is tantamount to giving the competition one’s own head in a silver platter.

5/31/07

PROTECTION AGAINST CLIENTS WHO DO NOT PAY



Today's job/business posting led me to write this article.
Despite several legal measures that any company may resort to, there always exist a possibility that a client will refuse to pay. This possibility is heavily magnified in the outsourcing industry where the clients and service providers are separated by large oceans.

I have listened to several litanies of complaints from BPO firms about clients who refused or simply stopped paying the outsourcing company. Lawsuits may always be resorted to but with both clients and vendors being located in different countries, the complication brought about by legal jurisdiction will always exist. In addition, legal action takes time and before its conclusion, the BPO firm may have already folded.

Here are some practical lessons that I have learned in order to avoid getting into this situation.

1. WRITE A TIGHT CONTRACT: Hire a lawyer from the client's country that will write a tight contract. To save on legal fees, the lawyer may be hired only during the negotiation phase. It is also imperative that a lawyer from the BPO firm's country is also hired to serve as a local adviser. That way, the outsourcing company is able to make informed decisions. Not to worry, the process is only tedious during the first contract. Beyond that, the BPO firm should have refined and mastered this process.

2. REQUIRE A DOWN PAYMENT: Starting a contract means committing company resources into an endeavor. It is but wise to be able to get hold of some of the client's money that wil also commit them to seriously do business with you. If not, a bank escrow or Letter of Credit (L/C) will be good. Again, double check the terms of the escrow or L/C agreement.

3. PROGRESS BILLING: This system simply means that the provider gets paid for every percentage of the job completed. A contract may specify a 20% downpayment making the service provider eligible for additional payment once his progress exceeds 20% of the project.

Here is an example of a progress billing.
There are many variations of this system. Please contact me should you need help.

4. HAVE A GOOD LAWYER PRESENT IN THE CLIENT'S COUNTRY: In the event of disputes, it always good to have a lawyer that will send collection notices on your behalf. Identify the law office prior to doing business with the offshore client. Have the lawyer agree to represent you should you need him. That way, you will not be scrambling for legal representation when the problem has already started to bother you.

5/30/07

HOW IS CHINA IN THE BPO RACE?



Here's the latest in Outsourcing...

China has been tagged as India's formidable contender in the race to become Outsourcing's top destination.

Two articles tackle this issue.

Where does China stand in BPO race? and China lags far behind India in BPO sector

"Though the Chinese government came out with supportive ordinance to promote BPO in the country with huge level of visibility on the global arena, Chinas offshore market has not taken off as expected and it still seems a long way before it could claim to be of any potential alternative to India, as reported by technology research firm Forrester on Thursday.

Forresters Vice-President John McCarthy said "When China was looked upon as an alternative to offshore two years back, it was widely considered as a key contender to challenge India's dominance on offshore business. However, the latest finding reveals an opposite story, which says, "China has still more to prove,"
In addition...
"Forrester in its finding clarifies that Chinas overall offshore resources has dropped and other countries are growing at a rapid pace. The need of the hour for the country is to refurbish its offshore efforts.

Instead of trying to compete in areas like application development and management, where India clearly dominates, China should encourage its local firms to focus on other areas like testing, data management and product development services.

Chinese firms also need to implement strict intellectual property controls..."

I KID YOU NOT. IT'S $7.47 PER CALL



The Japanese would say; "TAKAI!!!!" -- Expensive

A call center in Denver is computed to be costing the taxpayers $3.31 per call and if the set up costs will be considered, the figure goes up to $7.47/call.

That's way too expensive if it will be compared to what the Asian Call centers charge.

The complete article can be found in this link.

5/29/07

IS OUTSOURCING REALLY BAD?

It seems that the number of Americans feeling threatened by outsourcing dramatically increases by the day. In a number of past articles, I have always maintained that outsourcing should lead to a better company/country since the "Outsourcer" will be able to free a lot of resources and put a lot more attention to its core business.

As for the outsourced jobs, the output should drastically improve since it is now being done by specialists. At the end of the day, outsourcing should lead to more focused and productive companies with a much lower cost structures. This site also maintains that outsourcing should not be seen as a job killer for it is not. It's been here for a long time but it's only now that it is being percieved as a threat.

Here are two articles that analyses reports that confirms this views:
- WorldView: Offshore outsourcing not hurting service job numbers
- Outsourcing not the job killer once feared: report

5/28/07

STRONG ASIAN CURRENCIES SCARE ASIAN BPO FIRMS


I have always argued that the BPO industry should be treated by Asian governments as a part of its export industry. As such, it should be given the full incentives due to exporting companies. With the current strengthening of most Asian currencies, the export market is generally suffering and this situation is very much being felt by BPO firms.

Since most outsourcing contracts are dollar denominated, a boost in the value of the local currencies has resulted in corresponding cost increases and decline in profits.

The Philippines, which earned approximately US$2 Billion in 2007, is becoming a little nervous due to the continuous appreciation of its currency. The Peso, which closed at PhP46.60=US$1.00 last Friday, has been on a constant climb since last year.

The other Asian currencies (Malaysian RmB, Indian Rupee, Chinese Yuan, etc.) have also appreciated despite governments’ attempts to restrain its value.

RELATED QUOTES:
Peso to reach our 46 target sooner than expected
"General weakness of the dollar. Despite attempts of most Asian Central Banks to keep their currencies from further strengthening against the dollar, the pace of appreciation seemed to have increased over the past two months. The Indian rupee, which was quite stable from January to March for example, suddenly moved eight percent higher in just two months. This is an exceptional move given that the Reserve Bank of India has been managing its exchange rate closely with the rupee appreciating by only 1.8 percent in 2006 and 3.6 percent in 2005. Likewise, the Malaysian ringgit began accelerating against the dollar in mid-March following announcements of key economic reforms. The Philippine peso, meanwhile, has been on a gradual appreciation since the start of the year primarily due to healthy remittances and capital inflows, and a generally peaceful election period. Finally, the baht is still up 2.3 percent against the dollar despite earlier attempts of capital controls by the Thai government."

Strong peso may dampen foreign investors’ interest in BPO sector

"A strong peso may deter foreign investments from coming into the country as this makes the cost of doing business here more expensive.

International real estate provider CB Richard Ellis warned that the continued strengthening of the peso against the dollar may be a threat to business process outsourcing (BPO) firms in the country.

“If the exchange rate continues to climb, it can potentially be a threat because it makes it expensive to do business here,” CB Richard Ellis general manager Trent M. Frankum said."

5/22/07

CAN'T GET OVER PASADENA's NEWLY OUTSOURCED JOURNALISTS



It simply reminds us not to threaten those who holds the almighty pen. Hahaha!

This has been on the news for a few days. American journalists continue to hammer the Pasadena news outfit that outsourced a minor part in its news service by hiring two journalists who will report from their workstations in India.

Nevermind that one of the two has better educational attainment than most of the American public. The outcry stil goes fullblast.

I wanted to post a lengthy discourse regarding this matter but here's an article that captures most of what I have to say;

"Haven't we heard these kinds of protests and this line of reasoning somewhere else? We're told that offshore developers and call center agents don't have the tech chops or communications abilities of their U.S. counterparts, and that they can't possibly appreciate the business nuances that are a big part of the job. And with all the training and hand-holding and do-over work required, these cheap offshore workers are terrible investments in the long run.

If that's truly the case, U.S. companies will realize the error of their ways soon enough. Dell, for one, moved some technical support back onshore after its U.S. customers complained. MONY, Sprint Nextel, JPMorgan Chase, and scores of other companies have reclaimed outsourced IT operations after figuring out that they were losing a competitive edge. Other companies burned by offshore projects have learned to be more selective or to manage them differently. Ultimately, the people who run Dell and JPMorgan Chase (and Pasadena Now)--not a bunch of disengaged critics--will decide whether their customers and financial interests are best served by offshoring. Offshore experimentation is inevitable and unstoppable, but it's also reversible." - ROB PRESTON

For the meantime, a crackdown on Indian's illegaly using thier H-1B Visas is probably in the offing (complete article).

5/21/07

MORE ON PASADENA'S NEWLY OUTSOURCED JOURNALISTS



The Pasadena newspaper's move to outsource news reporting to India continues to generate more buzz. Not including last week's news and blog entries, here are some feedbacks from different sources:

CNN.com - Story details

SFGate.com -

Outsourcing news: What a cheap idea - Need I say more? :)

Outsourcing in Journalism - This one's from Harvard law.

More outsourcing on the way: blogger-
"Alan Mutter says to be prepared for more outsourcing at newspapers. Even after severance pay to current staff, a publisher stands to save money on that position about 12 months later by having an overseas employee do the work.:
In The Era of Citizen Journalism James Macpherson Wants to Outsource Reporting To India? -
"Bryce Nelson, a University of Southern California journalism professor and Pasadena resident thinks "Nobody in their right mind would trust the reporting of people who not only don't know the institutions but aren't even there to witness the even"

5/17/07

This is why you need redundancy in outsourcing



This article illustrates every outsourcing company's need for redundancy.
Client services should never cease to be delivered despite emergencies in the offshore sites. Storms, strikes and other "Force Majeure" will never be accepted as a reason why nobody is answering the customer service hotline, sub titling the television programs or debugging the critical flaws that was suddenly found inside a commercial jet.

Outsourcing is not really easy. Having back up locations designed to take on additional load (at a moments notice) requires good planning and efficient implementation. On top of that, an outsourcing company should be very careful not to bloat its cost structure. Otherwise, the firm will become uncompetitive.

I can imagine that there are outsourcing companies now that are operating without a good redundancy and back up systems. These firms must be very aggressive in pricing their products. But the real cost of doing business with them will be realized when natural or man made calamities strike.

5/16/07

Wage inflation in outsourcing



It appears that there's a lot of truth to the fears quoted in a past article (please read it here).

"While manpower costs seem to be surging across sectors, the BPO sector leads the charts with the cost of wages, hiring, training, attrition and other human resources (HR) related expenses accounting for a whopping 50% or more of total costs."

I have written a few articles about this topic and it would be very redundant to repeat it here.

The bottom line is for everyone not to price themselves out of the market.



5/7/07

Outsourcers who failed



The Outsourcing weblog Quotes a KPMG study pinpointing outsourcers who were unsuccessful because of failure to use the outsourcing model properly. The study is very timely since there are already some claims that it is not really beneficial to outsource.

I remember a CEO of a big outsourcing company who recently said; “Clients are supposed to save time and money by outsourcing. Putting it simply, a client is able to devout more time to his core business by having somebody perform certain parts of his work. However, there are people who use the time saved by going to the bar and start getting drunk early”





5/3/07

MEDICAL OUTSOURCING



In a related development, Karen talks about reasons why even critical medical services are being outsourced. The practice which is commonly known in Asia as Medical tourism has actually been going on for quite sometime. I remember meeting US citizens (10 years ago), who continues to travel to Manila in order to get medical treatment. The quality and price of the treatments, they told me, are both excellent. The last time I checked on them was last year and I found out that they continue to visit the country and enjoy the quality of medical service that the country provides.

The people in the article both had heart conditions. They both went to New Delhi for surgery. She received more tests than she could remember, & her total, including the 4 week stay in the hospital, was $16,000.00. He spent 20 days in the hospital, had 24/7 nursing, & his total was $15,000.00. They both said the quality of the care was much better than here. He’s even started his own company, to help people who need to arrange such a trip for the same reasons. Please Read the complete article here.



Further to India's outsourcing industry, economists predict that a slowdown in the US economy will force US firms to send more jobs offshore. However, the same analysts also claim that a rise in the US interest rates might reduce the volume of US investments in their outsourcing industry.

And finally, this got me laughing really hard...

An employment expert in The Wall Street Journal recently advised bosses to reward young people with freakin’ balloons and gold stars just for showing up for work on time. We used to get that in the first grade, not on Wall Street. One employer, definitely of the old school, wrote in that instead of calling in the party planner, he would prefer to call in the outsourcing consultant. Amen to that. -- Please Read the complete article Here.







4/28/07

OCCUPATIONAL SAFETY AND SECURITY MEASURES FOR BPO FIRMS

Hindu.com posted a story about the case of a female call center employee who was murdered while on her way home from a night shift. While security measures were observed to have slackened, the report quoted some of the procedures that are being implemented in order to assure the safety of female employees outside of their office premises. I know of at least one call center in Manila that includes personal protection in their employees training program.

Most BPO firms are generally labor intensive organizations making employees’ health a major concern. In fact, a past article in this site discussed an incident wherein a call employee inflicted his coworkers with an infectious disease.

In regard to other workplace safety matters, the International Labor Organization (ILO) has published in its website some inexpensive and easy to implement rules that can minimize the occurrence of accidents at work. Furthermore, the Philippine Daily Inquirer quoted the same ILO expert /author and published a slightly different version. Both versions are quoted below:



A. PHILIPPINE DAILY INQUIRER VERSION: 10 tips for a safer workplace:

1. If you see something wrong, take action. Don’t leave it up to someone else to correct a possibly dangerous situation. “Small, day-to-day improvements are key to a safe and productive work environment.”

2. Use your space well. Don’t muddle up areas for working, resting, or storage. Keep working areas and passageways clear and well-lit. Clean drinking water and restroom facilities should be easily available.

3. Regularly check your work area. Ideally, you should work at elbow level and in natural posture, minimizing twisting, arm-raising, and bending. Frequently used items must be within easy reach.
4. Machines with dangerous moving parts must have guards; electric connections and wirings must be safe. Monthly maintenance for broken, unstable parts is recommended.

5. Maximize natural ventilation; keep temperature comfortable. Chemicals must be properly labeled and kept in a secure place.

6. First-aid kits and training
on their use must be available.

7. Use labor-saving equipment
for moving or lifting heavy and awkward objects, or performing regular tasks.

8. Add variety to what you and your employees do. “Monotony and boredom are the enemies of productivity, quality, and safety. Making work more interesting will also help develop new skills,” Kawakami said.

9. Consider the needs of pregnant women, those with disabilities, foreign or migrant workers, and the elderly.
10. Take a break. “Regular short rests help to keep productivity and work quality high and accident levels low. Longer term, don’t think of regular days off and vacations as a luxury; they help to avoid burnout, fatigue, and exhaustion,” he said.
“It’s easy to see that safety and health is a basic part of decent, quality work. So, creating a safety culture that lasts 365 days a year -- not just one -- is in all our interests,” Kawakami stressed.





B. INTERNATIONAL LABOR ORGANIZATION (ILO) TIPS FOR A SAFE HOME AND WORKPLACE:
1]. Keep the floor clear. Don’t use corridors and stairways for storage, they make it easy for people to trip and fall badly. Boxes in passageways also block your escape in a fire or emergency - and that could be fatal.

2] Carry carefully. Think before picking up something large or heavy. A back injury can last for life. Use a trolley or conveyor instead.

3] Chemicals. Every home and workplace has toxic chemicals that can kill – bleach, fertilizer, cleaning materials. They should be clearly labeled, in a language everyone understands, with basic information about their properties. And they should be securely stored so children can’t reach them.

4] First Aid. A basic first aid kit is not expensive. Make sure it’s easily available and that you know what it contains and how to use it. The right on-the-spot treatment can make a big difference.

5] Take precautions. Personal protective equipment like gloves, shoes, masks, goggles and hard hats doesn’t have to be expensive but can save you from serious injury in the home, fields or office, so get into the habit of using them. Domestic and work machines should be fitted with protective guards.

6] Electricity can be lethal. Don’t let electric cables lie loose on the floor. All electrical machinery - domestic and industrial - should be well earthed.

7] Work smart. Whether you’re cooking at home, sitting at a computer, or standing mixing and assembling products make sure you are comfortable. Standing or sitting, worktops are best at elbow height. Chairs should have supporting backrests. Don’t sit on the floor to work or cook – it’s bad for your back as well as being dirty and unsafe.

8] Pure, fresh drinking water should be easily and plentifully available. Washing and toilet facilities need to be clean and convenient, with soap, towels and separate facilities for men and women.

9] Give yourself a break. Working long hours without a rest makes people less productive and more likely to have accidents or make mistakes. It’s easier to stay alert if you introduce some variety into your tasks rather than monotonously performing the same action. You’ll develop new skills too.

10] Light and air. Good light and fresh air help you stay alert and cut down unhealthy build-ups of chemicals and dirt. Better ventilation and a proper, insulating ceiling can pay for themselves with reduced heating and air con bills.

11] Be aware that elderly people, the disabled, pregnant women, young and inexperienced workers have special needs in health and safety, as in other things.

12] Systems are the key to safety.
Make good health and safety practices part of your daily habits at home and at work, 365 days a year.

4/26/07

Are outsourcing fears misplaced?




More articles supporting this site’s several pronouncements are coming out. In the linked article, the CEO of Infosys talks about the need to cope with the times. Details Here

With the upcoming US presidential elections, people paranoid with offshore outsourcing are increasing their call for the candidates to go against the trend. This is despite proofs supporting the argument that outsourcing actually brings about an increased demand for higher value jobs (onshore), resulting to higher productivity and stronger American companies.

The IT industry shows that more than 147,000 new US jobs were created. The problem with the American manpower pool is that it cannot fulfill the quantity of demand. Please read the complete article here.

I’ve read a few years ago, that despite the growing need for IT graduates and the increasing salaries of IT professionals, the number of Americans enrolling in IT courses continues to go down.

This scenario is very similar to the transcription sector where the supply of onshore transcribers is a lot less than the actual demand. A relative in the US tells me that daily newspapers always include advertisements of companies “Looking for transcriptionists”.

“But there is so much global demand for employees proficient in programming languages, engineering, and other skills demanding higher level technology knowledge that outsourcing can't meet all U.S. needs. "There would have been a lot more than 147,000 jobs created here, but our companies are having difficulty finding Americans with the background," says William Archey, president and chief executive of the AeA.

One culprit is the dearth of U.S. engineering and computer science college graduates. Second, immigration caps have made it difficult for highly skilled foreign-born employees to obtain work visas. Congress has been debating whether to increase the numbers of foreign skilled workers allowed into the country under the H-1B visa program (see BusinessWeek.com, 3/27/07, "Immigration Reform: Americans First?").



4/20/07

Outsourcing Newspaper Editing

A Newspaper in New Zealand will be outsourcing 70 sub editing jobs to Australia. The organization of journalists are strongly condemning the act saying "Assembly-line sub-editing' would compromise the quality and accuracy of news coverage in the country." Please read the news here.

Not everything can effectively be outsourced but newspaper sub-editing should not be so difficult to properly implement. The only concern for me, at this point, is the loss of jobs. Employees are human beings who have worked with the company for a long time and fallen in love with it. On the other hand, business owners have to decide at a certain point. Faced with serious competition, wary stockholders and rising costs, they have to know where savings and better quality can be derived. Right now, conventional wisdom points toward outsourcing. For some businesses, it spells the difference between profitability or loss. Please read a related article here.

Besides, the idea of outsourcing should be seriously considered by everybody. As of now, it is a step upwards for most companies. We all know what failure to move upwards mean. It is actually, a step downwards. As for the displaced employees, the solution to their plight has been discussed in a previous article.