Business Process Outsourcing

Winnie L. ConstantinoEntrepreneurshipJanuary 7, 2012

Roadmap• Definition of Outsourcing - Forms of outsourcing - Models of outsourcing• History of BPO• Importance / Challenges of BPO to

companies• Philippine BPO Competitiveness• Philippine BPO Drawbacks • Conclusion

What is Outsourcing?

Is contracting with another company or another person to do a particular function. This role is considered as non-core to the business. The outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called as service providers.

Source: www.sourcingmag.com

What is Outsourcing?BPO is defined by Department of Trade and Industry ….

“As the delegationof service type business processes‐

to a third party service‐

provider”.

Source: Business Processing Association of the Phils. BPAP

History of Outsourcing?

1989 – Outsourcing as business strategy started. They outsources those functions for which they had co competency internally

1990’s – as organizations began to focus more on cost-saving measures, they started to outsource those functions necessary to run a company but not related specifically to the core business.

Recent YearsCompanies develops strategic partnership with third-parties

Source:http://hsassociates.org/bpo/bpo-history.asp

Forms of Outsourcing

Other part of BPO is KPO – Knowledge Process Outsourcing – this requires greater skill, knowledge, education and expertise to handle.

Models of OutsourcingOffshoring

Outsourced business done in another country

Near-shoringTaking the outsourced work to a nearby country

On-shoringOutsourcing within the same country, domestic outsourcing

ADVANTAGES

• Cost reduction• Concentration on core of

business• Outside expertise

• Accommodate to changing customer demands

• Revenue increase

DISADVANTAGES

• Poor quality control• Decreased company loyalty• Lengthy bid process • Loss of strategic alignment

OUT SOURCING

Outsourcing is “In”

Philippine’s Advantage:

• Quality of Human Resource

• Cost of doing business• Infrastructure and

Utilities• Business Environment

Philippines downside in BPO

• Security risks / Political

• Investment environment

• High cost of electricity

Source: World Competitiveness Yearbook (2009)Note: a) Availability of IT skills, on a scale of 0‐10 with 10 being the highest

Philippines downside in BPO

Sources: a‐d) World Competitiveness Yearbook (2009), e) Transparency InternationalNotes:a)Higher score indicates that corporations more adequately protect data and systemsconnected to the Internetb) Higher index score indicates the lesser likelihood that bribery and corruption existc) Higher index score indicates more transparency in government policiesd) Higher index score indicates lesser likelihood that the bureaucracy hinders business activitye) Ranking in the 2009 CPI, with 1 being the least corrupt and 180 being the most corrupt.

Speech of Pres. Aquino at the 3rd Annual International Outsourcing of the BPAP

October 12, 2011

….It is because of this that the European Outsourcing Association named the Philippines as one of three finalist countries in the 2010 Most Preferred BPO Country Destinations…..

“you have given more than half a million of our countrymen jobs already where they earn a decent salary, where they will be given the means to provide for the needs of their families…

”Source: www.gov.ph

Philippines - Invest in BPO

This page is with Video taken from youtube:

Source Link: http://youtu.be/ljKYWKPgyCE

Philippine bags another NOA AwardSource: www.boi.gov.ph

Philippine overtakes IndiaVikas BajajVikas Bajaj, New York Times | Nov 28, 2011,

“The Philippines, which has a population one-tenth as big as India's, overtook India this year, according to Jojo Uligan, executive director of the Contact Center Association of the Philippines”.

executives say they are worth the extra cost because US customers find them easier to understand than they do Indian agents, who speak British-style English and use unfamiliar idioms.

World’s Best BPO

1 IBM Global / Daksh 2 Accenture 3 Hewlett Packard 4 MphasiS 5 Ernst & Young/Capgemini 6 Wipro Spectramind 7 ICICI One Source 8 eFunds Global Outsourcing 9 Convergys 10 Affiliated Computer Systems

Source: The Black Book of Outsourcing (Brown & Wilson, Wiley Publishers)

Conclusion

• Recognizing what we are good at within our business and handing over those duties that takes so much time because they are not where our passion lies or where our expertise lies makes very good business sense.

• BPO companies should prevent the possibility of risks that outsourcing can expose organizations to by working closely with their clients on three key elements: confidence, motivation and transparency

• The government and BPAP (Business Processing Association of the Philippines) should continue to support and should take substantial efforts to promote Philippines as prime BPO destination.

• BPO is one of the key drivers for employment and economic growth. Thus, it helps a lot of people feed their families through the vast employment it provides to the Filipinos.

Insights with BPO

Real competitive advantage comes from human talent—and that talent’s skills need to be kept refreshed and upgraded. Many of the world’s smartest companies are outsourcing their learning function to achieve this goal, and ultimately attain high performance. Accenture Learning Business Process Outsourcing (BPO) Services take them beyond cost savings to the next generation of outsourcing by generating insights to drive business outcomes

Source: http://www.accenture.com/us-en/outsourcing/business-process-outsourcing/learning-bpo/Pages/index.aspx?tab=2

Sources

Speech of Pres. Aquino at the 3rd Annual International Outsourcing of the BPAPhttp://www.gov.ph/2011/10/12/speech-of-president-aquino-at-the-3rd-annual-international-outsourcing-of-the-bpap-october-12-2011/

http://www.sourcingmag.com/content/what_is_outsourcing.asp

Board of Investments: Rising Business Confidence, annual report 2010http://www.boi.gov.ph/pdf/publication/annual_report/Annual_Report_10.pdf

BPO Industry at a Glance, released January 2010http://www.senate.gov.ph/publications/AG%202010-01%20 %20BPO%20Industry.pdf

http://www.pmpresearch.com/downloads/IT&BusProOutsourcing.pdf

Sources

http://www.outsourceronline.com/2011/11/types-of-outsourcing.html

http://www.indobase.com/bpo/bpo-benefits/benefits-at-a-glance.html

http://www.referenceforbusiness.com/small/Op-Qu/Outsourcing.html

http://hsassociates.org/bpo/bpo-history.asp

Philippine overtakes India, By Vikas Bajaj, New York Times | Nov 28, 2011 http://timesofindia.indiatimes.com/tech/news/outsourcing/BPO-biz-Philippines-overtakes-India/articleshow/10902430.cms

http://youtu.be/ljKYWKPgyCE

Thank you