Business ProcessOutsourcingWinnie 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 delegation of service‐type business processes to a third‐party service provider”. Source: Business Processing Association of the Phils. BPAP
History of Outsourcing? Recent Years Companies develops strategic partnership with third-parties 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. 1989 – Outsourcing as business strategy started. They outsources those functions for which they had co competency internally 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 Near-shoringOutsourced business done Taking the outsourced workin another country to a nearby country On-shoring Outsourcing within the same country, domestic outsourcing
OUT SOURCING ADVANTAGES DISADVANTAGES • Cost reduction • Poor quality control • Concentration on core of • Decreased company loyalty business • Lengthy bid process • Outside expertise • Loss of strategic alignment• Accommodate to changing customer demands • Revenue increase
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 International Notes: a)Higher score indicates that corporations more adequately protect data and systems connected to the Internet b) Higher index score indicates the lesser likelihood that bribery and corruption exist c) Higher index score indicates more transparency in government policies d) Higher index score indicates lesser likelihood that the bureaucracy hinders business activity e) Ranking in the 2009 CPI, with 1 being the least corrupt and 180 being the most corrupt.
Speech of Pres. Aquino at the 3rd AnnualInternational 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 Indias, 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 BPO1 IBM Global / Daksh2 Accenture3 Hewlett Packard4 MphasiS5 Ernst & Young/Capgemini6 Wipro Spectramind7 ICICI One Source8 eFunds Global Outsourcing9 Convergys10 Affiliated Computer SystemsSource: 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 outcomesSource: http://www.accenture.com/us-en/outsourcing/business-process-outsourcing/learning-bpo/Pages/index.aspx?tab=2
SourcesSpeech 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.aspBoard of Investments: Rising Business Confidence, annual report 2010http://www.boi.gov.ph/pdf/publication/annual_report/Annual_Report_10.pdfBPO Industry at a Glance, released January 2010http://www.senate.gov.ph/publications/AG%202010-01%20%20BPO%20Industry.pdfhttp://www.pmpresearch.com/downloads/IT&BusProOutsourcing.pdf
Sourceshttp://www.outsourceronline.com/2011/11/types-of-outsourcing.htmlhttp://www.indobase.com/bpo/bpo-benefits/benefits-at-a-glance.htmlhttp://www.referenceforbusiness.com/small/Op-Qu/Outsourcing.htmlhttp://hsassociates.org/bpo/bpo-history.aspPhilippine overtakes India, By Vikas Bajaj, New York Times | Nov 28, 2011http://timesofindia.indiatimes.com/tech/news/outsourcing/BPO-biz-Philippines-overtakes-India/articleshow/10902430.cmshttp://youtu.be/ljKYWKPgyCE