MicroSourcing.com Blog Feed

Is it Safe to Outsource IT?

Thu, 13 Jun 2013 00:00:00 -0800

Before, when people talked about outsourcing, they would think about manufactured products. As technology progressed, it became the avenue for new growth opportunities in various industries and it became one of the more commoditized segments in the services exports arena.

An article posted at Business2Community.com highlights data security - an issue that is commonly faced by many business owners particularly those in the SMB segment.

IT processes are gaining traction, and so are risks. It appears that hackers and cyber criminals are one step ahead of IT professionals - they are always finding ways to breach even the most sophisticated data security program right after the service/product launch.

IT outsourcing, though perceived as a high-risk business tool, enables business owners to reinforce complicated IT processes that are too much to handle for the in-house IT team. For instance, a company with 2000 employees and several IT personnel uses a ticketing system to properly address requests. But the requests are a hodgepodge of assistance, hardware installation, and even upgrades. Some of the processes can be outsourced to an IT service provider which will work remotely, or solve issues using the internet.

The success of an IT outsourcing operation will rely on the partnership between the provider and the client. There will always be data security issues and these can only be solved if both parties have a solid relationship, built on trust and the desire for growth. Also, the contract should be scalable in case the course of the operation changes. It should still enable a smooth transition and rates should be standardized so that problems are minimized right from the start.

Finding the Right Cloud Services Provider

Tue, 11 Jun 2013 00:00:00 -0800

The cloud is one of the latest tools used by businesses everywhere. It enables multinational companies to manage and store data efficiently and reduce brick and mortar storage costs - even risks.

Since it is a fairly new concept and most cloud vendors are overselling their services, these tips shared by ISG Principal Consultant Scott Feuless at info.ISG-One.com can help business owners properly evaluate and select the right cloud services provider.

Weigh costs vs. your business' needs. It is a known fact that cost is one of the major reasons businesses tie up with service providers. Before looking at the offerings of cloud services providers, make a list of what your business needs and the reasons you need them. Compare the prices to all the options available in the market, even in-house, and include periodical processes such as hardware upgrade, and initial costs like transition.

They should be flexible enough to handle changes. Sooner or later, the current trends in cloud technology will no longer be applicable to your business because everything, even the market, is constantly changing. Your budget should have a margin for sudden modifications to accommodate the demand of your customers.

What do past customers say about them? Not all large and tenured providers will be compatible to your business. To gauge the strengths and weaknesses of your prospects, review their track record for at least the past five years. Also, use in-house data as you go over the contracts.

How secure is their system? Providers are usually tending multiple customers at a time and any mishap can cause your business' data to be exposed and exploited. See to it that the security measures of your chosen provider comply with industry standards, or are more substantial than others. They are prone to be attacked more because they house multiple data from numerous clients.

Consider the longevity of your partnership. Always look at the possibility of switching providers or termination of your cloud outsourcing contract. Make a contingency plan in case it happens a little earlier than you expected. Also, get your development team involved so you would know which areas of the contracts and strategies you should look into, and which of your products will be affected.

MicroSourcing's Talent Pool for Q2 2013

Mon, 10 Jun 2013 00:00:00 -0800

This is an overview of the latest talent pool of MicroSourcing - with basic information about our common disciplines including the job profiles, monthly salary ranges, and available talent.

Advantages of Outsourcing Online Marketing

Fri, 7 Jun 2013 00:00:00 -0800

Online marketing is one of the most outsourced processes today. Apart from the fact that it is the type of work that uses the internet, it requires commitment and experience to make an online marketing campaign a success across several platforms such as social media, affiliate marketing, viral campaigns, and even search engine marketing.

However, outsourcing has gotten a bad rap as it is perceived to take away jobs from first world countries. But the reality is many business owners are struggling to make ends meet, and keep their respective customers happy with the quality of their products and services.

Business2Community.com shares numerous advantages of outsourcing online marketing:

It is more economical. Outsourcing enables business owners to take advantage of the labor arbitrage in some countries. They are able to employ skilled people who are ready to take on online marketing work at relatively lower costs.

Business owners will have access to a larger workforce. Internet marketing involves several platforms and each platform requires a specific skill. With outsourcing, you can find candidates who are suitable for your marketing requirements.

Establish a non-stop operation. There are several internet marketing processes that are time-sensitive and social media is one of them. It requires constant monitoring as results and activities from customers are seen real time. In some cases, work has to be done in a different timezone, which is why instead of hiring someone who'll cover the night shift locally, work can be outsourced to an offshore employee.

Have a remote team. Instead of having to set up additional workstations, a remote setup will do just fine, as long as you are able to communicate the requirements of your marketing campaign and business to your offshore online marketer.

Benefits of Outsourcing Accounting Work

Mon, 3 Jun 2013 00:00:00 -0800

With the struggling market and tougher competition in various sectors, businesses and decision makers are looking for ways to not only break even every fiscal year, but also to develop their operations. While some are downsizing, closing shop, and skimping on the key features of their products and services, others are finding business solutions such as outsourcing.

Outsourcing can be applied to several processes. Some of the popular ones are manufacturing, customer support, and data entry work. However, one process that is being outsourced more is accounting.

Business2Community.com posted an article that explains the popular benefits of outsourcing accounting work:

It enables business owners to focus on the goals. Accounting can take up valuable time when done internally as it requires attention and participation from business executives. If it is done by an external partner, business owners would only need to review the accounting work that had already been completed for them instead of nitpicking on every process. They can now use their time in aligning their core processes with their goals.

It's an economical solution. We all know that outsourcing is a proven tool to save operational and labor costs. Clients can take advantage of the labor arbitrage, getting the services of offshore employees at relatively lower costs.

Small business owners can sleep better at night. Fraud is a serious problem in small businesses because most of organizations that have 100 employees or less do not have a chief finance officer (CFO) - as they are financially strapped or are on their way to expand. By outsourcing accounting processes, business owners can assign a controller/CFO to handle these processes.

Business owners can make sure they are hiring professionals. Accounting outsourcing also enables business owners to easily gain access to a pool of experts as accounting firms make it a point to screen their employees rigorously. It's their business on the line which is why they only hire the best.

Multiple heads are better than one. An offshore accountant can ask for assistance from his colleagues whereas an internal accounting employee has to do all the tedious accounting processes by him/herself. Accounting firms also have their own tools and are well aware of the crucial information in the finance industry.

You only pay for what you need. Outsourcing gives business owners the freedom to choose what's best for their business. They can adjust their accounting operations based on the current requirements of the business - even temporary solutions for seasons that need more accounting experts.

Benefits of Content Creation Outsourcing

Fri, 31 May 2013 00:00:00 -0800

One good way of spreading awareness about a brand is through online marketing. Business owners as well as decision makers in advertising agencies are now going digital to better create brand awareness campaigns.

One crucial issue faced by these executives is the creation of content that will effectively influence their target audience. But finding an expert that can easily understand a company's campaign and create captivating content is an arduous task. Sourcing the talent needed for content creation will take up valuable time and resources, which is why other business leaders choose to outsource content creation processes.

Business2Community.com shared several advantages of outsourcing content creation:

1) Significant cost savings
One of the main reasons businesses outsource is to save on operational and labor costs. By farming out this process to an offshore provider, you no longer have to arrange fixed and long-term benefits for additional staff, hiring more people for times when demand is doubled, and providing additional training for the current staff so they can address the project requirements better.

Business owners as well as marketing managers no longer have to worry about how they will produce the next batch of content such as blog posts, articles, newsletters, and other content materials.

2) Production of content is faster.
Service providers that solely focus on content creation usually deliver high-quality output at a fast rate. By using their services, business owners are able to minimize work backlog, especially during the busy season.

3) Tap professional content creators from all over the world.
In some countries, talent shortage is an issue that prevents firms from completing a project. Outsourcing gives them access to a larger and more diverse talent pool.

4) Outsourcing helps drive innovation.
Outsourcing will help business owners learn about new things because they will be able to interact with different service providers across the globe. With the new things that they've learned, they can create more materials and develop new strategies that are not yet used by their local competitors.

5) It can help businesses achieve their goals.
Most of the content writers today have additional skills that can drive success to a campaign. Some content creators have the skills that are not only specific to writing, but marketing as well.

6) It will help you align processes with global standards.
If content creation/marketing/creative direction is not the core of your business, then by outsourcing to skilled content creators, you will be assured that the content materials you'll be using for your campaigns are aligned with global standards.

7) It will help you create effective content and marketing strategies.
Renowned service providers have enough experience to help you manage your marketing campaign. They've already failed and learned from their mistakes, which in general, helps them become better partners. They also have the right tools to help you collect and analyze data, which can then be used to create better campaigns.

8) Create new relationships with trusted partners.
Not only will business owners accomplish their content creation tasks but they will also gain a new partner in the industry. Basically, they'll have someone to run to in case they come across projects that need content creation expertise.

9) Target your customers better.
These days, majority of content providers are well versed in social media, which is today's fastest medium to disseminate marketing materials and reach potential customers. They can also assist you in creating social media campaigns and explain to you which social media avenue will work best for your brand.

10) It will enable you to use different types of content.
There are several types of content and each has its specific type of user. If you were to create several types of content in-house, it would require additional training and more people to do the job. By using the services of a content creation provider, you will no longer have to train additional staff, contact multiple providers, and spend more because most of these firms already have everything you need, a one-stop-shop for all your content marketing needs.

The Evolving Strategies of Manufacturing Companies

Tue, 28 May 2013 00:00:00 -0800

In the past, sourcing strategies were mainly focused on cutting costs. But as economies worldwide continue to struggle and business environments remain uncertain, decision-makers in the field of manufacturing should re-evaluate their sourcing strategies to get appropriate and satisfactory results.

A post at info.ISG-One.com shares five ways manufacturing executives can re-assess their sourcing strategies.

1) Strongly consider the cloud technology. Cloud technology is still considered taboo in the manufacturing industry, but it is slowly gaining traction through bundled software-as-a-service (SaaS) offerings - used by both manufacturing service providers and clients.

2) Will managed services work for you? Manufacturing is still the leading market in the outsourcing sector. More and more manufacturing companies are seen making use of managed services to better control their outsourcing operations and minimize the usage of multiple service providers. The packages offered by managed providers can be customized according to the requirements of the client.

3) Do you need to change the ratio of your outsourced vs. insource operations? To achieve the correct balance between the skills needed and number of available candidates locally, companies can re-appoint which business unit will take on which role to get the best results.

4) Design a no-frills multi-sourcing strategy.You'll never know when you'll need a multi-sourcing strategy so it is advisable to create one just in case. It will enable you to access the best of the best providers. It will also prevent delays should business owners decide to make use of multiple providers, and it will streamline all processes while reducing risk.

5) Division of budget. More and more businesses are seen banking on innovation rather than the current operations. They do this to pave the way for growth across all departments. For instance, some businesses reposition funds from marketing operations and re-allocate them to upgrade IT-related processes such as a better inventory system to make the flow of production and delivery easier.

PH Ranked as Top Offshoring Destination in English Proficiency

Wed, 22 May 2013 08:00:00 -0800

Language barrier is still one of the challenges faced by CIOs who want to outsource IT processes either nearshore or offshore. However, there's hope as the recent data collected by English language consultancy firm GlobalEnglish showed improved results.

An article posted at CIO.com explains the results of the Business English Index (BEI) research. It involved 212,883 non-native workers resulted to a global score of 4.75 this year on a scale of 1 to 10, which is 14 percent higher than 2012.

A score of 10 represents complex usage and application of the English language in business situations, while 1 indicates simpler responses and practice.

The global 2013 BEI rating of 4.75 shows that most professionals are able to understand discussions and presentations in English, but do not participate that much in more complex tasks.

According to the President of GlobalEnglish, Tom Kahl, the recent BEI results could mean that companies are employing people who have adequate English communication skills that are suitable for consultation and functional processes. It could either be an indication that candidates equipped with business English skills cost too much or are hard to source locally.

The Philippines took the top spot with a BEI score of 7.95. It is a world-renowned destination for voice-based processes, as well as business process outsourcing (BPO) capabilities. The second most proficient country in business English is South Africa with a score of 7.86.

As for the key segments, professional services and technology sectors scored 6.22 and 5.72 respectively.

The top 10 countries for English proficiency are: Philippines, South Africa, Norway, Netherlands, United Kingdom, Australia, Belgium, Finland, Sweden, and India.

Some non-English speaking countries were found to only have a handful of technology experts who are highly skilled in communicating in the English language and it was found that the educational system is not addressing the issue properly.

Kahl added that some companies have become more lenient in hiring English-proficient IT candidates just to fill positions.

Meanwhile, the "BRIC" nations showed dissimilar results. Brazil posted 3.27, Russia with 3.95, India scored the highest in the group with 6.32 and China was a little below US's 5.23 with 5.03.

As for the nearshore destinations for US-based CIOs, Mexico scored 3.16 while Chile, Honduras and Columbia are still at the bottom five. In line with that, Kahl noted that firms in this particular region are doing the best they can to resolve issues related to the workforce's Busiiness English skills.

GloablEnglish also discovered by analyzing 24,000 global knowledge workers from 90 countries that with the proper English skills, an average of two hours or more per week is saved which equates to a reasonable ROI of $750,000 per 1,000 employees.

Kahl reiterated that when CIOs are selecting their outsourcing provider, they should make sure that the other party is committed to English proficiency among its employees.

What Clients Want Out of their Outsourcing Operations

Mon, 20 May 2013 00:00:00 -0800

Business process outsourcing (BPO) has become a conventional practice ever since the renowned economic downturn happened more than five years ago. It enables businesses to streamline processes, reduce costs of operations, and improve productivity.

However, buyers want more out of their outsourced IT operations. They know for a fact that outsourcing reduces costs, which is why now they want more value out of it. They also want to work with BPO service providers at a more personal level where they will grow together instead of being at the receiving end of the bargain.

Business2Community.com shares some of the key factors that clients want when searching for the right outsourcing partner:

More value for money
The BPOs that you would want on your side should stand out from the hundreds of providers that are aggressive with their marketing strategies. They do not brag about what they can do, instead they get credit through word of mouth. Moreover, they are praised for their ability to innovate and go beyond what is expected of them, which in the end becomes more advantageous for the business of a client.

It helps them become pioneers in the market.
The rapidly evolving industries result to tighter competition amongst businesses that are trying to remain relevant in their respective industries. If businesses want to achieve those things, their providers should be able to create strategies that will help them become the leaders in whichever segment they're in for both their clients and competitors.

Consultation is now part of the package.
Buyers are looking for the experts in the field so they will be able to predict trends better, create a simpler process for their needs, and analyze data more accurately.

A provider that will stand by the entire process
A good outsourcing provider will walk you through the entire process and share all the information that you need. They are also willing to take the extra step in explaining the pricing and changes that may happen in the future, especially during the times when the business becomes exposed to problems.

Common Practices of IT Leaders in Organizations

Fri, 17 May 2013 00:00:00 -0800

High-ranking officials in the field of information technology (IT) usually deal with highly sensitive and complicated processes. What differentiates the work of IT leaders from the daily routine of IT specialists is the discipline that they have to impose during the crucial stages of making decisions.

A post at info.ISG-One.com lists down the usual undertakings of IT leaders and how these affect the success of IT operations:

1. Successful IT leaders look at the whole picture. IT leaders should be able to manage their teams properly by focusing on three key things: individual growth, team's progress, and the movement of pending tasks. This means happy employees lead to proper teamwork and can result to achieving the entire team's goals. IT executives can use metrics and data to create strategies that will work well across the board.

2. It is a lonely profession, but they deal with it. Like with any high-ranking position, being an IT leader can affect one's social life since there are a lot of things that need their attention. They often work silently behind the scenes without anyone noticing that they were able to accomplish a task.

3. They incorporate IT goals to the overall business strategy effortlessly. Successful IT leaders are often seen creating strategies that can help each business unit of the company. They make sure that each department's IT issues are addressed immediately.

4. Invest on your staff. The people will always be the backbone of businesses. Instead of increasing the budget for new offices or other things that you want but do not need, why not start with the development of your IT staff's skills? Teaching and training someone are less expensive than trying to correct a problem caused by lack of knowledge.

5. They impose professionalism in business dealings. IT leaders believe that during business meetings and corporate events, their IT staff should be tactful, professional, and of course well-versed especially when talking about the company they are representing. This not only applies to those in the sales setting - even the people who work in the background should follow this protocol.

Pros and Cons of Outsourcing Social Media Work

Thu, 16 May 2013 00:00:00 -0800

One of the most used marketing tools today is social media. It enables business owners to communicate with consumers at a more personal level. Some executives who are interested in creating social media campaigns usually assign the work to an existing employee who probably has no background in social media. So, on top of his/her daily tasks, he/she has to work on creating and monitoring campaigns.

Other managers hire additional employees, often increasing the overhead costs of the company, while some outsource social media marketing to service providers and outsourcing companies.

An article posted at Business2Community.com shares insights on social media outsourcing and highlights its advantages to help business owners understand how it will affect a company's marketing campaign.

Outsourcing social media processes is a good solution for small and start-up companies that do not have enough money to create an end-to-end marketing campaign. Another scenario is when no one from the internal team can spare a few chunks of their time to handle the project - or nobody has the expertise to get the project going.

Service providers have the necessary people who can get the job done properly. They know how to create workable campaigns, apply the strategies, and collect and interpret data when necessary. A good provider will help a company grow and represent your brand seamlessly among the consumers and competitors.

However, outsourcing social media work doesn't always result to successful branding and marketing. Since other people will be doing the work for you, chances are they only know the basic stuff about your company. They can only explain or translate your message to the point where your ideas are not properly communicated to your targeted consumers.

Whatever the executives choose for their marketing campaigns (outsource or not), they should always consider what consumers want and the current trends in the market.

Basic Facts about Online Data Security

Tue, 14 May 2013 00:00:00 -0800

Products and services that prevent security breaches are highly accessible nowadays that it would be imprudent for businesses to ignore the common practice of protecting their online data. However, with these rapid advancements, the strategies and tools of hackers have undergone some tweaks here and there as well, making it more complex for IT leaders and business owners to track and prevent data security attacks.

Memeburn.com shares five data security mistakes that can put the private and sensitive information of businesses at risk:

1. The use of generic passwords
As many of you may have noticed, password protocols have become more sophisticated these days. Users now have to create a password that uses a combination of characters, numbers, and letters. Web and software developers are working twice as hard to create products that are functional, innovative, and secure - only to be acquired by a business owner who disregards data security and uses generic passwords such as Password1.

2. Careless outsourcing practices
Businesses that deal with third party service providers should be extra careful in disseminating information or data with their chosen partners. Not all outsourcing providers are careful with their data security policies and protocol and if they are breached, your company's data can be exposed to attacks, too.

3. Neglecting updates
System updates are there for a reason. It is used to reinforce your protection against viruses, as well as upgrade your system to match the current changes made by software developers. You wouldn't want to encounter errors in the future just because you didn't update your system, would you?

4. Even your mobile device can expose you to threats
Mobile malware was seen shooting up by 400 percent which is why businesses that have enetered the global arena should also be on the lookout for data security issues. Regularly monitor and test all digital properties through mobile devices and ensure that the system is attack-proof.

5. Being too complacent can risk your data
Any business owner should be vigilant about these types of attacks. Having the latest security features is not enough because you have to be a step ahead from these hackers. There's no room for mistakes so analyze, implement, monitor, and modify regularly.

Advantages of Outsourcing Bookkeeping Processes

Fri, 10 May 2013 00:00:00 -0800

Technology opened countless doors for the world of business. It is now one of the crucial factors in various industries, trends, and even purchasing behaviours of consumers.

The internet changed the way business is done, and everything and everyone can easily access information with just a click of a button. Devices also adapted to the evolution with countless types of mobile gadgets for people and business executives who are also on the go.

Outsourcing also became easier as it enables business owners to subcontract internal processes to external providers who are experts on the matter. They are also able to save on operation and labor costs, tap skilled workforce, and streamline processes. Common processes that are usually outsourced are voice-based work, anything related to the web and data.

However, even back office processes such as bookkeeping are now being outsourced by business owners. Some consider bookkeeping as a daunting task - in fact, some only manage it during the end of the fiscal year. But more companies are seeing the benefits of bookkeeping outsourcing.

An article posted at Business2Community.com highlights the benefits that business owners can take advantage of should they outsource bookkeeping processes.

More time for the core processes of the company. It is one less thing to worry about in a business owner's busy schedule. If they outsource, they can just check the operation from time to time and never worry again.

Reduce costs. Cost is still a key driver for business owners to outsource. By outsourcing bookkeeping, they are able to save on infrastructure and management expenses - should they choose to hire bookkeepers who'll work full-time.

Access to experienced bookkeepers. Other cities, even countries, have skilled bookkeepers who can focus and specialize on a particular bookkeeping process that a business needs.

An outsourced bookkeeping team is able to focus more. Bookkeepers need to focus on their tasks as they are dealing with crucial matters such as budget and expenses of a firm. If bookkeepers are working in a hodgepodge environment, they wouldn't be able to concentrate as much as they would want to because phones would be ringing, marketing people would be discussing, etc. If they are outsourced, they would be able to focus on their work since they are in their own environment.

You'll have a team-oriented operation. Unless you hire an internal team of bookkeepers, nobody will be able to check a bookkeeper's job and tasks in your firm except for other bookkeepers. Outsourced bookkeepers are known to help one another since they need to meet the client's requirements and it's their business' name on the line.

Basic Outsourcing Tips

Wed, 8 May 2013 10:00:00 -0800

Here's a checklist of things that business owners and decision-makers should look into when it comes to outsourcing.

2013 Outsourcing Trends for Small Businesses

Tue, 7 May 2013 00:00:00 -0800

Outsourcing is still perceived by some as one of the key contributors to thousands of job losses in the US. They believe that since numerous businesses are farming out jobs to offshore service providers, it is creating an imbalance to the availability of jobs domestically.

Outsourcing has accumulated quite a following over the years, as it has helped even small businesses to grow and remain competitive. In fact, a study done by Elance, an online platform for freelancers and business owners, found that 78 percent of small businesses in the US that outsource experienced numerous benefits.

Business2Community.com shares the latest trends in outsourcing and small businesses:

Technology paves the way for new processes.
The way customer service (a crucial factor to the success of a business) has been done has changed as technology allowed it to be disseminated through different platforms that can be easily accessed by customers.

One of the common platforms is social media, which needs to be managed 24/7 because of its real time nature. It has also enabled business owners to approach consumers at a more personal level, especially to customers who are opinionated and vocal about the minute details of products and services.

Basic and complex tasks are now more defined.
Small business owners are looking to reduce operational costs as well as alleviate risks using remote operations and remote management. Because of the nature of the way things are done in outsourcing operations, business leaders can now clearly identify which operations should be kept in-house and which processes can be outsourced, especially for small businesses that have limited budget or are short in staff.

Mobile applications will play a major role.
Mobile apps will be used by small business owners to make processes easier and faster since this type of technology can eliminate unnecessary steps and can boost production. Also, it will be easier for managers to monitor the progress of a project because these apps can be customized according to the needs of the project.

Everything still depends on the small business owners.
No matter how much the small business and outsourcing environment changes, it is still up to the business owners if they want to adapt, be more innovative or avoid altering anything. After all, there are other external factors that go beyond these trends such as the changes in technology, global economic condition, and social environment which can affect even the best strategies created by business experts.

Ways to Minimize Risk in Outsourcing Pricing Models

Tue, 30 Apr 2013 00:00:00 -0800

The pricing models of outsourcing contracts are often based on either a fixed pricing prototype or the scope and duration of a project. Some things such as risks are often overlooked, which in turn can affect the total cost of a contract.

In an article posted at info.ISG-One.com, risks in outsourcing deals are highlighted to help business owners who are looking to outsource clearly identify uncertain aspects in contracts especially with today's rapidly moving market, and with a bit of luck, rule out risks altogether.

Always check if there's a basic pricing model. Most providers offer their services in packages at a fixed rate. This type of outsourcing pricing is usually less risky but often results to overhead costs so before signing a deal, make sure that it will be maximized and every function will be useful and effective.

Build trust to pave the way for a clear process. Knowing the background of the provider you've selected will help you in creating the contract. Clients should communicate their concerns properlyand share more information about their background to help the provider perform due diligence as well.

Explain what you want in a nutshell. To save time and money, clients need to tell the provider what they want to get out of the process and let the professionals come up with the proper solution before signing the proposal or the contract. If the client doesn't want the proposed solution, he/she can always forward his/her suggestions and provide direction to help the provider design a better solution.

Know the requirements of your business. Since technology is always evolving, business executives should analyze and anticipate trends that can change the landscape of the way business is done and how technology is used. By documenting the internal process of the company, they will be able to map out the events and needs of the company, which can affect operations and budget in the future.

Create a team of leaders. It will be assigned to spearhead the operation and manage each crucial business unit. Select a service provider with the most compelling proposal and pristine track record. Your business, on the other hand, should be an institution worth-serving.

Outsourcing Social Media Marketing 2013

Mon, 29 Apr 2013 08:00:00 -0800

Most people often misconstrue that managing social media sites are as easy as pie, but the truth is businesses that want to invest on social media campaigns will have a lot on their plate.

First off, they need to set up accounts in various social media platforms such as Facebook, Twitter, LinkedIn, and other websites where content is shareable. To make user targeting easier, they would have to know the interests of the majority of each platform (LinkedIn = entrepreneurs, etc.). They likewise need to build their followers, which means marketing managers or outsourced marketing agencies need to create content that will attract users to follow and trust their brand's account.

Managing social media accounts is very time-consuming and can be labor-intensive depending on the campaigns. Some businesses want to establish their presence in social media but do not have the resources to successfully do it.

OnlineSocialMedia.net lists down things that drive businesses to outsource social media marketing:

Time - It is the most crucial element for social media marketing as it covers different aspects of the production, publication, and marketing process of a campaign. Apart from replying to posts and direct messages, they also have to create compelling content. It can be through articles or videos, but what matters is you are showing it to the right set of audience at the right time.

Know-how - Anybody who knows how social media sites work can handle a company's campaign - Wrong. The social media marketer should have background in marketing, as well as the latest trends in technology. So business executives can't just pluck out random employees and order them to tweet about this and repost that as it needs a certain type of skill and that is experience.

Budget constraints - Hiring additional staff to your current marketing team would mean you would have to set up a workstation for him/her and pay for other overhead costs. By outsourcing social media processes, the employee can work remotely while fulfilling his/her daily tasks.You know it's money well spent when the social media outsourcing company is able to explain to you the details of a campaign, how they started, and if they were able to reach new customers.

What Telemarketers should Avoid

Fri, 26 Apr 2013 00:00:00 -0800

Some businesses are likely to get penalized for improper telemarketing practices. For instance, consumers still get calls from a certain company, which they have specifically registered in their Do Not Call list. They can lodge a complaint to the FTC and pursue a case against the company for disregarding their specific request.

Of course, no company would like to be sued and have their brand tarnished, which is why most organizations that need aggressive marketing only deal with professional telemarketing companies.

Business2Community.com shares some of the things that business owners should look out for when selecting a telemarketing partner:

Robocalls are considered as part of SOP.
Robocalls are an illegal practice for telemarketing. Even if the telemarketing service provider claims that doing robocalls is perfectly safe and that they are experts on the matter, do not think twice of turning their offer or package down. Never risk your company's reputation for the sake of reducing costs.

Do Not Call list is not updated.
One of the crucial compliance factors for telemarketing companies is to strictly follow the Do Not Call list. By assuring that the telemarketing service provider you've chosen strictly follows this protocol, you will at least have an idea of the type of leads they have. For instance, they've already removed unfavourable leads or leads that are already irate.

Spoofing.
This basically means hacking the system so that the number that will appear on the customer's caller ID will be different.

Misleading introductions.
It is hard enough to trust someone over the phone, and it is even harder to trust someone who is obviously altering his/her character for the sake of landing a sale. Since telemarketers are the ones calling, it is only appropriate to properly introduce themselves and the company they are representing.

Some of these unethical practices carry a hefty fine. It is up to the business leader to make the right choice for their company's telemarketing processes.

Proper Ways of Outsourcing Content

Tue, 23 Apr 2013 00:00:00 -0800

More and more marketing and advertising agencies are starting to take notice of the benefits of content outsourcing. However, they are often seen doing it in a discreet manner as it is still not generally accepted by numerous consumers, companies, and even marketers themselves. The idea is even said to be around long before the internet came, and once technology picked up, the industry and process of having a "ghost writer" evolved, along with platforms such as blogs, micro blogs, photo sharing sites, and social media, as well as devices like tablets, smartphones, and netbooks that were being used.

An article posted at Business2Community.com shares five effective ways of outsourcing content creation processes:

1. Find a credible and creative writer.
It seems like more and more users have added the title of content creator or web writer to their online profiles. The thing is, unless they've actually published their portfolio online, looking for the right writer has become such a daunting chore. There are several things you should look into: he/she should have exceptional command of the English language, should be active or have a broad audience in his/her social networking sites, and should be up-to-date with the trends.

2. Brief them properly.
Ideas do not magically appear on a blank piece of paper or an empty screen. No matter how good your writers are, if they are not well informed about what you want and what direction and tone they should take, you will end up with nothing but scrap.

3. It's better to overshare than to hold back information.
Writing for the internet and writing for the newspaper are two different things. Invest time in training your writers about the newest trends in online marketing. Give them different types of information so they would have enough to write compelling and realistic content that can be appreciated by your audience. Also, giving them access to the blog or website's visitor tracker can help them strive to become better writers and reassess targets better.

4. Appoint an editor.
All types of content have to be double checked by somebody. If you can't hire a full-time editor, ask each of your staff to cross check each other's work. The last thing you want is a minute syntax error on an ad copy that will affect the image of your company. You could also hire a subject matter expert for professions or topics that a typical writer can't just weave words about.

5. Creative newsjacking.
Trends come and go and when a certain report becomes the talk of the town, writers should be able to contribute and relate their stories with what's currently happening. News items, especially online articles, have a certain lifespan wherein one moment, it's really hyped up and

Choosing between Multisourcing and Single Service Provider

Mon, 22 Apr 2013 00:00:00 -0800

Most business owners tend to refer to their initial outsourcing contract - believing everything would still be applicable to their upcoming plan of hiring more providers or subcontracting other processes. Some probably feel that all providers are the same and that changing the contract will just consume more resources, even their time.

However, doing a competitive analysis of credible service providers can help clients know where their contracts stand in the market, and how they can improve them.

ISG-One.com shares five steps that can help clients gauge if it's feasible to retain their initial contract or draft a new one before hiring more providers.

Research on the things you would like to verify with the provider.
Avoid skimping on the details because once the contract has been drafted, it will be hard to go back and edit it as some clauses are dependent on one another. It will also affect the relationship during the negotiation phase as some providers might think that you often change your mind or you do not know what you really want.

Analyze if your firm has enough room for errors.
Being too confident with your selected service provider can be detrimental to the operation. Since they didn't experience competitive tension, they might become negligent and lose sight of what they are supposed to deliver. Your current processes might undergo delays and strenuous transition, which is why you have to be sure right from the start that everything will go smoothly or that you are equipped with a contingency plan.

Take the initiative to study the latest trends.
Knowing what you have against what is going on can help you improve your business' standing. By sending several providers invitations to present will give you a broader idea of what's going on in the market today.

Reassess the strengths and weaknesses of your organization.
Without knowing the strengths and weaknesses of your internal team, you will fail to get enough information to negotiate and define the scope of your strategy. This will then prevent you from getting a good deal.

Consider the company-wide goals.
See to it that the strategy will add value to the company as a whole and not just a specific business unit. This will maximize your effort and budget, and will help the company grow.

Proper Management of IT Service Providers

Fri, 19 Apr 2013 00:00:00 -0800

Technology is one of the fastest evolving tools in businesses today. It is crucial to the decision-making process and construction of strategies for future operations. It is constantly evolving that some business leaders consider it as a problem as they've invested much of the company's capital to technologies that drive little to no value to the company, or are only useful for a short period of time.

Meanwhile, major companies were seen hiring IT suppliers to keep their internal IT operations updated and become more economical. However, vendor management protocol should be regularly evaluated and changed so that new technologies can become more sustainable.

Business2Community.com shares five things that can help businesses manage their IT vendors better.

1. Study the trends that may affect your IT supplier's market.
IT vendors can be easily swayed by the demands of their respective markets. For instance, when the cloud was introduced, they would have to be one of the first service providers offering cloud-related services to the market. Their pricing for other services will change; their packages will evolve as well. It would be better if you are updated or study this on your own.

2. Avoid pushing your vendor to the limit.
Business owners should know the limits of their vendors. This enables them to make correct judgment calls should they want to expand or acquire new IT infrastructure. If IT leaders proceed with plans without checking the background of their providers, it could lead to loss in funds and time.

3. Business executives should always put their foot down.
Operations that use major IT providers often have conflict of ideas. A feasible customer and vendor relationship does not happen overnight. Both parties have to collaborate and business executives should still be able to plot new strategies without being shot down by the vendor.

4. Be more stringent.
When managing IT providers, little mistakes are often pushed aside and when a major error is done, clients do not know how to deal with it. Buyers should review the contract and seek legal action when necessary, or better yet, create a contract that covers all aspects of the operations, even errors, so that when an error actually happens, it will be easy for executives to draw up a solution.

5. Prepare for the end of contract.
Even before starting the operation, clients should have a clear view of what's going to happen when the contract with a certain provider ends. This alleviates additional financial woes and transition problems.

Ways to Optimize Business Processes

Thu, 18 Apr 2013 00:00:00 -0800

Internal operations of most businesses usually have a routine where business executives are in charge of overseeing each department. They also work on formulating new strategies that can improve efficiency, minimize production blockages, and enhance the process flow.

If all internal business processes are optimized, each business unit will be able to help a company to eliminate overhead costs, streamline processes, and contribute to its growth.

Business2Community.com shares five things that can help optimize the processes of a business:

1) Do an internal audit of your current operation.
Having a concrete background on the current state of the business operation will enable executives to come up with a better strategy. It will serve as an outline for every goal that they would want to achieve.

Proper collection of data from each business unit should also be done meticulously so that mistakes can be prevented. All of the processes, once collected, should look like they are telling a detailed story of what's going on in each department and should be able to show which parts need to be improved or need the most attention, and which parts can be retained.

2) Create goals that correspond to the results of the audit.
Goals should be driven from the results of the analysis. This will help in creating achievable goals that will contribute to the business as a whole. The formulated goals can then be used in service level agreements (SLAs) in the future. These can also help the executives to make proper projections.

3) Compare the current state with the goals.
By looking at the current state and goals side by side, leaders will easily see how the important goals, or the goals that need immediate attention, can be attained. The errors can be identified at a faster rate, giving leaders more time to apply planned changes.

4) Create a simulation and try out the strategies.
A simulation will give each business unit and executives a better view on what will happen if they use a specific strategy. Moreover, it will help in predicting the costs and turnaround time of an operation.

5) Hire credible people.
Having the right people will make the transition better and faster. They should be able to handle their tasks, while making additional contributions to the company. For instance, they perform their daily tasks, but they make time to analyze and act on the plans designed by their leaders. They should also be able to understand the plans and adapt to changes.

Ways to Maximize IT Outsourcing Deals

Fri, 12 Apr 2013 00:00:00 -0800

During the initial stages of an IT outsourcing services deal, providers and buyers become busy - focused on getting things started and often overlook their long-term goals. They become stuck with an average operation and many disappointments.

Stephanie Overby of CIO.com dissected the findings of Phil Fersht, CEO at Hfs Research, on the analysis of 282 outsourcing customers and providers, where only 32 percent of outsourcing customers said they have the ability to drive innovation internally and 23 percent were actually investing time and effort on implementing changes to improve operations.

In fact, only a handful of service providers were seen administering development programs such as training for employees and minor improvements to make operations sustainable, even successful.

Also, it was becoming more obvious that with the tighter competition amongst service providers, they are formulating packages that are aimed to attract new customers, and once these customers have bitten to the bait, they leave them hanging after the first few stages of transition and implementation. Clients become complacent as they feel they are getting exactly what they paid for, and they start to settle with that idea.

However, there are clients who want more out of their IT outsourcing operation, and when they approach their providers with the idea of innovation and improvement, providers are dumbfounded because they are not prepared for such requests. They no longer look for strategies that can drive value to the business, and often times, feel that their work is done once the operation is up and running.

Here are three ways clients can maximize and improve IT outsourcing service deals:

1) Don't make cost the sole selling point. More often than not, buyers get what they pay for when selecting a service provider. They do not see that hiring a credible service provider that costs more than the usual can justify the additional price.

2) Review current internal operations. In order for executives to have clearer judgment of what they need to move forward, they should review what they currently have internally. They will be able to see what they actually lack and start from there, instead of having duplicate positions and tasks, which results to redundancy and ineffectiveness.

3) IT service clients should avoid a monotonous relationship. Some clients settle with a smooth-sailing operation. If they want growth, they have to strive for new strategies and try something different. They should start by presenting new ideas to the provider and ask for suggestions so that the growth will be a two-way street.

2012 TCV and ACV Report of the Global Outsourcing Industry

Mon, 8 Apr 2013 00:00:00 -0800

An article posted at BPOOutcomes.com highlighted the recent webinar done by IDC entitled "The Pulse of Outsourcing Q4 2012". It showed nearly an eight percent drop in total contract value (TCV) for global outsourcing deals that are worth $10 million and above. Also, IDC monitored 22 mega deals that are valued $1 billion and above, and saw that from $150 billion in 2011, it fell to $140 billion last year, which equates to a 20-percent drop in TCV and activity.

On the other hand, the actual contract value (ACV) grew from $24.8 billion to $27 billion during the same period. ACV of large deals did not change while the commercial sector ACV experienced a decrease of 29 percent. The latter was countered by a 16-percent increase in the public sector ACV.

TCV Results (2011-2012)

Global business process outsourcing (BPO) TCV matured seven percent due to the manufacturing and government segments, but was countered by regressions in the communications/media segment.
BPO deals made by US-based businesses grew 15% but were evened out by the drop of deals in other regions.
TCV also decreased from $23.3 billion to $17.5 billion for the commercial BPO sector.

TCV Trends (2013-2014)

IDC projects that contracts that are up for renewal could reach $257 billion.
Manufacturing will take the lead in the commercial segment with six megadeals and 207 deals up for renewal - with TCV above $100 million.
Other segments such as government (17 mega deals, 194 deals with TCV of $100 million-plus), communications/media (three mega deals, 43 deals with TCV of more than $100 million), and BFSI (five mega deals, 91 deals with TCV of more than $100 million) are predicted to reach full TCV for the same period.
For the global outsourcing industry, five mega deals and 91 deals with TCV of $100 million are projected to be renewed in the months to come.

Value-added Services in Outsourcing Operations

The financial management sector, talent/skills segment, market dynamics division, and enterprise-type businesses are able to reduce costs, access specialized skills that are not available internally or locally, and streamline processes.

BPO also drives innovation in operations, transformations and technology, which then helps in expanding the market of businesses.

Managing Outsourcing Relationships

Fri, 5 Apr 2013 00:00:00 -0800

In most outsourcing partnerships, clients and providers often get fixated on following every mandate in the contract where each party has their own goals and roles.

What other business owners and outsourcing leaders fail to see is that they are missing out on valuable benefits that most enriched and personalized partnerships have, and that building better relationships that go beyond the clauses of the contract can bring more worth to businesses.

However, there will always be a few drawbacks that will come your way, but precautions can be done to circumvent these issues. A post at info.ISG-One.com shares five ways that can help make outsourcing relationships more rewarding and successful.

Teamwork. Since there are two sides to every story, two leads should be assigned to manage their sub-workstream and act as the point person. This will assist in aligning the goals and operations of each party. It will be easier for both sides as this could lead to proper delivery of tasks, while keeping employees motivated and happy.

Go beyond the professional setup. It is easier for employees to collaborate if they work in an environment that is conducive for building rapport. That way, information and resources are easily accessed and retrieved. For operations that involve offshore service providers or people who work remotely, they can schedule video calls and chat using different web applications to make sure everybody's aligned and well informed.

Periodically check the relevance of the contract. There are times when each clause in the contract doesn't need to be followed rigorously. The head of each team can re-evaluate if it is necessary to make minor changes. This is especially essential for multifaceted partnerships that deal with several negotiations and projects at once.

Create a transparent and concise contract. It is the duty of each party to know the provisions of the contract that they signed. They should review, find loopholes, and edit if necessary before signing it.

Buyers and providers should know where they stand. Each group has their own role, but they also have their own identity and authority. Clients should be one step ahead and guide the providers of what they want out of the partnership.

Answers to Basic Outsourcing Questions

Tue, 2 Apr 2013 00:00:00 -0800

Businesses that are thinking of sending out work to service providers often face these basic questions. What processes should businesses outsource? Why should they consider outsourcing? When should they outsource their processes?

An article posted at SmallBizTrends.com shares the answers to these outsourcing questions.

WHY
Outsourcing carries a lot of benefits to businesses, specifically start-ups - and small to medium ones. It is proven to bring significant cost savings. It could lead to optimal growth due to the fact that labor and operational costs are far lower than creating a team that will work in-house.

It also helps alleviate work load for key decision-makers of the company. Since they are preoccupied with several tasks at once, there are instances when certain processes are overlooked and affect the efficiency of a company. With outsourcing, they are able to focus on more important issues that affect the core processes of an operation.

WHEN
The time to outsource generally depends on the requirements of a business. For instance, a firm needs to double the output for a specific period, they can outsource this process instead of hiring more employees in-house. Another is when the talent they need is not available internally - even locally, and if talent is available, it could cost the company a pretty penny.

WHAT
Repetitive and time-consuming tasks are usually at the forefront of outsourcing deals. An example would be data entry. Instead of assigning it to internal employees, it could easily be sent out to third party service providers that will make sure that the task is carried out properly.

High-valued positions that require specific skills are often hard to find and local talent may be expensive. An example of this is a software developer. Work can be done remotely and with proper management from outsourcing service providers and grid-locked contract dealings with freelancers, the outcome could be a success.

HOW
Business owners should first do an audit of their internal operations before seeking out and sending RFPs to third party service providers. They should identify the key areas that are plausible for outsourcing, countercheck with the budget, send out request for proposals (RFPs) to reputable providers, and perform due diligence.

Once each factor is properly identified, they can now work on the contract and identify what they want out of the outsourcing relationship.

Strategies for IT Leaders

Tue, 26 Mar 2013 08:00:00 -0800

Many IT professionals often disregard the little things that are crucial to a company's IT operation. Choosing the right service provider and having a comprehensive contracts are some of the things to consider to make the operation a success.

Angus Kidman shares some of his findings from the Gartner IT Infrastructure Operations & Data Center Summit, which is also part of his World of Servers series, posted at LifeHacker.com. Here are eight useful guidelines for IT professionals:

Trust trumps outsourcing and insourcing. Majority of firms that outsource IT processes are driven by the premise of saving on operational and labor costs. But sooner or later, they realize that by doing so, customer satisfaction gradually decreased because the results of the outsourcing operation are sub-par. This prompted firms to lose confidence and trust on the providers.

It's not always about the service level agreements (SLAs). Too much focus on service level agreements can cloud the way IT pros measure the effectiveness of an outsourced operation. SLAs should be used to improve, but not limit the outcome of operations.

Being stubborn when it comes to making decisions. Some IT leaders stick to their initial decisions, even if these compromise the company's goal of becoming more economical. Some jobs are obviously more expensive to do in-house, which is why executives should deliberate if it would be beneficial to outsource a process or do it internally.

How will you know if you haven't tried it yet? Not knowing about the entire process can sometimes fuel fear for decision-makers. For instance, cloud technology, which is a fairly new concept in the world of IT, is often set aside because leaders are unfamiliar with it, and immediately think that it will put the entire IT operation at risk due to security issues.

Mistakes can actually be useful. Apart from serving as a guide for future operations, mistakes can be the fuel to the fire by instigating collaborative effort among employees.

Exceptional employees aren't always looking for the highest salary. There are several things that motivate employees, but it is not always about the money.

Update and innovate. The service offerings of vendors are constantly changing. This gives clients the advantage of knowing the game.

Overstretching your goals. Implement one at a time because you can't always do everything at once. It will give you a clearer view of what's happening across your entire operation. Also, sometimes, it is more beneficial to turn down a project and focus on one operation at a time.

Negative Effects of Employee Negligence

Mon, 25 Mar 2013 00:00:00 -0800

In every company, the people are always considered as the backbone that keeps things moving forward. However, poorly managed employees can have a negative impact not only to the company's growth, but the company's full existence as well.

CMVLive.com shares four common employee management blunders that companies should avoid.

Redundant positions in the organizational chart. Small businesses tend to hire several people for the same position, with the perception that their turnaround time will be faster. This takes up a huge chunk of the company's resources, and in most cases, doesn't contribute anything to the company.

By getting to know more about them, business owners will be able to identify the strengths and weaknesses of their employees better. For instance, a certain copywriter is also proficient in editing images, he/she can fill in as a part-time designer for certain projects, instead of hiring another full-time designer to work on small design projects.

Average is passable. Being unsympathetic to employees who do not add value to the company is another thing to avoid. Executives should want employees who want to grow with them. Some employers fail to take action when employees give unsatisfactory results.

One good way of motivating employees is to start a healthy competition within the department. It also wouldn't hurt if there are monetary rewards or recognition for those who contribute more.

Goals are not achieved. Exhaustion and lack of sleep were found by a study to be key reasons for failing to achieve goals in the workplace. Employers should make it a point to check and assist employees if they are having troubles in sleeping and getting enough rest.

Lax supervision. Like any other operation, managers should be aware of what's going on within his/her department. By getting to know more about each employee, it would be easier to resolve issues, offer support, and even let go some people who are not doing their job properly.

Trends in the Global Animation Industry

Mon, 18 Mar 2013 00:00:00 -0800

PRNewswire.co.uk recently released the highlights of Research and Markets' "Global Animation Industry: Strategies, Trends and Opportunities 2013" report. It included major movements in the animation industry, particularly the growing development in animation outsourcing.

It stated the rise in online streaming, and cable and satellite TV, which are now more accessible by the audience, and are seen stimulating the demand for diverse shows, including animated entertainment.

The audience demographic was also seen evolving. Major networks and production companies are tapping more mature audiences. Viewers 10 to 15 years ago, the time when traditional animation and cartoons were popular, have also matured. Some of the notable animated series that are targeted to a wider audience (kids to adults) are The Simpsons and King of the Hill.

Some of the countries that participated in the report are the US, Canada, Japan, France, Britain, and Germany. Animation companies also made money in licensing operations and royalties for the production of collectibles and knickknacks based on the animated franchise.

On the other hand, computer games have also transitioned from consoles to animated series for television and movies. Some of which are Pok�mon, Power Stone, Monster Farm, and Detective Conan.

Outsourcing animation content to regions such as Asia has become a major trend. The key clients are film and television program producers from North America. The availability of affordable and feasible computer animation platforms, and low-cost labor rates compared to their counterparts in Europe and North America were noted as the key drivers for this growth. The US, Japan, Canada, Britain, China, France, Germany, and Korea were identified as major animation markets, while China and India are emerging as animation outsourcing destinations.

Common Mistakes in Outsourcing

Thu, 14 Mar 2013 00:00:00 -0800

Not all outsourcing partnerships are successful. Some clients, especially the ones that have already done this in the past, know the basic actions to turn a tainting partnership around. However, there will always be a few who are stubborn, anxious, and even unsympathetic when it comes to salvaging whatever is left of their outsourcing operation.

Before it's too late, business owners need to look out for these bad outsourcing indications shared by Outsourcing-Center.com, and take the suggested methods to recover:

1. Low price doesn't always equate to good service. Keep your eyes open for service providers that are offering "too good to be true" rates. If the BPO provider you are eyeing said they are able to deliver according to the precise requirements of their clientele, you should be able to see the results yourself. They do not have to oversell their company to you or use other marketing ploys to prove that they are affordable without sacrificing the end product.

Also, look beyond their resources. Since the outsourcing industry is constantly evolving, they should be able to withstand the demand from the market and the sudden changes in the industry.

2. Red flags in cultural differences. When performing due diligence after getting responses from RFPs, don't forget to ask around about the work ethic and culture of the provider you're eyeing. Also, if possible, it would be better if you observe the people, infrastructure, and current operations. Your operations might not sync with your provider's properly, resulting to miscommunication and other issues.

3. Review the sentiments of the stakeholders and decision-makers. Always solicit the opinions of the stakeholders. It would be easier during the integration and transition period if key people are aware and well-informed about what's about to happen. Moreover, you will know what each department is willing to do and what they need, so if in case an issue emerges, it will be easier for you to trace the cause.

4. Choose an operations manager wisely. An operations manager will act as a referee for the parties involved. He or she will be dedicated in making sure that the operation is running smoothly. He/She could either visit the providers or manage them remotely.

5. Adopting new processes. Clients should be willing enough to entrust the problem-solving process to their providers. This doesn't mean that they will leave once they've informed the provider about the problem, but they should avoid breathing down the necks of their providers since it stunts their freedom to think and use their own techniques. You hired them for a reason so let them do their jobs.

6. Making hasty and irrational moves. Before giving the operation the green light, always review and reassess the plans to integrate before making a move. This will make the transition easier as everything would be well thought out and well-executed. Success doesn't always happen immediately - it takes a lot of hard work and patience. There's no point in executing everything at once and getting bad outcomes in the end.

7. Client-provider relationship. Keep in mind that you are involved in an outsourcing partnership. If you lose, the providers lose. If you win, it's also a triumph for them. You are in this together, which is why there's no point in pointing fingers should there be a problem in the future. Both parties should own up to mistakes and be more transparent.

Using Hybrid Pricing Models for IT Outsourcing

Wed, 13 Mar 2013 00:00:00 -0800

Standard and structured pricing models for outsourcing IT services are no longer used these days. Back then, two types were mostly used - pricing based on input, which is mostly used for product development services and application maintenance, and output-based pricing for infrastructure services.

Information technology (IT) outsourcing has diversified over the years, especially with the emergence of cloud technology. Clients now prefer hybrid pricing models that cover various processes and products that they would like to outsource, instead of purchasing an entire IT-suite that restricts their preferences.

A CIO.com article shares a checklist that should be reviewed by IT services clients who are interested in the hybrid pricing model.

1) The pricing model should be based on the requirements of the customer. Service providers often stick with a fixed model or only offer limited types of services. However, clients can dictate their requirements. For instance, their application development and maintenance (ADM) services can be contracted with IT providers that are flexible enough to offer the managed services model and pricing based on additional retail processes.

2) Will your company benefit from the changes? Business owners tend to overlook key factors for outsourcing. They should make sure that once outsourcing changes are implemented, there would be evidence of improvement. A good example is changing IT helpdesk calls to a different platform such as email response, which some clients find too simple as they are looking for real-time assistance.

3) Raise your concerns and identify what you want right from the beginning. Having a good start on things could not only make operations smoother but faster as well. It will also help during the pricing period as clients will only pay for the services that they identified and they could strike a better deal since providers will get a better idea of the entire operation.

4) Consider integration problems. Clients and IT providers have different perspectives on how things are done. Moreover, some clients do not fully understand the actual value of the processes that they are acquiring. Both factors can result to additional overhead costs.

5) Gainsharing is a two-way street. Both parties should anticipate that things can turn sour, and when that happens, they should work together to overcome or address the problem. It will be a long and painstaking process but if the client and provider work together, with the right governance and leadership, it could be a success.

Benefits and Drawbacks of Social Media Outsourcing

Tue, 12 Mar 2013 00:00:00 -0800

Social media is one of the most efficient tools for budding businesses. It can reach a wide audience, can be adjusted according to a company's marketing strategy, and can be a platform for customer service.

Some businesses do not have to worry about their social media campaigns because they have enough resources to get the job done, but for small and start-up businesses, it eats up a chunk of their valuable time. In fact, a survey done by Business2Community.com showed that 43 percent of small businesses spend more than six hours weekly on social media.

If you are thinking about outsourcing social media marketing, here are three things you should consider:

Social media service providers know what they are doing. These consultants know the ins and outs of the entire social media industry, including the trends and popular innovation that can add value to a marketing campaign. Having the right information would require small businesses to appoint a person internally to manage and do all the research needed for their social media campaigns on top of his/her daily responsibilities. Service providers would be assigned to design and implement a campaign, analyze the target market, maximize the tools, and analyze the results.

They always know when the right time is. Apart from knowing a thing or two about the behavior of users and consumers, consultants know how to capture a wider audience by publishing an engaging and well-thought out content at the right moment.

Hiring a social media service provider is proven to be cost-effective. Majority of consultants offer an all-inclusive package where they can work remotely using their own software and hardware. They will be doing the research and reports depending on the requirements of your social media marketing campaign.

For businesses that are strongly considering managing social media operations in-house, here are the key points:

Real-time updates. Any material that you acquire or develop throughout the day can be immediately passed on to your internal social media marketer. There will be no delays and clients no longer need to worry about business partnerships as they only need to treat their social media marketer like a regular employee.

Internal social media marketers will be an extension of the company. Since the social media marketing marketer will be working for the company instead of with the company, it is relative that he/she would like to bring success to an organization which serves as a representation of himself/herself.

Smooth integration across all internal platforms. Marketing tools such as press releases and informative data can be shared easily if the social media marketer knows how to control all of the online marketing channels simultaneously. This could result to a smoother operation and a wider reach.

Factors to Consider in Outsourcing HR

Thu, 7 Mar 2013 00:00:00 -0800

Outsourced human resources (HR) processes were unheard of 10 years ago, but one by one, organizations started to take notice of its benefits. The HR outsourcing segment is predicted to grow even more as organizations continue to find ways of reducing costs and combine service providers while improving their core processes.

In a survey done by Global Industry Analysts, a business strategy and market intelligence firm, participated by nearly 300 human resources outsourcing firms, they found that the HRO market has the potential to reach $162 billion by 2015, an increase from $103 billion 2007 and $61 billion in 2002.

However, businesses that are still deciding on whether they should outsource human resources processes or keep it in-house should review these factors when selecting the right human resources outsourcing service provider listed by Business2Community.com.

They should have strong financial credentials. HR outsourcing providers are often assigned to process critical methods such as payroll, payroll taxes, and insurance-related work. To make transactions easier and faster, choose a firm that already has a solid relationship with financial institutions, have a good reputation in accomplishing tasks, and have been doing those kinds of transactions for at least 10 years.

Former clients should be raving about them. If you are going to partner with an HRO firm, it means all of its employees and whoever they're affiliated with will somehow become associated with your company. So you have to do an in-depth research about the company. Start by asking for references from current and former clients that covers safety, benefits, and regulatory compliance.

Who are their clients? Some HR providers focus on a specific industry and a specific niche while some have a much broader target market. However, it really depends on the needs of your business. If you are looking for people who have a certain skill to effectively work on your processes, then you would need a niche-specific HR firm so that they will understand what is actually going on in your company.

Can they work on local policies and regulations? Many businesses that outsource HR often face law and regulatory challenges. In some cases, HR firms from another region are not aware of some of the business and employee rules and laws, which can lead to problems.

Customizable approach for your business. It will cost you more if you avail a service package with processes that you don't really need at the moment. Make a list first and deliberate which employment, administration and compliance processes you need and find a suitable vendor that offers flexible HR services.

5 Commonly Outsourced Business Processes

Tue, 5 Mar 2013 00:00:00 -0800

DynamicBusiness.com.au shares five processes that can be easily outsourced by businesses.

1. Small and one-time projects. Basically, anything that can be done or delivered using the internet can be outsourced nowadays. This business model has flourished because of the number of tasks that is subcontracted to freelancers and third party experts. One thing to take note of is that providers pride themselves in doing a great job, because generating good feedback and publicity is their way of getting more business and projects.

2. Photography. Not everyone who has an expensive camera is an expert photographer - especially in this day and age when cameras are quickly being upgraded and devalued at the same time, and pictures are taken constantly and are immediately considered art just because the person used the digital photo filter installed in his/her gadget. Taking the right shot at the right moment and setting requires a specific skill, which is why some firms prefer to subcontract the job to professionals.

3. Administrative/Repetitive tasks. Business people are always on the go. If you are one of them, you probably don't have the time to scout for the perfect venue for a company event, call suppliers, and answer emails. This is where the virtual assistant steps in. Your virtual assistant will be working remotely and will handle all your emails and contacts for you, so you can concentrate on more important meetings and work.

4. Accounting and bookkeeping. Outsourcing accounting work is considered taboo by many organizations. But some consider it as a great strategy as they no longer have to worry about having to coordinate with an in-house finance department.

5. Graphic design projects. The demand for one-time graphic design work shot up during the past few years. Businesses saw that it is more economical to outsource graphic design work to freelancers or service providers.

What Buyers Get from IT Outsourcing Deals

Mon, 4 Mar 2013 00:00:00 -0800

An HfS Research survey involving 450 IT service buyers and providers was recently discussed at CIO.com. Results suggested that IT buyers want innovation, success evaluation, and analytics capabilities from their service providers, but aren't getting them. Less than half of them noted that they provide analytics, industry acumen/relationship management, and training internally. Also, less than one third of IT outsourcing customers said they experienced formal training for these factors.

The survey found that while outsourcing buyers perform well in negotiating contracts and choosing the right service provider, they fall short on the processes that come after it such as driving innovation, defining business outcomes, and improving analytics.

According to Phil Fersht, CEO at HfS Research, problems in these types of skills will be seen this 2013, even if 43 percent of outsourcing customers still identify cost reduction as the most important factor during outsourcing decisions.

For the coming months, survey participants said what they would want to change in outsourcing are management strategies, and improving the approach and perception that outsourcing is not only about cost reduction but value creation as well.

Outsourcing buyers may get what they paid for, which is reduced expenses at a contract agreed upon, but they are not satisfied as they want skills and talent that can drive innovation, analytical thinking, and better business outcomes.

Fersht said if IT outsourcing customers and service providers want to achieve those goals, they should develop their talent pool. Not only will they provide relevant contribution to the client's cost saving practices, they will also be able to grow with the operation and help provide direction and focus.

Meanwhile, the first quarterly market index report, also released by HfS Research, states that with a projection of 3.5 percent growth last year, by 2017, the industry would have sustained a compounded annual growth rate of 4.7 percent.

Furthermore, Fersht notes that for this year, outsourcing buyers and providers will be more mature in organizational approaches.

Using Operating Level Agreements in Multisourcing

Wed, 27 Feb 2013 00:00:00 -0800

Operating level agreements (OLAs) were commonly used internally between two departments or between a client and an IT services provider. But as more and more organizations begin to use multisourcing arrangements, OLAs are rapidly becoming the intermediary among several service providers and client - making sure that things will run smoothly and as planned.

However, creating an OLA that will work across the entire operation is a tedious task as it is expected to cover all the needs and recommendations of all parties involved.

CIO.com shares nine things that clients involved in multisourcing can expect from using operating level agreements (OLAs):

There will definitely be challenges along the way. The OLA service provider needs to supervise their own operations, as well as oversee if other service providers involved in the operation are on the same level. However, if maturity levels of all providers aren't the same, then they would have to work on it or create an environment that is fair for all.

The OLA should always be protected from scheming providers. Some providers might take advantage of the OLA and use it to their benefit. Some of them use it against the client's SLA and create a loophole that can overrule a clause needed for another service provider. All the IT providers, including the client, should discuss any uncertain matter.

OLAs should go first. OLAs should be used as a guide for the entire operation. Having to draft it after sending out RFPs and building relationships will only cause problems in the long run.

Establish internal OLAs first. No matter how many providers are involved and how many processes are worked on by external service providers, the internal IT group and CIO should remain as the core group of the entire operation. This assures the executives that their employees are also accountable should there be a problem in the future.

Clearer directives get the job done faster. OLAs plagued by jargon will be useless if only a few can understand it. Things will be done faster and everybody will be more attentive to the OLA if it's concise and straight to the point.

Customers always come first. Some service providers will offer a business OLA to help their company grow. For instance, some might present an OLA that restricts the client. This is one thing to look out for.

Clients can be exempted from the OLA. No matter how detailed OLAs are, clients still have the option to be exempted from the provisions and clauses included in it.

Let the OLA do its thing. Clients should not micromanage providers. The OLA can get the job done, but if the providers do not meet the expectations, that would be the only acceptable time to step in and address the problems.

Evaluate if your OLAs are effective. OLAs, if tracked, can provide sustainable metrics that can give clients, as well as providers, a better perspective of their performance.

Three Reasons to Outsource Lead Generation

Tue, 26 Feb 2013 00:00:00 -0800

Information Technology (IT) products and services providers already have a lot on their plate, which is why most of them close deals from outsourcing service providers to take on their lead generation tasks. Although they can procure the services locally, some of them choose to outsource lead generation to companies overseas for several reasons.

A Business2Community.com write-up shares three common reasons why it is ideal for IT products and services providers to outsource lead generation processes.

It is more cost-effective overseas. There are a lot of marketing agencies and third party service providers all over the world. They charge far less compared to the ones available locally or near IT companies. Being more economical is one of the things IT firms are looking for during these trying times, and offshore outsourcing functions enables them to reduce costs.

Non-stop lead production. While IT companies focus on delivering products and providing services, outsourced lead generation firms can work on gathering and ensuring future sales leads. Also, even if the client in this type of setup is done working for the day, they can be sure that they will have leads as their marketing agencies are working hard to get prospects.

Lead generation companies have mastered the niche. Lead generation firms are called just that because they are experts in the field. It is the only service that they are focused on and they take on all requests and demand, which are often unfamiliar for organizations that belong to other industries.

Ways to Improve Contracts using Benchmarking Clauses

Mon, 25 Feb 2013 00:00:00 -0800

Benchmark clauses have long been used in contracts. These provide companies a perspective on the state of the market as well as the competitors.

According to an article written by Senior Consultant at ISG Robyn Singlehurst, posted at info.ISG-One.com, benchmarks should have these characteristics to be successful, especially in new contracts.

The benchmark should have a workable program (schedule). For services and products that often change in pricing, benchmarking should be done annually. For those that are in a more stable industry or market, it should be done every two to three years. However, if there are changes to be made, it should be able to cover the benchmarking expenses.

It should be directed to the perfect target. Benchmark clauses should be able to withstand the test of time. For instance, you are aiming for the average benchmark; it should still be valuable after several years of implementation. One thing to consider two or three years from now is: will the provider allow you to take up its margins?

It should be able to follow a certain format. Instead of having to revise a few months from when it was drafted or having to revise month after month, it would be better if changes are addressed in a specific date. For example, when it comes to changes in pricing, providers can bill clients every month or in their usual schedule, but the changes in pricing can be done retroactively.

It should make the decision-making process easier. Benchmark clauses that already include a list of the providers can make the work easier and faster, considering that there are countless providers in each industry which will take up time and money.

It should be absolute. Make sure parties involved follow the outcome of the benchmarking process. If one side does not agree and refuses to perform their part, then having a benchmark will be useless.

Data Breaches Linked to Bad IT Outsourcing Choices

Fri, 22 Feb 2013 00:00:00 -0800

Last year, 63 percent of IT system cases were caused by external service providers that lack security integrity. This is according to the 2013 Global Security Report which involved 450 global data breach investigations. The report was released by security firm Trustwave and analyzed by Warwick Ashford of ComputerWeekly.com.

According to Trustwave European Director John Yeo, companies often overlook security concerns and common data security risks as they are more fixated on cost savings when it comes to making outsourcing decisions.

Moreover, most of the buyers' internal IT security teams are commonly not involved in the selection and deliberation process, when in fact it is crucial for them to be present during those times.

Yeo pointed out that during the evaluation process of the providers, service level agreements, along with costs, often derail decision-makers from considering details about security. He added that it should even be included in the requests for proposals.

From another aspect, if the internal security team is already involved in the IT outsourcing process, most of the time, they fail to double-check the aptitudes and strengths of the providers.

Yeo suggested that after asking the service provider about security, they should at least validate their answers.

In another report done by Trustwave last January, annual reports of FTSE 100 companies were rounded up, where it was found that half of the respondents identified cyber risks and data loss issues as principal risks.

Some larger companies were also seen to have enough knowledge and concern about cyber risks at the executive level but don't reach the managers and the people who handle the outsourcing processes.

The report also found that some outsource their security processes because they do not know how to set up and operate such processes internally. Once the process is transferred to the provider, it is disregarded since it is not well thought-out or priced during the initial discussions, or they themselves do not know the new forms of attacks.

Furthermore, the report reiterated that buyers should ask for PCI DSS (payment card industry data security standard) compliance from a Qualified Security Assessor (QSA).

Businesses are also advised to incessantly check the progress of their providers and make sure that all systems are up-to-date.

Global Services Set for Growth in 2013

Fri, 15 Feb 2013 00:00:00 -0800

Every year is different in the global services industry. This 2013, however, predictions from Everest Group indicate that it will experience average growth.

The results of the recent Market Vista webinar, a survey done by Everest Group, were discussed at BPOOutcomes.com. More than half (58 percent) of survey participants anticipate a faster growth rate for the industry this 2013, while 19 percent foresee that the growth rate will be similar with 2012's.

Q3-Q4 Performance Indicates Hope

The overall performance of the global outsourcing sector last year was inferior as transactions declined to 1,633 from 1,929 and is even more noticeable if compared to 2010's 1,978 (year-over-year). But during the last two quarters of 2012, transactions improved from 380 in Q3 to 401 in Q4 and could indicate a steady rise in activity.

The Everest report also noted that from 2010 to 2012, continental Europe was the only region that did not slow down in transactions. Regions that showed a decline in deals are North America, from 733 in 2010, 699 in 2011, to 541 in 2012. UK also showed a decrease at 302 from 373.

Transactions in other parts of Europe declined from 522 to 475 and didn't move at 473 in 2012. In other parts of the world, there were 440 deals in 2010, 382 in 2011, and 317 last year.

Much of the processes outsourced were related to banking, financial services and insurance (BFSI), manufacturing, distribution and retail (MDR), public sector, and healthcare.

Outsourcing Potential in Latin America

Everest Group considers Latin America as the underdog when it comes to outsourcing destinations. The region provided 27 service centers during 2010, it declined to 22 in 2011, but jumped to 37 last year. Captive center in Europe went from 32 to 32 to 29 while the Asia-Pacific region posted 93 to 84 to 90. Singapore showed the highest service center activity in the Asia-Pacific region during 2012. For Europe, it was Romania and in Latin America, it was Colombia.

Opportunities in the SMB Cloud Market

Tue, 12 Feb 2013 00:00:00 -0800

Small and medium-sized businesses (SMB) are hard to classify nowadays as there are countless industries that have churned out close to 250 million SMBs globally.

On the bright side, this diversity presents opportunities for a trending business tool known as cloud technology. A study done by Forrester Research showed that more and more businesses ranging from small businesses to mega enterprises were seen outsourcing cloud services. Most of the sourcing activity came from the small business segments, which were estimated to employ 10 or less. It was also found that from 2011 to 2012, the use of the cloud increased from 10 to 20 percent.

Moreover, it is anticipated that the cloud-driven market in the SMB space will grow nearly two times its current size from US$45 billion in 2012, to US$95 billion in 2015.

TechGoondu.com has listed five possibilities for the SMB cloud market:

DR/BC will play a major role. By conducting a survey participated by SMBs, Forrester was able to identify two similar segments in which cloud technology is likely to flourish this 2013. These are disaster recovery and business continuity.

Clients prefer bundled services. SMBs are also anticipated to procure SaaS more compared to PaaS or IaaS as it is already pre-packaged and is ready for integration.

Demand for business intelligence. Before, SMBs preferred SaaS for its capability of providing CRM and collaboration software, but a 10 percent growth within the last four years was seen for its BI and decision support traits.

It's no longer about cost savings. The Forrester report also cited that even if the primary reason for outsourcing is to save money, they are looking for things such as business agility and aptitude to focus on core functions that will add value to their businesses.

So much activity, so little time. Some will be confused in identifying the IaaS providers, hosting companies, telecom operators, traditional system/service vendors, system integrators, and outsourcing companies as it is a fast-paced field where everybody is trying their best to outdo each other.

Global Pharma Firms Eye Asian Market

Mon, 11 Feb 2013 00:00:00 -0800

It appears that more and more pharmaceutical companies from all over the world are planning to expand not only their market share, but also their operations in Asia.

ArabianGazette.com dissects the Global Life Sciences Cluster Report done by Jones Lang LaSalle, a commercial real estate services company. The report stated that the growing patient pools and consumer demand are pushing pharmaceutical firms to increase their infrastructure and broaden operations across Asia.

According to Asia Pacific Regional Director for Industrial and Logistics at Jones Lang LaSalle David Wilton, the market opportunities that Asia has for science and clinical companies are driving up costs for the formulation of new drugs and treatments. However, it was also found that facility and real estate expenses are relatively high. The industry was also seen calculating every real estate move more meticulously � choosing areas that are equipped with industry resources, capital, and are highly-susceptible to innovation.

According to Industrial Services Head at Jones Lang LaSalle, Nirav Kothary, India is one of the countries in Asia that is working aggressively to tap more investors for biotechnology. In fact, the Indian government, along with Exim Bank, considered providing INR 2,000.0 crore ($365.6 million) worth of venture capital fund to finance pharmaceutical research and development in the country.

Moreover, Nirav Kothary noted that the Indian finance ministry has approved nearly INR 180.0 crore ($333.0 million) in foreign investments, allowing investors to own up to 49% of established Indian firms.

Other important notes in the report are:

� New players are looking to expand while mature markets are downsizing.
� Pfizer, Novartis, Sanofi, and GlaxoSmithKline were seen gaining three times more in non-traditional markets.
� Life science organizations are working to become leveled with their Western counterparts,which means that they are expanding and maximizing resources.
� Providers in Asia are now focusing on R&D instead of manufacturing.
� Some countries such as India, China, and Singapore were able to provide R&D services while allocating resources to intellectual capital, business parks and incubator centers.
� India and China are seen providing programs to protect intellectual property while promoting the return of Western-trained scientists for the development of the country's economy.
� Japan, the country that ranks second globally for drug sales and prescription, was seen to have acquired more in the international market.
� In 2016, China is predicted to overtake Japan and become the second largest pharmaceutical market globally. Even if the country's losing its cost advantage with increasing salaries and valuation of the country's currency, its ability to provide a large talent pool and the ample support it gets from the government make it an ideal R&D investment.
� The maturing middle class in India propels its life sciences industry, making it a suitable candidate in becoming a major pharmaceutical destination.
� Indonesia is also expected to make a mark as the 6th largest pharmaceutical market by 2016, with the impending revisions in laws and regulations.
� Singapore is set to offer a more advanced research and innovation to the life sciences industry. The country also presents favorable traits such as strict intellectual property protection laws, tax policies, and stable political structures.

2013 Trends in Managed Services & Outsourcing

Fri, 8 Feb 2013 00:00:00 -0800

An article posted at ITWeb.co.za highlights some major shifts in the outsourcing and managed services sector. It also shares the observations of Brian Anderson, an executive at SunGard Systems SA, a technology and software services firm.

Anderson said as the industry is diversifying in terms of processes being offered to the market, he saw that more businesses are adapting as well, by outsourcing or putting up managed services centers related to non-traditional methods like retirement plan record-keeping, tax processing, and actuarial modelling.

He also noted that organizations can take advantage of the valuable services and traits of outsourcing providers - their expertise, ability to render services at a lower cost, and they enable business executives to focus on the core operations.

SunGard predicts 10 trends in outsourcing and managed operations:

1. Business process outsourcing and managed services activity will increase this year since more and more clients are seeing its benefits.

2. With the surge of cloud technology, Software as a Service (SaaS) will become more popular as it is anticipated to help increase the productivity of companies across several software components.

3. A more customizable and flexible strategies application hosting for industry-specific services will be the main focus of buyers who have had experience in IT outsourcing in the past.

4. Bulk processes such as infrastructure, application management services, and custom development are likely to be outsourced more as business executives want to have more internal resources for their core functions.

5. Apart from the traditional services, providers are seen to offer complex and high-value processes related to IT.

6. Contracts are also predicted to become more flexible, which balances cost control between the provider and buyer.

7. Cloud technology will be strongly considered by a lot of buyers for their IT infrastructure and application management.

8. There will be stricter guidelines that will monitor if outsourcing providers are complying with global standards, and the provisions of COPC, ITIL, and Lean Six Sigma.

9. More buyers will be more cautious and are anticipated to put providers under a microscope before signing a deal. They will look for good customer reviews, stricter service level agreements, and certifications.

10. Buyers will expect more from their managed services providers. For instance, they will be expecting that providers are capable of handling complex processes such as big data and smart grids.

Things to Consider in IT Outsourcing

Tue, 5 Feb 2013 00:00:00 -0800

More and more business processes are being outsourced nowadays - from simple and repetitive ones to more complex methods that involve analytical thinking. Outsourcing was mainly used to reduce the cost of operations. However, over the years, clients wanted more out of their outsourcing activity.

A guest post written by Carmen Brettel, published at OnTechies.com, lists several tips for maximizing outsourcing operations:

Eradicate language challenges.
Should a company outsource locally, there would be no problem in terms of collaboration. But if they decide to outsource processes offshore, they would need to make sure that the provider has excellent English communication skills so that when the time comes to discuss the details of the project, the quality of service and outcome will not be affected.

Perform due diligence.
A good marketing material may come in handy for providers that want to lure customers. They will use flowery words and fill their ads with promises which, most of the time, work on innocent business owners who only want to find an outsourcing partner but end up with a scheming provider instead. Customers need to do their homework when selecting an outsourcing provider.

Clearly identify your goals.
An outsourced arrangement calls for stricter guidelines and a tighter business relationship. To have a smooth operation, it is advised that clients clearly identify their goals early on, as well as the division of tasks and order of command for the entire operation.

Always have full control.
More often than not, data center facilities are included in the outsourcing package and clients overlook that they should at least have majority of the ownership and control over their systems. This is crucial in cases where the provider's system fails or there's a need to pull out the outsourcing operation.

Outsourcing Data Center Processes

Mon, 4 Feb 2013 00:00:00 -0800

The internet has definitely made it easier for businesses to subcontract internal processes to credible service providers. Cloud technology is being adopted rapidly by businesses that want to expand and cut costs. Along with this strategy are several challenges that executives may encounter and often times, they even consider data center outsourcing to optimize processes that rely heavily on the internet.

A Business2Community.com post shares several angles that business owners should look at before drawing up a conclusion on whether their data storage facility should be outsourced or not.

Current Storage Facility Space is not Enough - This is one of the more popular reasons why businesses opt for remote storage facilities. Outsourcing your data center will give you more space for more important functions.

Power Supply and Energy - Monitor your current data storage facility's power consumption. If it costs more than the quotation presented by the outsourced data center facility, then it might be more efficient and cost-effective to subcontract it.

Non-stop Operations - Most businesses nowadays, especially the ones in the information technology segment, are required or are expected to operate non-stop. If an operation fails to deliver due to unforeseeable events such as service downtime, they will definitely lose revenues. Depending on the capability of the internal storage center, outsourcing can serve as a backup plan or an alternative so that executives have one less thing to worry about.

If the Operation Needs Innovation - Upgrades are often required overtime. A quick solution is to go for a remote data storage facility through a provider that offers end-to-end solutions. They are equipped with the right software, space, and utilities to refurbish the business.

MicroSourcing Milestones

Thu, 31 Jan 2013 00:00:00 -0800

MicroSourcing has come a long way from its humble beginnings back in 2004. See the highlights of MicroSourcing from when it was established, to how it has evolved over the years as a leading offshore outsourcing provider.

Outsourcing Social Media Marketing

Wed, 30 Jan 2013 00:00:00 -0800

A lot of small business owners see social media as a tool that can help boost their company. While many larger and older firms often outsource their social media processes to reduce costs and benefit from the expertise of social media marketing service providers, some still avoid it thinking that it is too risky. On the other hand, start-ups and small business owners can't afford to shell out more towards hiring a social media marketer and a lot more time in managing their online profiles.

According to an article posted at Guardian.co.uk, business executives who are looking to outsource social media marketing and management usually worry about several things. They think that social media marketing service providers may have the necessary skills and tools to create campaigns but they don't have enough knowledge about the company to actually create a suitable campaign. The solution for this is to involve at least a one internal management member who will serve as the basic source of information and lead the social media marketing strategy.

The social media marketing service provider might not be able to predict the trends and changes of the client's specific industry, market, and environment. This can be resolved by assigning an in-house employee who will manage the budget and strategy according to the innovation needed to become more relevant in the market.

For the contract, the client should identify the exact role of the provider, which should include their responsibilities and limitations. Clients, on the other hand, should give adequate information and direction to deliver better results.

Social media strategies do not come as prototypes, so small business owners should clearly define the direction of their social media plans. They should analyze if outsourcing is the best solution for whichever industry they belong to before acquiring the service of a provider.

Job Opportunities in the PH Game Development Sector

Tue, 22 Jan 2013 00:00:00 -0800

Ovum recently reported that Asia-Pacific's video game development industry could be valued nearly US$30 billion in 2016. This could be a result of the continuous growth of video game consumers and proprietors from different parts of the region.

A TeamAsia.com post recounts an interview with Alvin Juban, President of the Game Developers Association of the Philippines (GDAP) and Head of Operations of Secret. At present, the gaming industry in the country has nearly 3,000 professionals working for around 60 companies, said GDAP.

Moreover, the local sector earned approximately US$70 million during the late 2011 up to the first few months of 2012. It was found that 15 percent of the industry's workforce were dedicated to quality assurance (QA) and support, nearly five percent worked on games for consoles, and the rest were dedicated to social and mobile games.

What are the skills required in the industry?

Mr. Juban said he usually looks for the basic game developer skills. Physics and math are crucial in game development, as well as computer science, information technology, among others. He added that he usually hires developers who take it to the next level and has the initiative to do research on their own. For the academic side, he is hoping that schools offer more courses that are related to game design and development.

Other job opportunities in the sector are Java developers, iOS, Android, and C++ developers, PHP and MySQL developers, and Actionscript developers.

However, game designer jobs are also available in the sector to those who do not have experience in computer science or information technology. Juban said game designers come up with the game design document, which requires knowledge of games, gameplay, and can put a story together. Other positions are producers and sound engineers.

What do gamers actually do?

Gamers basically live and breathe games and gaming is an integral part of their everyday lives. Furthermore, Juban said gamers do what they love to do, which is why few people leave the industry.

He noted that the 10,000-strong workforce for 2015 that he had predicted could actually grow as the industry is evolving and growing rapidly.

Ways to have a Successful BPO Strategy

Mon, 21 Jan 2013 00:00:00 -0800

Over the years, organizations were seen making swift and hasty decisions regarding outsourcing. Most of the time, those types of outsourcing strategies are baseless, ineffective, and lead to uncontrollable damages.

BPOOutcomes.com posted an article about seven helpful steps that can reinforce business process outsourcing (BPO) strategies of companies worldwide:

1) Provide a clear roadmap of the strategy.
In most cases, decision-makers forget that other divisions of the company will be affected by the strategy. Having a well thought-out plan of what goes where and who's in charge will eliminate the chances for mistakes. Everything should be aligned with the goal of the strategy, including the staff.

2) Double check integration processes.
This is the proper time to decide if external outsourcing is the best option. It will also determine how the organization will be prepared as the integration process is taking place.

3) Seeking out the best provider.
For those who have decided on outsourcing, they would need to select the type of contract and provider. Will it be multi-sourced where different providers will be assigned different sections of the project? They should also identify which specific areas of the processes the providers can work on and have authority over. Moreover, a proper incentive program should be discussed before the contract takes effect.

4) Determine the structure of the partnership.
Will the contract have provisions for incentives and rewards for the provider? Will they also be rendering services and have no input on the entire strategy?

5) Check the current infrastructure.
Strategies often require new processes and infrastructure to work effectively. See to it that your internal systems match the ones needed for the processes. However, if the new system is included in the package or the deal, it should be aligned with their existing arrangement.

6) Preparing for the transition.
Having a transition strategy will help avoid problems in major regions such as the UK, where provisions such as Acquired Rights Directive (ARD) or Transfer of Undertakings Protection of Employment Regulations (TUPE) often become a challenge.

7) Reinforced strategy during the operation.
Operations should be closely monitored and collection of data should start at the beginning. The performance of the provider should likewise be observed to see if they are doing their job.

Six Reasons to Outsource Video Editing Work

Fri, 18 Jan 2013 00:00:00 -0800

Cutting operational and labor costs was the primary reason why businesses began to outsource offshore. The common types of work which were subcontracted during the first few years were the repetitive and easy ones. So why is video editing now being outsourced by companies, specifically marketing firms? A post at Business2Community.com lists six reasons:

1) Lack of budget for additional employees.
Digital marketing is proven to be more effective when interactive and captivating materials such as images, infographics, Flash animation, and videos are used. Videos provide a different multimedia experience but it entails a lot of time and money to train and hire more video editors, which is why if companies need to produce more marketing videos, they usually consider outsourcing.

2) Cost reduction isn't always everything.
In some cases, employees who know little to nothing about video editing assume the task because there's just too much to do. Even if the cost of doing it internally may be far smaller than outsourcing, the quality of the output is well worth it.

3) More ideas from client-vendor collaborations.
Once the idea is shared with the provider, clients can now focus on the next project as they no longer have to worry about editing and producing the material. Each service provider has their own style and perspective, and more often than not, when they incorporate it to the material, the result is a fresher, more relevant video.

4) Service providers know when it's already too much, or still not enough.
Video editing companies know that even with time constraints, everything has to be perfect and not overly done. Apart from alleviating the stress of going back and forth, they make sure that their clients are getting not only what they want, but also what they need.

5) They can act as the POC.
Some videos require footage from different people, angles, and perspectives, but gathering and editing all materials can be an arduous task. For video editing companies, it's just another day at the office.

6) One stop shop.
Video editing service providers have all the equipment needed for all sorts of editing work. Clients no longer need to purchase or rent the materials required to finish one video.

The Philippine Call Center Industry

Wed, 16 Jan 2013 00:00:00 -0800

With over 10 years of providing voice-based services, 420,000-strong workforce, and five percent ($11 billion) share of the country's gross domestic product (GDP), call center operations are still flourishing in the Philippines. In fact, the Philippines remains the call center capital of the world.

A post at Aljazeera.com noted that improved political environment, large English-speaking workforce, as well as affinity with Western culture are the factors that make the country the top outsourcing hub for call center operations. Moreover, clients can save up to 70 percent in labor and operational costs.

With the majority of call centers operating in Manila, many providers and clients are looking at other areas which can be new outsourcing hubs. Dubbed as Next Wave Cities, these are cities and provinces that have the characteristics needed in outsourcing, including large talent pools that can meet client requirements. The government fully supports the call center sector, and the outsourcing industry in general, with initiatives in the academe, infrastructure, and telecommunications.

Philippines-based outsourcing providers are also offering non-voice, high-valued processes as they are looking to diversify their outsourcing services. These services include game development, copywriting, graphic and engineering design, as well as animation.

Significant Changes in Outsourcing

Tue, 15 Jan 2013 00:00:00 -0800

Businesses back then were mainly seen outsourcing repetitive and basic tasks to save costs and focus more on the core functions of the entire operation. But now, they are also outsourcing to grow and stay competitive.

An article written by Eric Lundquist, VP & Editorial Analyst at InformationWeek Business Technology Network, posted at InformationWeek.com, cited the changes in the outsourcing industry during 2012 along with several forecasts that are likely to happen this year.

Tasks are assumed by other departments.
CIOs used to be the ones who manage the IT budget of the company, but they are now seen prioritizing and focusing more on their basic functions which include securing the data systems, compliance, and troubleshooting. Other IT-related tasks are now executed depending on which department can address the issue best. For example, purchases and invoice materials related to social media accounts are worked on by the marketing department, instead of relaying these to the IT deportment for verification. This, in turn, alleviates strain from the IT department and excessive control as some outsource their tech processes to external service providers.

Rise of BYOD.
In this day and age, it is up to the employees on which hardware they prefer and will use. It has become a "bring your own device" (BYOD) world. The internal IT department no longer has to supervise hardware used by employees, but still manages the software and ISP.

Cloud technology for IaaS.
A business cannot use the infrastructure-as-a-service without heavily using cloud technology. Basically, servers and other IT infrastructure are housed elsewhere, and are outsourced to an external service provider.

Crowdsourced business services.
It is now easier to outsource multiple types of processes. Crowdsourcing sites are everywhere and they even cater to different niches.

Top tech vendors are evolving as well.
It is hard to stay afloat, specifically for tech giants, when a new process comes along. Outsourcing has changed the playing field for renowned hardware firms such as Dell, HP and Microsoft. So what does one do to remain successful? Adapt of course.

More employees are working offshore.
Businesses that want to reach a wider audience and influence more customers outsource majority of their workers to far flung areas. This way, they take advantage of the different time zones and different markets.

On the other hand, here are the predicted trends for the business technology in 2013:

- Metrics and data will play an important role in shaping an IT business.
- Cloud technology will affect almost every aspect of the business. It was observed that businesses took it one step at a time, costing them more time and money. This year, however, businesses will be seen going directly for the public cloud, prepping each stage rapidly before releasing it to the users and consumers.
- Social network, even if it plays a huge role, will still not be maximized by enterprises. Instead of planning, executives will only look at the results.
- In some cases, interns are the ones who are updated on the newest trends in apps. Businesses should strongly monitor the trends in mobile devices, particularly apps that consumers use. This way, they are not left behind in the deployment and other management processes.

2013 Trends for the Outsourcing Industry

Mon, 14 Jan 2013 00:00:00 -0800

A list of the upcoming developments in the business process outsourcing (BPO) industry was recently published at DataMark.net. The report states that the trends will be more mainstream and measurable. Also highlighted in the study are the use of social media, online avenues, and insourcing.

Here's the full list that can help business owners, as well as BPO start-ups, to manage their way through outsourcing this year:

1. Mobile apps will be more accessible.
Over the years, outsourcing service providers have noticed that there are now more potential customers who are constantly using their mobile devices. This 2013, IT departments of these providers will look into developing more user-friendly applications to tap probable clients, and increase their exposure to the market.

2. Social media will work overtime.
Businesses that operate only during weekends, but have social media profiles, have more work cut out for them, because the popular way for customers who want to reach out to companies is the use of Facebook, Twitter, etc., which are available every day, every hour.

3. Gamification to fuel competition.
Much like in the realms of gamers, companies will begin to brag about their achievements and awards to entice more potential clients.

4. Stronger currencies to drive insourcing.
Since the dollar has become weaker in renowned outsourcing destinations such as India and China, companies based in the US are starting to strongly consider insourcing and nearshoring.

5. Mexico will dominate in 2013.
Mexico was seen improving steadily in different aspects, even with the resonating issues on cartel wars. These include labor productivity growth, education, broadband access, infrastructure development, and labor productivity growth.

6. Chromebook will soon replace paper documents.
With the continuous adoption of cloud technology, organizations will begin using tools that are cloud-friendly. Chromebook will help the use of cloud technology prosper.

7. Stricter cloud regulations.
We all know how customers react if their favorite website, which they have probably paid for to access its services and products, experience downtime. Although apologies are widely acceptable, sooner or later, customers will be looking for support from government bodies to become firmer when it comes to business continuity and disaster recovery plans.

8. The internet will be maximized by BPOs.
BPOs will use the internet to connect everything and everyone to gather and monitor data better. Information can either be restricted or granted with a click of a button, and data will be more accessible to those who need it instantly.

9. Helpful metrics.
Data from business processes will be a crucial tool that could help organizations grow. It will be collected, identified, and then labelled to give thought leaders a better idea of what's really going on in the business.

10. Outsourcing will be viewed 360 degrees.
Business executives will soon realize that offshoring is not always the answer to their problems. However, it is still a strong factor for major players to stay ahead of the game, if not survive the tight competition.

Transformation Practices for the Insurance Industry

Fri, 11 Jan 2013 00:00:00 -0800

Insurance companies deal with a hodgepodge of processes used to deliver results to the clients. Moreover, each organization might operate in an environment that has either strict or lenient regulations.

According to an article posted at ISG-One.info.com, 80 percent of the processes in most insurance companies are the same, while 20 percent depend on the decisions made internally, and of course, unforeseen events.

Majority of insurance firms are anticipated to take necessary actions to decrease operational costs as they believe it will affect the cost of their services to customers, which in the end, could affect their sales. These measures are transformation strategies and more investment on information technology (IT).

The article also shared five ways transformation and technology could be maximized to improve operations.

Outsourcing is not always the answer.
Review the requirements of the company before deciding on whether you should outsource insurance-related processes as it may not always work for you. The transformation should address concerns of the company's target operating model.

Create a template for all departments of the company.
If possible, come up with a model that can be used across all departments of the company, which could likewise be used by employees as reference whenever new transition plans come up. Ideally, each team should have their own strategy, which should then be disclosed to the business unit for review and IT department for the implementation of the changes.

Focus on one transformation strategy at a time.
To have a successful transformation process, assign the budget, allot the bandwidth, and keep an eye on it as it progresses. This eliminates redundancy and creates restrictions that help companies have a faster transformation turnaround time.

Make sure you have the right people on board.
Analyze the skills and expertise of each team or employee and assign tasks accordingly. This way, you are sure that they are working on something that they're good at. There will be fewer errors and time used to resolve work that are done incorrectly.

Not all transformation plans are the same.
Work and adjust accordingly.This will result to a customized plan the can be adopted easily by the segment that needs it.

How Outsourcing can Boost Lead Generation

Wed, 9 Jan 2013 00:00:00 -0800

Lead generation is one of the crucial processes for business growth. Basically, it means creating consumer interest, which could then turn into more sales for a company.

Businesses are neck and neck in the competition where they are most likely offering similar services at similar rates. So how can business executives change their strategy to generate more leads? They make use of outsourcing.

An article posted at Business2Community.com highlights some of the ways outsourcing can improve a business' lead generation process.

Smaller operation and labour costs.
Creating an internal lead generation team can result to large overhead and operational costs. It could also take up precious time and effort that could instead be allotted to major segments of the operation, like the decision-making process for a new product.

The right outsourcing provider is already equipped with the necessary infrastructure and word-class team that can deliver results. Boot-strapped companies can grow and operate flawlessly without worrying about their lead generation processes, as providers can take on and manage the tasks at a lower cost.

Lead generation providers are experts in the field.
Lead generation providers would not thrive, or even exist, if they are not good at what they do. Their ability to deliver results keeps clients coming back for more. There are different types of lead generation techniques nowadays, which include email marketing, B2B telemarketing, and appointment setting that can be used depending on the needs of the client.

Improving Customer Care with Outsourcing

Tue, 8 Jan 2013 00:00:00 -0800

Customer care has become a crucial part of small and even established businesses. Consumers nowadays are able to share purchase sentiments through word of mouth and social networking sites.

An article posted at Business2Community.com shared customer care-related facts from studies done by Forrester Research. It stated that 64% of organizations got below average ratings last year for customer care, which resulted to nearly $83 billion in losses accrued by US-based businesses.

The losses indicate a window of opportunity for organizations to improve their customer care services to win back and draw more customers. Outsourcing is one of the best tools used to provide customers easy access to customer care specialists, and enables business owners to concentrate on more important segments of an operation.

Here are other benefits of customer care outsourcing:

Refine Customer Service
Whether your goal is to generate more leads or address customer issues, outsourcing will enable you to employ global talent or experts in the field. Outsourcing providers are also well aware of the market, which is why executives can use this to their advantage. They can also customize the customer care environment according to the requirements of the business.

Constant Availability
Majority of customers are normally preoccupied by their work, school, and chores during business hours, which is why it is better to have a team on standby after their usual 9-5 routine. For small businesses, it shows that they put their customers first and projects more authority.

Drive More Value to the Company
Although customer care is the star of this post, let us not forget the fact that your business depends on its ability to grow and prosper. Your main goals are to sell your business' products and services.

By outsourcing customer care, businesses executives can allocate their time and focus on the core functions of the operation.

What's In Store for the IT Outsourcing Sector?

Fri, 4 Jan 2013 00:00:00 -0800

2012 has definitely been a roller coaster for the IT outsourcing industry. Various activities contributed to what the sector is now. These are: merger and acquisitions, rise of new markets, operations being more goal-oriented, and challenges with cloud adoption.

Well-renowned IT information site CIO.com shares top predictions from various groups in the IT services segment for the plausible trends in 2013. These are:

1) High-valued jobs will be brought home.
Businesses that subcontract work offshore are anticipated to bring work back home for these reasons: work is done better locally, vendors do not meet their standards, and offshoring rates are fluctuating. However, basic tasks will still be outsourced.

Low-level and routine tasks will remain with third parties while higher value positions like capacity planning, architecture, and configuration management will move back in.

2) Possibility of domination.
It is predicted that a Chinese company will acquire an Indian or US firm.

3) Integration will still be an issue.
During the early stages of transition, partnerships will face more integration challenges if these are not planned properly.

4) A new IT delivery model will take center stage.
The service integrator model, which was introduced this year, will be picked up and tested by several organizations. Buyers are particularly interested in its ability to reduce headcount. It is also a tool for them that will help bring innovation.

5) New suppliers post new risks.
IT buyers will still contemplate if they will renew contracts or if they should push through with a different service provider. However, the latter entails more risks and threats to the operation, which is why many are expected to renew deals.

6) More flexible pricing models.
As customers faced more budget constraints this year, they are likely to seize every opportunity that empowers them when it comes to costs. Same goes for the providers that are looking to earn more. This is where flexible pricing models will come in handy, which is anticipated to help pave the way for transaction-based processes.

7) Buyers will try it on their own.
Now that outsourcing is more commoditized, the number of business owners who have tried outsourcing will decide to do it on their own, on their terms.

8) More local delivery hubs.
Providers will try to put up hubs locally which will act as the brain of all their delivery centers. This will enable them to provide services at affordable rates while maintaining balance in the operation.

9) Management practices will improve.
Buyers will be stricter in selecting the cream of the crop amongst hundreds of service providers, because they will be more focused on value-driven schemes that go beyond costs. They will also include cloud solutions that are straight to the point and are highly secure.

Strategies for the Growth of IT Firms

Fri, 28 Dec 2012 00:00:00 -0800

The information technology sector presents two challenges for businesses. First, they are pressured by the growing market demand for innovative products and services. Also, there's always the pressure in working within a specific budget, if not surpassing their projected sales.

A post at ISG-One.com shares five strategies used by major businesses that were found to have helped them grow and achieve their goals:

Change should originate from the top.
In order for organizations to have a sound structure during the transformation process, it should start from the core divisions such as the top management. This way, it is at a favourable position as it is where the decision-making process takes place.

Use the best possible operating model for your business.
There are a few types of operating models in the market today. It is crucial that thought leaders and decision-makers select the one that will help drive growth across the entire business. It should be designed for the business and not a generic one that is often used as a template by some firms.

Closely monitor each activity.
As the transformation is taking place, it is advisable that the cause and effect are noted down and closely monitored. This way, executives can review each process and gauge if they are getting anywhere near the goal. It will require a considerably large investment, but it will be rewarding in the long run.

Always consider the technical and architectural aspects of the transformation.
Make sure that the IT transformation will work all throughout the organization or does not have adverse effects if integrated. This will help clearly define the path of a firm's growth and also how it will be managed as it evolves.

Use the multi-sourcing delivery model.
Multi-sourcing is anticipated to become the premier delivery model next year. It offers a lot of benefits and is said to be user-friendly. However, it should be integrated carefully to avoid disrupting ongoing operations.

10 Ways to Maximize the Benefits of Outsourcing

Thu, 27 Dec 2012 00:00:00 -0800

Outsourcing has evolved rapidly over the years. It can now be accessed through several delivery models, and is already applicable to numerous types of services. But since the ways business executives manage operations have also changed, there are unpredictable instances that lead to problems between providers and clients.

BDaily.com lists 10 ways businesses can utilize outsourcing for their internal operations, as well as tips on how outsourcing relationships can be reinforced.

Always put your best foot forward.
Having everything mapped out before the start of the operation helps both parties to clearly identify goals. This way, everything can be easily tracked, specifically the deliverables of the service provider.

Create an agreement that works both ways.
Contracts should have a margin for changes to prepare the operation for inevitable events. These should be able to protect and guide each party as the operation progresses.

Work as one.
Providers should be treated as part of the internal team. However, the client side should be able to adapt to the changes brought about by the external team. This way, the team will be able to pull through no matter what challenges they face.

Transparency is key.
An open communication and open mind can help strengthen any outsourcing relationship. This way, concerns and suggestions can be easily addressed on a timely manner.

Have a mutual understanding.
In line with having an open communication, parties should be on the same page when discussing crucial matters.

Be open to changes.
As they say, change is the only constant thing in our lives, especially in business operations. Change can help drive innovation and productivity, and avoiding it can lead to slow business growth.

Learn to get along.
Trust is crucial in any relationship. If each party commits that they will remain loyal and be confident with the strengths of each other, they will grow together as a team.

Step up above the rest.
Providers should not only deliver, they should also strive to surpass their commitments specified in their contracts. This way, clients will see that they are real partners in the business.

Proper management of operations.
Each party should monitor each other's progress properly and maintain their focus so that they are not overdoing processes, which could result to problems in the future.

Focus on one goal at a time.
Focus on the business' goal. Do whatever it takes to reach the objectives without straining the client-provider relationship.

Results of the 2012 Outsourcing Predictions

Wed, 26 Dec 2012 00:00:00 -0800

Cloud computing, offshore application development, and a different sales and marketing approach were all included in the 2012 outsourcing forecast created by CIO.com and outsourcing experts last year.

In an article posted at CIO.com, Stephanie Overby dissected the real score of those predictions as 2013 is fast approaching.

Exactly as predicted

Last year, it was prophesied that "2012 will be a mixed bag of M&A activity," which is how it turned out. There were minimal acquisitions and providers focused more on better deals with buyers. Smaller companies acquired by larger firms are poised to function internally and also through the services division.

Another is the prediction that outsourcing clients are more concerned with the output than just savings. Buyers turned to an outcomes-based business model because providers underperform and oversell.

Lastly, buyers are considering other regions that are feasible to outsource to, although it is still the leader globally due to the fact that it has a large workforce equipped with various skills and its world-class infrastructure.

Not quite exactly right

Experts believed that the cloud hype will eventually die down in 2012. Unfortunately, that wasn't the case. Businesses were highly intrigued by the benefits of using the cloud for operations which in turn increased its hype. Although interest on the process is high, adoption and procurement remained low due to security issues. Moreover, infrastructure outsourcing, which was predicted to proliferate offshore, remained aground.

Talent gap was also predicted to fuel multiple cases of sales managers being let go. The problem seen was not all account executives and salespeople understood the products and services being sold.

Domestic app development growth is also listed down as a possibility last year, but the lack of infrastructure and expensive labor rates locally made it impossible to be done.

Things that are yet to come

Several predictions can be found somewhere in the middle of the outsourcing conundrum. Buyers are still unsure if they should purchase now, which process should they avail and from where.

Smaller deals were also found in this specific group of predictions. Furthermore, multisourcing will be highly deliberated as providers that landed smaller deals are looking to renew next year and attain much larger deals.

Businesses were seen in between inshore and offshore operations. There is no concrete way of identifying which delivery model they will further adopt. In addition to that, providers became flexible in deals and terms, but not all were open to those types of drastic changes.

Lastly, issues on IT security were anticipated to be the main concern in outsourcing. Although there were a lot of security-related challenges and issues that rocked the IT segment, only a small number was related to outsourcing.

Why Outsourcing is still a Powerful Business Tool

Tue, 18 Dec 2012 00:00:00 -0800

Over the years, outsourcing was able to help numerous businesses all over the world. Even with the recent slowdown seen in the information technology (IT) outsourcing space, outsourcing is anticipated to remain resilient due to the following reasons posted at InformationWeek.com.

Adoption of cloud technology
There are several processes involved in outsourcing. These include network monitoring to third parties and hardware maintenance. Outsourcing enables businesses to rearrange internal structure and streamline processes, as noted in the 2012 State of IT Outsourcing survey done by InformationWeek.

Businesses can operate continuously and globally
Apart from the benefits of tapping a global-graded workforce at a lower cost, the difference in time zones helps businesses operate round the clock. For instance, call centers that need to operate 24/7 outsource to countries like India and the Philippines to cover the night shift.

Outsourcing also broadens a business' market reach, especially for countries that are currently growing and are seen as potential markets.

Working permit and visa challenges
Foreign workers who are crucial to the operation usually have to deal with H-1B visa and employment permit issues. These things usually take time to process and are difficult to come by since only 65,000 are allowed each year. This is simplified by outsourcing work overseas.

Skills mismatch
Some positions are often difficult to fill, specifically the ones related to information technology. There are job openings, but candidates usually do not have the skills needed for those positions. Other emerging markets deal with mobile technology, big data analysis, and online processes. Unless there's an upsurge of skilled workers, businesses will rely on available talent in other countries.

Lessen expenses
Transferring work to offshore outsourcing destinations that are experiencing vast economic growth is still highly considered by major companies as labor rates are relatively lower. Labor arbitrage is highly considered for high-valued services such as engineering and programming.

What Niche Outsourcing Providers can Offer to Businesses

Fri, 14 Dec 2012 00:00:00 -0800

Businesses that outsource internal processes are often perceived as entities that are looking for budget solutions. Before, if a company wants to outsource a specific process, they acquire the services of a large multi-service outsourcing provider. Nowadays, it can be subcontracted to smaller, niche-driven service providers.

RDB Consulting Service Delivery Manager Gerrit-Jan Albers shared several promising benefits of each outsourcing service delivery model at ITWeb.co.za:

Niche outsourcing providers are focused on a specific service or segment of IT outsourcing and often times, they are smaller. It is said to be more efficient and effective and is a means to reduce excessive bureaucracy that is common in large providers. What makes niche providers attractive to clients is the fact that it is much easier to terminate a single contract than a bundled one, which is why they are believed to be more passionate with their work as the entire company's reputation depends on their output. Moreover, a lost deal is detrimental to the success of a niche IT service provider, making each contract count.

Multi-sourcing companies execute several processes and are typically much larger in scale.They offer a complete package for businesses that are looking to outsource multiple processes. Most business owners think this route is easier as they would only need one contract instead of managing several service vendors. However, large outsourcing providers specialize in one or two segments and the rest are identified as "add-ons". This leads to inconsistency in the quality of their output and contract. Moreover, costs are harder to manage and track when dealing with a single provider that offers multiple services.

What Social Media Marketing Outsourcing can Do for You

Tue, 11 Dec 2012 00:00:00 -0800

Social media has evolved from being a mere avenue for personal engagement and connection to a means for businesses to broaden their reach, make new professional connections, and engage with their customers. One business strategy seen profusely used by marketing experts is outsourcing, which is aimed to shoulder additional work that can no longer be accommodated by an organization, or to simply cut overhead costs.

Alleli Aspili, SSG Specialist at Infinit Outsourcing, Inc., shares her insights about social media, its uses, and how companies maximize its benefits in an article posted at Business2Community.com.

Social media is used by organizations from different backgrounds and industries to improve and reinforce marketing strategies. For instance, it enables businesses and users to connect with other organizations and individuals who might be interested about the brand or product.

During its early stages, social media was only used to establish personal connections. But as businesses developed, they were able to use it to their advantage. Social media was able to help small and start-up businesses grow and reach potential customers in other areas. Soon after, business to business deals ensued which enriched the world of commerce. Strategies were made to attract more users and businesses developed more tools for other businesses.

As social media campaigns became more elaborate, companies started to outsource social media marketing so that implementing and monitoring social media campaigns are streamlined. However, a lot of people are not confident in doing so because they feel that the company's brand and image should be managed by someone who knows the company fully.

When people hear the term social media marketing outsourcing, the first thing that most of them think about is an external provider that manages all replies, works on increasing the number of followers of an account, etc. In general, they feel that the social media profile is an external part of the brand or company.

However, not all social media marketing outsourcing providers do the same thing. Some have a template for delivering their services while others have a flexible services menu. Also, strategies still come from the client and the service provider will be responsible for executing tasks according to the standards and requirements of the client.

Why Businesses should Outsource

Mon, 10 Dec 2012 00:00:00 -0800

A post at Business2Community.com lists seven reasons that make outsourcing a feasible solution for basic and complex processes such as accounting & payroll, HR, IT services and customer and tech support.

Proper redistribution of workload
Outsourcing enables business executives to focus more on the operation and critical procedures. It also frees up financial resources that can be used to help the company be more productive.

Perfect for SMBs and start-ups
Since most small to medium businesses and start-ups face financial challenges during the early stages of the operation, outsourcing would be the most pertinent solution to ease financial burden by providing access to a more economical and skilled workforce.

Reduction of overhead costs
Most of the time, back office functions such as data entry are repetitive. This often leads to additional overhead costs for the company. By outsourcing, processes can be done efficiently at low costs.

Proper management and order of operations
Depending on the processes covered, outsourcing specialists have the necessary skills and can bring a better perspective in terms of management. This is ideal for companies that are currently having problems in finding the right people to handle a team - at a lower price.

Build better relationships
Over time, clients and service providers are able to establish good working relationships as they see good results of working with each other.

More flexible operations
Processes and the number of employees can be customized according to the needs of the business. They can easily upgrade technologies used and increase the number of employees when needed.

For a seamless operation
Outsourcing is an answer to business continuity. If ever something comes up, the company can count on their service provider to continue operations and provide support to the entire team.

Outsourcing Web Development Offshore

Wed, 5 Dec 2012 08:00:00 -0800

Business owners nowadays want a website that could not only help broaden customer reach but funnel sales as well.

In an article posted at StartUpSmart.com.au, Dean Ramler shares his insights on several scenarios that may come up when business owners decide to put up a website, especially when it comes to the website's capacity to handle mass traffic.

Create an internal team.
Having an internal team enables business executives to keep a close eye on the progress of a project. Immediate concerns will also be addressed more properly and changes can be made straightaway. The problem is, it's hard to find the right web developers who are equipped with the right skill at the right price.

Form a tie-up with a local service provider.
Entrepreneurs who do not have any experience in creating websites can partner with a local service provider. They will take the owner's website preferences and create one according to the client's specifications.

Often times, they will not work directly on the website as they will probably outsource web development offshore. The upside is they will not have to manage the team - the service provider will do this for them.

Outsource web development offshore.
If budget is an issue, offshore outsourcing is definitely the way to go. Start with a template and ask your outsourced team to customize as your business grows.

Why You Should Outsource Telemarketing

Tue, 4 Dec 2012 00:00:00 -0800

Each company has its own telemarketing needs. Some may be inclined to outsource the process to beef up sales figures while others just need to maintain the demand from the growing market.

A write-up at Business2Community.com lists three scenarios in which outsourcing telemarketing may be the best option for the entire business.

Business owners should consider outsourcing telemarketing if:

You're planning to saturate a new market.
Businesses that want to broaden their reach will get a better chance by outsourcing telemarketing processes. Even if in-house telemarketers are doing a superb job in making a sale, it will not be the same with new accounts or new markets as these can be considered as new targets.

Telemarketers can help in accommodating additional lead generation tasks as well as in doing market research and even basic marketing tasks. They will also be able to support irregularities in operations during the transition or the big move to newer markets.

Goals are not met.
An outsourcing team of telemarketers can help reinforce dwindling sales results by providing better strategies and a different perspective on what's trending in new markets, especially international ones.

The business is just starting up.
Because start-up businesses usually have the least experience in the field, they do not have a concrete plan for sales targets and it will take some time and money. Having an experienced team on board can provide guidance in the dos and don'ts of lead generation processes.

PR: Do it In-house or Hire a PR Agency?

Tue, 27 Nov 2012 08:00:00 -0800

There are several ways businesses can improve branding, and one of them is keeping marketing strategies updated. Having a good public relations (PR) approach and using different types of media can help businesses improve their presence among consumers. Traditional ones such as print, radio, and television are still effective and are widely used by advertisers, but as technology and data gradually become more mobile, majority of consumers can now be found online - which is another medium to consider.

PR covers different aspects and is a time-consuming process. Many companies have their own PR departments in-house, but for some businesses especially start-ups, they may not have enough manpower and resources to develop an effective PR strategy. They may hire a PR agency or even consider outsourcing.

An article posted at Guardian.co.uk shows the benefits and drawbacks of doing PR processes in-house and hiring a PR agency.

If you decide on creating an in-house team, you should be equipped with the right information by performing a SWOT (strengths, weaknesses, opportunities, and threats) analysis. Your strategy should be well-thought of and be cascaded to all members of the production team. This will help you have a unified goal and reach the target market using the appropriate media. There are also several ways business executives can learn the trends in the PR & marketing arena. They can take media training courses that cover writing and media processing to achieve marketing goals.

However, setting up a PR team is time-consuming. Even its basic processes will have a long turnaround time.

If you choose to hire an agency, it will definitely cost more but will enable you to focus on more important things like the development of the product that will be launched, or supply chain issues in certain regions of the country. PR agencies have the skills needed to formulate the right plan according to the requirements of the company and/or products/services. Present your objectives to PR agencies and ensure that they understand it fully. It would also help if you give them a unique selling point or how you want to be seen by consumers. For small projects, hiring a PR agency is a good idea as it will help reduce overhead costs.

What Small Business Owners Should Know

Mon, 26 Nov 2012 08:00:00 -0800

In a write-up posted at TheStreet.com, Laurie Kulikowski shares important things that start-up and small business owners should know.

First, she cited the article from TheAtlantic where writer James Fallows said business owners as well as employees should avoid including personal comments in emails, especially ones that could create a scandal or problem in the company. It includes gossip or harsh criticism of an employee. One thing people should remember in emails is that data can be easily monitored, stored, and sometimes, hacked.

Another one is outsourcing. It enables business owners to subcontract a wide range of processes to service providers that charge at a lower rate. It also helps solve talent shortage issues. For instance, if a business needs a new design for their website, they can outsource web design tasks to an offshore to service provider or freelancer who can do it well at a fraction of the cost.

Lastly, one of the important things to remember is to make use of the available marketing tools. If there's one thing that is crucial to businesses, it's definitely acquiring more presence online because that's where the customers are. Everything is becoming mobile, thanks to the internet.

Business owners can make use of social media marketing, search engine optimization, and more interactive processes that can help improve consumer engagement and spread the word about the company.

The Pros and Cons of Crowdsourcing

Wed, 21 Nov 2012 08:00:00 -0800

Crowdsourcing is the combination of the word �crowd� and �outsourcing�. It basically means that processes can be outsourced to a crowd of freelancers. Organizations that still have their internal managers and employees often make use of crowdsourcing to address talent shortages.

For instance, a client goes to the provider with a specific job order, the provider then asks several freelancers to send a sample, or work on the task. Ultimately, the client will select his/her preferred freelancer.

Brad James deconstructs crowdsourcing in his article posted at Business2Community.com. His article highlights the cost benefits of crowdsourcing, and identifies its pros and cons.

When it comes to cost, he said businesses that are trying to avoid huge overhead costs are often caused by hiring external providers or employing an additional internal team. With crowdsourcing, you only pay for what you've utilized, which is typical in freelance-based operations.

Crowdsourcing providers earn by charging a services fee or taking some sort of commission from the freelancer's reward.

Advantages:

- Portfolios do not mean much as long as you can deliver what clients want and when they want it.
- It is more cost-effective for clients.
- There is an endless supply of new ideas.
- It enables businesses to tap international talent.

Disadvantages:

- Freelancers usually get paid at a lower rate.
- It will be hard to track each person's work and retain top level talent.
- Freelancers who are involved in crowdsourcing are usually beginners and are ready for mass production.
- Traditional providers are overtaken by crowd-based providers because they charge more.

All in all, businesses can use crowdsourcing to the benefit of their financial situations whereas beginners and those who are looking to make extra money can partake when crowdsourcing agencies call for orders.

Game Changers in the IT Services Arena

Tue, 20 Nov 2012 00:00:00 -0800

In an article published at CloudTimes.org, Gartner Inc. said the information technology (IT) sector is changing as it is leaning more towards mobile-based technology and data. David Cearly, Vice-president at Gartner said mobile-based processes are overtaking desktop-based technology. Some of which are mobile devices, social media innovations, cloud computing as well as web information. IT companies are now encouraged to address the growing demand for mobile services, specially the cloud-client architecture.

With this shift in the IT environment, the skills of IT employees are also anticipated to change. Front-end developers and designers should now consider mobile capabilities that are compatible with different browsers and mobile operating systems. Cearley also noted that consumers have new perspectives and expectations that should be addressed by application developers and designers.

Miko Matsumara, Senior VP for platform marketing and developer relations at Kii Inc., said the developers of today rely heavily on the cloud and have shifted from traditional architecture. He added that client cloud is similar to a programming platform, language, and model.

Meanwhile, Jim Duggan, Gartner's VP for Research, said by 2015, mobile applications will be at the forefront and have surpassed static technology by 400 percent. Firms should also look into training programs for developers and outsourcing.

Gartner analysts predict that in the near future, businesses will allocate more funds on IT and will employ a Chief Digital Officer (CDO), and by 2015, 25 percent will have CDOs.

Another segment that is anticipated to grow is cloud security due to the increasing compliance regulations. Furthermore, Gartner sees enterprise service providers to acquire cloud-based identity access management solutions. Eighty percent of cloud security issues next year will be related to administrative errors and user management issues, said the firm. They also believe that 60 percent of large companies will only give mobile network access connectivity to their employees.

Is the Concept of Outsourcing still Effective?

Mon, 19 Nov 2012 00:00:00 -0800

The presidential elections in the US must have amplified the negative implication that the term outsourcing has.

An article in CIO.com proves that a lot of service providers want to break away from the negative idea and want to be known as something else, something better.

The article highlights a study done by Hfs Research, an outsourcing analyst firm, in which 63 percent of IT leaders said they would like to remove the term "outsourcing" when speaking of the IT services that they subcontract to third party providers, while 68 percent said they do not want to be associated with the term.

According to Cliff Justice, Partner in KPMG's Shared Services and Outsourcing Advisory, outsourcing is beginning to evolve. In his report "The Death of Outsourcing", processes and delivery models are said to be shifting from basic cost-cutting processes to more complex operations that deal with the client's higher expectations and provide tools that help businesses operate. He also mentioned in the study that customers and providers should come up with fresh ideas regarding outsourcing.

His report pointed out that entrepreneurs should look at which process would best suit their business. They should think of it as an "extended global enterprise" where they can make use of, and combine, insourcing, outsourcing, or offshore outsourcing.

In an interview, Cliff Justice revealed that the shift in the industry began around 2006-2007 and that outsourcing has evolved as a commodity instead of a special service. Businesses which are well aware of the outsourcing processes use it to enable their business to grow and mature, and are actually only purchasing the services that the business needs and help them achieve their targets. It has resulted to new products, collaboration, and innovation.

The Philippines as Destination for English Lessons

Wed, 14 Nov 2012 00:00:00 -0800

An article posted at www.BBC.co.uk stated that the Philippines is rapidly becoming known as a destination for affordable English lessons. Foreign students were said to be flocking to the country to enrol in English-speaking universities to learn how to communicate in English.

Factors that were found to have contributed to the growth in the number of foreign enrollees are the inexpensive fees and neutral English accent. If compared to English-speaking countries such as the UK, the US or Australia, the Philippines is singled out by Russian, Iranian, Brazilian, and Libyan students who want to learn English as it is more economical to study the language in the country.

An English teacher cited that her school's fee of $500 (�313) for a 60-hour class is only one-third of the same course in Canada or the US. Furthermore, the ability of a Filipino to speak with a clear American accent makes the country more ideal for learning the English language.

The country is also home to a lot of companies that offer call center services, where employees are often trained to speak like an American so callers will understand them easily and will not know that they're talking to people who are not from the US.

The Philippine Immigration Bureau announced that 24,000 candidates applied for a permit to study this year, far from the 8,000 back in 2008. Another positive factor for the Philippines is that most of its universities teach lessons in English.

According to Cristino Panlilio, Undersecretary of the Department of Trade and Industry, the Philippines is ready to accept more students and as the demand increases, the country should likewise improve marketing strategies to address the trend.

Managing End-User Computing Costs

Mon, 12 Nov 2012 00:00:00 -0800

There are times when companies experience fluctuations in end-user computing (EUC). This could result to large overhead costs or budgets falling short. However, it is more common for an organization experience an increase in demand which is why some businesses encounter challenges, especially in dealing with the service provider and costs.

Info.ISG-One.com shares five ways on how businesses can manage EUC costs properly, while making the most out of the entire operation.

1) Coordinate with your service provider. Service providers know more about the environment than the clients. So who better to ask regarding the ratio of full-time employees to end users? Providers are also likely to point out which ordering and delivering processes clients could focus on.

2) Regularly monitor and update changes in device usage. Properly track each device. See if it's idle, left behind by a former employee, returned properly when new orders came or if it is in storage. This will help clients as well as providers have a concrete idea on what's actually going on and if each device is being accounted for properly.

3) Create an agreement based on usage. Recommend provisions regarding chargeback principles so that each job order, delivery, and usage of all the devices will create a benchmark that can be used for future transactions. This will also enable clients to provide accurate data if discrepancies in billing show up.

4) Review invoice. Closely monitor invoice sent by the provider. Having proper financial management ensures clients that no unscrupulous charges show up.

5) Review warranty policies. Original equipment manufacturer (OEM) warranties have expiration dates. If devices are retained beyond their OEM warranty, clients should contact EUC service providers for upgrades or complete change of units before these expire.

Q3 2012 Outsourcing Activity Slows Down

Fri, 9 Nov 2012 00:00:00 -0800

According to a study done by research and consultancy firm Everest Group, the outsourcing activity for Q3 2012 fell 20% year-on-year, from 472 during 2011's third quarter to 381 in the same quarter this year. The value of outsourcing deals also decreased.

ComputerWorld.com shared insights about the Everest report, where it was found out that the drop in Q3 is more worrying than Q2 figures, because it is the quarter that is supposed to post the highest activity in the outsourcing industry.

Key influencers during Q3 are the political opinions at the presidential election campaign in the US as candidates were lobbying to bring jobs back home, and the economic challenges in the US and Europe.

Several financial organizations in the US even avoided activities related to offshore outsourcing to countries like India and the Philippines as they've received grants from the government amidst the peak of presidential campaigns.

Offshoring accounted for 47% of the entire number of contracts during Q3, and 38% of which were rewarded to countries in Asia.

Everest noted that they were only able to gather data from companies that publicly shared information, new contracts, and renewals. However, it was said that if private contracts were included, it would still fall short compared to Q3 2011.

Also, the report shared that the value of business process outsourcing (BPO) contracts fell year-on-year from 2011 Q3's $2.7 billion to $1.5 billion for third quarter this year.

Sizes of contracts are shrinking in almost every segment, according to practice director for global sourcing at Everest, Salil Dani.

IAOP's Outsourcing Predictions for 2013

Wed, 7 Nov 2012 00:00:00 -0800

A lot has happened this year for the outsourcing industry. With fluctuating economies and different business climates and political environments, shifts in the outsourcing market were seen as well as mergers and acquisitions.

The International Association of Outsourcing Professionals (IAOP) released the sixth instalment of their annual outsourcing trend predictions at Marketwatch.com. The organization believes that 2013 will be eventful as buyers will be more cautious in transactions and relationships and opportunities will increase.

Some of the highlights included in the 2013 outsourcing predictions are the upsurge of nearshore operations, and offshore operations are anticipated to slowdown. Moreover, emerging countries will see the domestic markets mature.

Other key drivers anticipated to influence the segment are corporate social responsibility (CSR) and impact sourcing, nearshore and onshore destinations, professional certifications, and data protection and other IT solutions.

The top outsourcing trends for 2013 are:

Local Providers - Amidst the continuous economic slowdown and tax issues, the US government is working on programs that will improve demand for local sourcing.

Data and Information Collection - Proper collection and analysis of data will be vital as business process outsourcing (BPO) businesses become classified as provider of common goods or services.

Substitute Source for Energy - As the cost of power is still on the rise and power disruptions are unpredictable, service providers that house large data and telco centers try to find alternative sources of energy like solar and wind.

Digitized Advancements - Internet-based software like social media will influence the growth of outsourcing under different segments.

Data Protection - Data protection will still be an issue next year, which includes problems in the availability of systems, technology, and networks.

Aptly Skilled Employees - Talent and skill are still crucial factors for the success of an operation.

Corporate Social Responsibility - Providers will focus more on impact sourcing or the effort to promote fair wages and labor practices, eco-friendliness while gathering support from locals, and working on a sustainable operation.

Real Deal Partnerships - More buying and selling activity will be seen in the coming year.

Advanced Control and Governance - Part of the risk management strategies of firms will include proper governance of operations.

Compliance with Industry Standards - Provisions regarding legal, financial risks will still be stipulated by the government. They will ensure that providers as well as clients are complying with the regulations of the government.

Processes that can be Outsourced by Start-ups

Mon, 5 Nov 2012 00:00:00 -0800

One of the main challenges encountered by start-up businesses is the lack of skilled employees for specific processes during the initial phase.

For instance, a business owner who is an expert on web-related processes may not have the time and skill to manage the financial aspect of the operation. Cases like this delay the progression of projects and the growth of the business. This is where outsourcing can be helpful.

According to Forbes.com, proprietors today typically outsource these types of processes to service providers:

1. Talent Acquisition and Employee Management
HR processes are time-consuming. Often times, HR employees handle tasks that need to be resolved immediately such as background checks of candidates, interviews, management of employees' benefits, etc. The outsourcing services provider can handle all of these at a lower cost while completing the manpower requirements of the client.

2. Financial Executives
Businesses which are racking up revenues of $250K and above need a chief financial officer (CFO) to oversee financial plans and the bookkeeping team. The ones that are not in this range may still need to outsource finance and accounting to take advantage of the labor arbitrage.

3. Accounting
If a business doesn't have enough resources to hire a CFO, bookkeepers or accountants will do, as all the sourcing, wages, taxes, among others, need skilled personnel to comply with industry standards. With outsourcing, start-ups can get significant cost savings while utilizing the skills of certified accountants and/or bookkeepers in an offshore destination.

The outsourcing delivery model to use depends on what the business urgently needs to be resolved. This enables start-ups to focus on their core business functions while other processes are being handled by service providers.

Building IT Outsourcing Relationships

Thu, 1 Nov 2012 00:00:00 -0800

There's more to an IT outsourcing partnership than the give and take process, especially when IT executives are expected to drive innovation and overall performance of an operation. CIOs are expected to know the latest trends in technology, plus the IT environment in each niche, but how can they take full advantage of IT outsourcing partnerships, specifically for long-term contracts?

One of the most important factors is of course, the cost. With that, what elements in outsourcing relationships can cause drastic changes in a company's IT division and operation?

CIO.com lists five important points that can affect outsourcing costs and relationships in general.

1) Scope of services
The type of services to be rendered is by far the most crucial cost driver. What buyers can do is look for a deal that is detailed and covers all the areas that need to be worked on.

In some cases, clients present providers what they exactly needed without margin for additional steps and processes. This then gives providers the upper hand as they usually give a more exaggerated proposal so that when it's time to negotiate, they will arrive at a more favourable position for the providers.

2) Customizable Service Level Agreements
More often than not, providers use a template service level agreement which they present to the buyers. This serves as a base for the different provisions and definitions of the entire contract. For higher levels of services, of course they would have to modify accordingly to meet each other's criteria.

Buyers should understand the needs of the providers and avoid low-balling them as this will affect the latter's performance, and the entire operation. Both parties should be diligent in pricing during the negotiation period and point out if there are any discrepancies.

3) Transparency between parties
Like in any other relationship, having an open and transparent relationship can help foster a healthy working environment. They will be more comfortable in voicing out their concerns. But clients should not forget about who's in charge of the operation and if deadlines and job orders are being met properly. Making providers feel that they are part of the company's growth will also go a long way.

4) See what's in store offshore.
Although offshore outsourcing presents more risks, this specific delivery model can help alleviate costs due to labor arbitrage. There are also benefits in outsourcing offshore as expertise in each region usually varies.

5) Consider the effect on the processes.
Clients usually fixate on the cost-cutting benefits of outsourcing and fail to consider the potential improvement of the process itself. They should ask the providers what tools can optimize and drive down the costs of an operation. Providers likewise should always inform buyers if there's a new practice or tool that can decrease costs.

Things to Consider Before your Outsourcing Contract Expires

Wed, 31 Oct 2012 00:00:00 -0800

Every outsourcing relationship is bound to be renewed, if not terminated. Several things can happen during a renewal of an outsourcing contract. This could mean new providers, ones that are not familiar with the operation, will be undertaking what has been left by their predecessors. Another is miscommunication with old management and having new providers will result to failure and additional costs as the transition will take a toll on the budget and time of the internal management.

An article at info.ISG-One.com tackles five ways companies can circumvent problems in case the current provider is not inclined to renew the contract.

Get a head start.
Reinforce your internal competency before a contract expires, so in case something goes wrong, your organization is already built around finance and legal experts, as well as important clients. This is especially significant to companies with several delivery centers across the globe. In other words, formulate a contingency plan.

Closely observe evolution of the industry.
Create a list of critical factors that you would like to be covered in your new service level agreement. Observe if your previous business model still complies with the updates and current industry standards in terms of technological capacity, delivery models that are available, and rates. Focusing too much on the price might derail the main goal of the pending operation.

Review your sourcing policies.
Service providers are known to have several supplier contacts. Do some research if it's more affordable and convenient to go straight to the supplier or if it is better to have the provider handle the sourcing processes.

See what is out there.
Businesses can typically learn from new providers by issuing a request for proposal (RFP). You will be able to see outsourcing in a new perspective as the providers with whom you haven't worked before will bring new ideas to the table.

Show your company's worth.
Large contracts that are well above the US$100 million bracket can be more valuable if properly presented to your account executive's organization. This can help you retain certain strengths as well as keep business continuity if the provider decides to stay.

What's in Store for the Tech Industry in 2013?

Tue, 30 Oct 2012 00:00:00 -0800

With the rapidly changing information technology environment, renowned technology and research consultancy firm Gartner shares its top 10 IT trends for 2013 at ComputerWorld.co.nz.

The list includes specific segments that are seen to influence not only the internal processes of an organization, but the behaviour of the market as well.

1) Mobile devices showing strong activity
Although mobile devices have nearly taken over IT departments, Gartner says it will not completely wipe out the use of PCs as not all divisions are required to use mobile applications, for now. As other platforms such as the Apple-based medium and Android arise, Windows will no longer be the only platform for companies.

According to an expert, in 2015, media tablets will soon catch up with laptop shipments, and Windows will be the last, lagging behind Apple and Android.

2) The evolution of HTML5
Native apps will still proliferate due to the recent developments in HTML5.

3) Users will be more inclined to use the cloud.
Because the uses and capabilities of the cloud are endless, more and more users will be inclined to store data and get information using the cloud and it will be long before a company or application surpasses it.

4) Everything will be connected through the internet.
Things will be made easier as processes will be more digitized and interconnected. It will be the dawn of the simplification of things.

5) Cloud services will also evolve.
With the continuous adoption of the cloud, more services will be designed for its usage, and of course, security.

6) Big data in the big picture
Big data projects are now more manageable and more ideal for companies since servers and CPUs have become more affordable.

7) More accurate metrics
Metrics like analytics will be used more to map out future strategies and point out which areas need to be improved based on past projects.

8) Faster in-memory computing
Information can be stored on a computer for a specific purpose and this is called in-memory computing. It will be more important in the coming years as users will be looking for real-time answers to their questions and needs.

9) Virtual appliances
Like everything that is becoming digitized, virtual appliances will gain more traction to respond to the increasing demand for virtual applications but not necessarily take over physical appliances.

10) Apps for enterprises
Companies will need to purchase apps that are specifically made for large companies. They would have to acquire licenses to maximize the potential of the app in an enterprise setting. IT departments will be the ones that will scout for app developers and of course, this is part of the sales talk.

Why Choose the Philippines as an Outsourcing Destination

Tue, 30 Oct 2012 00:00:00 -0800

The Philippines is currently one of the major players in the global outsourcing industry and is the current leader for voice-based processes. Here are several reasons many companies from all over the world choose to outsource business processes to the Philippines.

The Challenges in the Philippine Animation Industry

Wed, 24 Oct 2012 00:00:00 -0800

An article at ph.news.Yahoo.com points out some of the country's challenges in developing the local animation and gaming industry.

The article highlights a report from MarketsandMarkets, an international research firm. The report predicts that the global animation and gaming market will accrue a compound annual growth rate (CAGR) of 12.94 percent from 2010 to 2016, which translates to $242.93 billion.

According to the Business Processing Association of the Philippines (BPAP), animation is one of the emerging markets that the Philippine information technology-business process outsourcing (IT-BPO) industry should look into, apart from the more popular call center industry. Revenues amounting to $142 million were posted by the local animation sector during 2011, according to the Department of Trade and Industry (DTI).

In retrospect, animation in the Philippines began in the 1980s and proliferated as foreign organizations based in Canada, Australia, and the US started hiring Filipino artists who eventually became animators. This resulted to a talent shortage in the country, one of the key challenges that local organizations are currently trying to solve. Also, the Philippines lacks the necessary technology to progress in the field, unlike its Asian counterparts such as Thailand, China, Singapore, and Malaysia.

Additional Programs to Reinforce Talent Supply
The Animation Council of the Philippines, Inc. (ACPI) and BPAP are forming partnerships with several government bodies and educational organizations to improve the talent supply. Fifty multinational companies are affiliates of ACPI, with nearly 10,000 employees who work as Flash animators and web designers, graphic and art designers, mobile application creators, full 3D and 2D animators, etc.

The Technical Education and Skills Development Authority (TESDA) and ACPI designed a curriculum for the TESDA's Training for Work Program which provides 2D and 3D animation courses for trainers.

Another program was launched in 2007. Animahinasyon is a festival that showcases original animation creations from students and professionals. Dimaranan said the entries with original content are promoted in other countries and she hopes that these will soon be shown on TV.

The Industry Needs Support
It is obvious that budget is an issue for the sector to grow. For instance, Dimaranan said the funding they get from different organizations, such as the P3 million from the National Commission for Culture and the Arts and the Film Development Council of the Philippines, can only create a trailer and not an entire film. She is hopeful that other firms and agencies will provide funds to complete an animated film.

Dimaranan noted that organizations perceive animated content creation as too risky and would cost a lot of money. But if done properly, it could be dubbed in different languages and marketed to foreign companies.

Dimaranan is hopeful for the Philippine animation industry and is confident that one day, the country will be a renowned destination for animation.

Benefits of Outsourcing Community Management

Tue, 23 Oct 2012 00:00:00 -0800

Having a strategy for social media and other community channels is the newest and one the most relevant ways of marketing services and products, as well as getting in touch with consumers.

Since it is relatively new, some executives are doubtful as they are not familiar with the ins and outs of the process. Some may feel that it is not relevant. So how can businesses go about using social media for the benefit of their organizations? There are several options that, if used properly, will help a business grow. One of which is outsourcing community management to a service provider.

Here are the benefits of outsourcing community management according to EConsultancy.com:

1. Community management service providers will help you focus on your goal.
Handling a social media account such as Twitter or Facebook is easy, but managing profiles for businesses is far different from handling personal profiles. Businesses usually do not have enough time to manage their profiles. With outsourcing, that's one less thing to worry about and businesses can concentrate on their core processes.

Outsourcing community management to service providers will enable businesses to make the most out of online platforms. Providers can take on the tasks and alleviate the pressure from the employees who also work as community managers for companies.

2. Community managers are aware of the social media trends.
Community managers can be considered as innovators in the online marketing segment. Since they have more hands-on experience, they can bring a wider perspective to the table in terms of which campaigns are effective.

3. Community managers can be considered as points of contact.
Since there are several online media channels that can be utilized by a company, they can assign a specific community manager (and a team) to properly manage all the company's profiles. In this way, the campaign in each profile will coincide with the overall strategy.

Global Outsourcing Market Posts Second-Highest Q3

Thu, 18 Oct 2012 00:00:00 -0800

Technology research and consultancy firm Information Services Group (ISG) recently released the 3Q12 Global TPI Index report of the global outsourcing market in an article at SacBee.com.

The report analyzed deals with annual contract value (ACV) of $5 million and above, reaching a total of $4.8 billion. This would be the second-highest Q3 total, but it was also found out that the same quarter fell six percent from Q3 2011, and 10 percent from this year's second quarter.

A three-percent growth in ACV was identified during 2012's Q1 to Q3, which now has a total of $14.8 billion. The key drivers for the past three quarters are the active outsourcing contracts in the Asia-Pacific, more mega deals found in emerging markets, and the ongoing increase of business process outsourcing (BPO) deals worldwide. Moreover, contracts with an ACV of $100 million and above this year have already surpassed the total value of the mega deals in 2011.

According to ISG Partner & President for Research and Managed Services John Keppel, this is an upset compared to Q2's performance this year, but he said it is a known fact that Q3s are usually the weakest. Amidst the decline in figures, he said the global market is gradually becoming more familiarized with other important segments. He also expected that the market will surpass 2011's $20 billion in ACV, through the larger deals that are waiting to be closed.

The BPO segment's ACV in 3Q12, which has a total of $1.6 billion, is 12 percent higher than same period of last year. However, it fell 32 percent from this year's Q2. IT outsourcing (ITO), on the other hand, posted $3.2 billion in ACV, which is 13 percent lower in terms of year-over-year. However, it increased 8 percent from Q2.

The Asia-Pacific region is gaining momentum in 2012 among other emerging markets. In Q3, it posted an ACV of almost $700 million. It declined 51 percent sequentially but increased 55 percent year-over-year. The ACV of the region from Q1 to Q3 reached $2.5 billion, a 72 percent increase over 2011.

Meanwhile, the US posted $1.6 billion in total ACV for Q3, an 11 percent decline from Q3 2011 and eight percent from Q2. The EMEA region (Europe, Middle East, and Africa) posted $2.5 billion of ACV, 12 percent lower from Q3 2011 and a 14-percent increase from Q2.

Ways to Secure Company Data

Tue, 16 Oct 2012 00:00:00 -0800

Some organizations are able to map out their strategies by calculating the future, using modern technology. But some events are highly unpredictable which, in some cases, leave businesses with arduous problems. So what do these organizations do? They plan and learn from the experiences of others.

On the other hand, it was found out that most of the technical problems seen in companies are not because of natural disasters and unforeseen events, but due to negligence of the managers. This leads to data loss, hardware failure, and other technical glitches.

In a post at info.ISG-One.com, Cindy LaChapelle shares five things that can help companies update and reinforce backup and recovery solution strategies.

1) Perform an annual review of the company's backup strategies.
Everything is constantly evolving. The industry, competitors, consumer behavior, among others, which is why businesses should update their data protection strategies as the competition is getting tighter. This is will also help avoid any problems in the future as companies will come equipped with the necessary tools in case a problem comes up.

2) Create a clear backup plan.
When it comes to data, a more important point to look at is the ability of the system to recover lost files or the data considered as collateral damage. Having a clear backup plan also gives businesses a leg up in case a disaster happens.

3) Do an audit so that you could easily point out areas that need improvement.
One thing managers should try to avoid is the bottleneck in the system. Try to identify which areas are highly susceptible to bottlenecks as these can lead to more problems in the future.

4) Delete unnecessary files.
Older files can become corrupted or can simply become outdated. These items take up space and in some cases, attention. It is ideal to sort all data and delete the ones that you no longer need and update/restore the ones that are vital to the business, then store them properly.

5) Look for platforms that can help optimize the operation.
Look into several options for storage that can work as contingency plans. Moreover, look for the ones that can be easily adapted to cloud-based solutions. These will cut the processing time and will allow easier access.

Things to Remember when Outsourcing Training Processes

Mon, 15 Oct 2012 00:00:00 -0800

Organizations that are looking to develop the competence of their employees and improve internal operations often outsource their training functions. Apart from reasonable cost savings, firms can save time and manage their training processes better.

A post at business2community.com lists five ways businesses can take full advantage of outsourcing training functions.

You now have more time to focus on core functions.
If businesses have the resources to train employees, then there's no problem in that. But what about those who don't? It is obvious that they can't juggle managing the business, hiring, solving immediate problems, and training employees all at the same time. This is where outsourcing comes in handy. It will enable business owners to focus on more important objectives.

Businesses will have someone to help them with the transition.
Transition is part of the training process that, more often than not, frustrates the managers because it is one more thing to worry about. But, if business leaders find the right service provider that will help in applying the changes, the company will be able to make the most of what they are actually paying for.

Clearly define the needs of the business.
By simply telling them what you want to achieve, service providers will draw up possible solutions and strategies that will best fit your company. You can even give details on how you want the processes to be done so that these will be easier to execute.

Select a provider that is willing to grow with you.
Business executives should also look for outsourcing training providers that are willing to invest time and are hands-on with the project. In this way, they will have a better understanding of which areas need to be improved or if they are supplying enough resources to make the training program a success.

Open the communication lines.
Have regular meetings and hold online activities that will help you get to know your provider better. This will reinforce your business relationship and resolve problems that are waiting to be discussed, so that problems will be solved as soon as possible. Moreover, they will be more comfortable in voicing out their concerns and suggestions.

PH BPO Needs more than just English Skills

Tue, 9 Oct 2012 17:00:00 -0800

Business process outsourcing (BPO) firms in the Philippines are now looking for candidates who not only speak the English language properly, but also fair well in other crucial skills such as the ability to comprehend new, complex information and perform computer-related tasks efficiently.

An article posted at Rappler.com dissects the current challenges of the country's BPO sector. Benedict Hernandez, President and CEO of the Business Processing Association of the Philippines (BPAP), said there are a lot of job opportunities in the BPO sector today - the problem is the job-skills mismatch. This could affect the growth of the industry. Hernandez said the Filipinos' ability communicate in English is equally important to having the right set of technical skills and basic core competences, but the latter cannot be taught through training.

Many fail to meet the industry's standards.
BPAP's official screening test called the Global Competitiveness Assessment Tool (GCAT) determines if candidates fit the bill in terms of conduct, learning aptitude, politeness, compassion, and dependability. In an effort to identify the top performers in BPOs, BPAP performed a sample test on 2,500 employees using GCAT. To have a more concrete idea on what's causing the problem, 19,700 students from 72 colleges were likewise tested. Hernandez said only five percent were able to meet the qualifications of the industry across all segments.

Other sectors are facing the same problem.
People Management Association of the Philippines (PMAP) President Arthur Luis P. Florentin said experience is not enough to make it in the industry. In fact, it is not a requirement in many positions. Based on the 2010 PMAP Manpower - Critical Skills Survey where 607 businesses across 28 different industries participated, 87% said they were only requiring two years or less in experience, and 50% said they don't require it. The study also showed that 65% of job openings were for entry level positions, but candidates fell short on certain skills and knowledge.

Moreover, Florentin said high-valued services related to IT, sales, and finance fall in the 88% bracket, which require college level graduates or candidates who have attained a high level of education.

Government proposed K-12.
One of the government's resolutions is to improve the students' basic skills, which is why they came up with the K-12 program which means adding two more years in the curriculum this year.

According to Maria Criselda R. Sy, one of the directors at the Department of Labor and Employment's Bureau of Local Employment division, the program aims to make students more employable so they can land a suitable job right after high school. Furthermore, she said additional support from major industries is needed for students to learn and practice the skills required.

However, other experts said adding two more years in school will not solve the problem. In fact, Florentin said it probably has something to do with the educational system itself. BPAP came up with a talent development program worth P668 million. They are hoping that 70% of those who were nearly hired become more employable. This will then boost the talent supply of the country, adding 74,000 more candidates. Hernandez said this program can help the industry in reaching the US$25 billion revenue target by 2016.

How to Avoid Switching Service Providers

Mon, 8 Oct 2012 00:00:00 -0800

There are several reasons many business process outsourcing (BPO) clients are thinking of changing their service providers. In a post at BPOOutcomes.com, Dan Berthiaume shares what the respondents have to say regarding the issue.

According to the poll results, most of the respondents (93%) have indicated that they have already changed their providers or are thinking of doing so. To break it down even further, 57% said they wanted to but find it hard to even begin the process. Twenty-one percent stated they were able to do so but it was really challenging; 15% said they have switched outsourcing service providers and it was easy, while only 7% said they have never thought of switching service providers.

If a BPO provider fails to meet the demands of a buyer or simply can't satiate the client even with ample renegotiation, vendor management and governance, clients are usually disposed to switching to a new one. But it doesn't always have to end that way because right from the beginning, clients can already nip the problem in the bud. Here are several ways to do it:

Perform proper due diligence.
Apart from sending requests for proposal (RFPs) to numerous outsourcing providers, clients should also consider other players in the field. Use benchmarks and metrics that comply with the industry and the company, and of course, look at the reputation and portfolios to ensure that they have a pristine track record that can fit the company's goals.

Contracts should be given equal opportunities.
Providers will not appreciate a buyer who low balls them during the negotiating period. Clients, on the other hand, do not like to feel taken advantage of. Clients should look into the details on why a certain provision in the contract costs more or less. For instance, an upcoming process will cost four times more than the other services - this could be an additional expense for the entire operation as they are anticipating for more innovations that could help the client. All in all, what clients want to avoid is a pause in the operation and renegotiation of the contract which will cause even more delays.

Discuss proper management and delegation of tasks.
Having a transparent partnership during the early stages of the operation can help provide a favorable path for both parties. They should be able to air their concerns respectfully, while considering the effects of the changes to one another. Both should also be flexible enough and be able to evolve depending on the current environment of the operation.

How to Reverse Bad Outsourcing Deals

Thu, 4 Oct 2012 00:00:00 -0800

Tips from Gartner Vice-president and Research Director William Mauer were recently shared by Karl Finders at ComputerWeekly.com. The post highlighted several issues faced by outsourcing clients and service providers that often get in the way of an operation's progress.

The article stated that some issues are already noticeable during the first few stages of an operation. In the transition stage for instance, delays caused by the provider result to unnecessary stress for the client.

One of the main reasons client-vendor partnerships are set for failure is because they do not consider it as a long-term relationship. Another factor to consider is the relevance of the initial contract to the business environment. Clients and providers often overlook small details that are crucial to the operation's success. These could lead to the demise of each party's efforts.

Below are nine ways that can help outsourcing players recover from crumbling relationships.

1. Identify what's wrong.
Before you start mending the situation, you have to first identify the cause of the problem and the affected areas of the operation. Estimate the costs of fixing the problem and check across all departments and goals of the business.

2. Identify your goals.
To come up with the solution, of course you need to know what you want to achieve with the given budget, sales and marketing constraints, how long it will take, and who will manage the operation as things are being fixed. This will then guide you in creating a strategy.

3. Rewrite terms and conditions.
Parties need to be on the same page regarding the terms and conditions of the operation. Priorities should also be modified accordingly.

4. Clearly identify the roles of the employees from both sides.
As the operation continues, there will surely come a time when the next step will need the approval of a certain person within the partnership. Furthermore, both parties should be well aware of what's going on so the operation can run smoothly.

5. Assign an overall manager.
Someone should be assigned to spearhead the entire project. His/her tasks involve overseeing the processes to make sure deadlines are met. This person should be present during the observation stage of the improvement process or should be briefed properly before proceeding with the operation.

6. The plan should have room for changes.
There will be instances when the action plan would need revisions. To help keep things going, loop everybody in emails and if possible, meet on a monthly basis so that they can voice their concerns.

7. Always update the managers and be transparent.
As the project progresses, the management, employees, as well as the investors should be regularly updated. This will make it easier for everyone to identify if they are close into achieving the goal of the operation.

8. Create a more workable relationship.
There have been issues before between the client and provider but if progress is seen, they should put differences aside for a smoother and faster operation.

9. Mitigate risks with a management plan.
Having a risk management plan is an additional security blanket if things take a turn for the worst.

How to Improve Outsourcing Output

Tue, 2 Oct 2012 00:00:00 -0800

In some outsourcing operations, processes often get stuck at a certain stage, which lead to unremarkable outputs as the process which was deemed fruitful when the contract was drafted is no longer applicable and needs to be updated. Some organizations even state that with outsourcing, they are getting the same output at a lower cost. Another issue with tightly controlled contracts is that more often than not, there is no room for innovation during the planning stage.

In an article posted at Info.ISG-one.com, ISG Director Bruce Everett shares ways on how outsourcing can help organizations reduce costs while increasing productivity as well as improving operations.

1. Create a checklist of possibilities. Each function of an operation requires different levels of supervision, resources, and of course processes. It is better to plan for each segment. Other things that firms should look into are demand management, proper allocation of skills, cloud computing, etc.

2. Monitor expenses. A good way to evaluate proper attribution of costs in an outsourcing operation is by establishing a benchmark and including the performance gaps. This will give businesses a better understanding of what's going on with the cost utilization within the operation, and adjust budget accordingly so that they will produce more with less expenses. There are also several ways that can help firms realize which areas need more improvement. One of these is conducting consumer and staff surveys.

3. Creating an equal partnership. To make the most out of an outsourcing partnership, clients should provide equal windows of opportunities for providers. This will act as a motivator for the contract and in the end will create a win-win situation for both parties.

4. Initiate good practices. Apart from the things mentioned above and the adoption of technology and increase in budget, key factors such as proper work ethic and attitude help drive labor productivity. Employees who are presented with the right motivation and are properly trained can add more value to the company. If employees are trained to go by the book, they are more likely to develop robotic behavior, but if given more freedom, they will be able to produce more in a sense that they are allowed to innovate and think out of the box once in a while.

5. Proper management of contract and operations. Like in any other contract, proper governance is crucial as small mistakes created years ago can escalate and become detrimental to the entire operation. By keeping an eye on the contract, challenges will be easier to overcome and compliance will always be met.

Gartner Predicts Strong Activity in APAC BPO

Fri, 28 Sep 2012 00:00:00 -0800

The latest study from Gartner Inc. was discussed in an article posted at BizTech2.in.com. It denotes some of the IT research firm's predictions about the changes in the business process outsourcing (BPO) market in the Asia-Pacific (APAC) region (sans Japan).

As stated in the report, the BPO market in the region is set to grow to $9.5 billion by 2016, as it is striding to reach $6.45 billion by the end of this year, up from last year's $5.9 billion.

According to T.J. Singh, Research Director at Gartner, the BPO market in the APAC region is a great source of opportunities for outsourcing providers as it is not as saturated as the other locations. Apart from saving on operational costs, APAC clients are said to be looking for flexible and quality services that can incorporate the best technology available.

Australia dominated the BPO market in 2011, accounting for over $4.63 billion, which is far greater than India's $1.26 billion. Meanwhile, the most notable markets in APAC are still China and India.

The outsourced processes came from industries such as banking and financial services, communications, government (both local and federal), technology, retail, and travel and transportation.

As the economic issues in the US and Europe linger throughout the world, APAC clients are equally struggling on learning the ropes of the industry. Moreover, it is anticipated that as BPO grows in the region and becomes more accepted, challenges such as attrition and wage inflation will arise.

The BPO market can be divided into four major segments, each having smaller divisions. These are:

- Customer management (sales, marketing, and customer care)
- Enterprise services (HR, finance and accounting (F&A), operations, and payment services)
- Vertical services (vertical-industry-focused processes, such as mortgage services and credit card services for the banking sector, claims processing for insurance, and billing services for telecommunications)
- Supply management services (logistics, procurement, and warehousing)

According to Singh, service providers for the APAC market (excluding Japan) come from regional and international locations. The market is led by service providers from India and large, world-renowned suppliers, along with a handful of niche BPO service providers.

Why Offshoring Clients are Looking beyond India

Thu, 27 Sep 2012 00:00:00 -0800

It appears that India is losing its lustre in the offshore outsourcing space as labor costs are continuously increasing. In a press release posted at ComputerWeekly.com, Arvato's Global BPO Director, Debra Maxwell shares the crucial changes happening in the outsourcing industry and the latest factors that are highly preferred by IT clients.

Several factors apart from cost efficiency were identified. These are the competency of the workforce and world-class infrastructure of other emerging offshore outsourcing destinations, which is probably why the global outsourcing scene is shifting. Apart from being more economical, buyers are now looking for an efficient provider that will help them satisfy their own set of customers even more and improving other processes.

Putting cost issues aside, in order for other providers to come up against India, they should offer solutions via simple processes. Maxwell also cited that buyers are looking for offshoring locations with a stable political environment, strong government support, and ample security.

Of course, she said clients will also look at the capacity of the infrastructure and technology as their processes heavily rely on the internet and hardware. Another factor is the size of the English-speaking workforce, with at least similar cultures.

She added that the Philippines is emerging as the newest option for US and other English-speaking companies since Filipino employees assigned to voice-based processes have a neutral accent.

The Philippines got the highest score in the GlobalEnglish study which rates the fluency of employees in business English, surprisingly beating the UK, Canada, and India.

Furthermore, the BPO executive said each region has its strengths and weaknesses when it comes to outsourcing which is why buyers should do their homework. China, for instance, is the strongest contender for ITO processes. The Philippines, on the other hand, is also getting recognized for high-valued outsourcing services.

Key Benefits of Outsourcing

Tue, 25 Sep 2012 00:00:00 -0800

Gery Menegaz, an executive IT architect for IBM, recounts his experience of outsourcing IT in an article at ZDNet.com. He said back in the day, cost reduction was the primary reason organizations outsourced some of their processes to the extent of putting up virtual offices in as far as India. But as the price of subcontracting to India increased over the years, the cost saving premise was soon gone.

Moreover, outsourcing wasn't considered as a feasible long-term strategy as businesses are only fixated on acquiring the services of less expensive contractors.

Menegaz said in his experience working in the IT outsourcing industry, providers were seen as partners that will add value to the company's processes by adding flexibility and initiating innovation. After a recent survey, he was able to determine that the pros and cons of outsourcing are still 50/50.

To maximize the benefits of outsourcing, organizations as well as providers should look into the details of the project, and customize a strategy that will benefit, if not optimize, all the departments of the company.

Meanwhile, here are three reasons that make outsourcing a highly sought after process by many businesses:

Outsourcing is still cost-effective.
A good example is the CEMEX outsourcing deal which involves finance, accounting, and human resource functions and was closed by IBM. According to a press release, CEMEX was able to save nearly US$1 billion throughout the duration of the contract. The operation was also successful in improving internal processes and business agility.

Outsourcing enables the company to adapt more efficiently.
Outsourcing is a great way to resolve problems brought about by the constant change in technology, market behaviour, and fewer resources.

Outsourcing gives businesses an opportunity to work with a larger group of skilled workforce.
Another reason that's driving businesses to outsource is the fact that the specific skill they are looking for is not available locally or is far more expensive. Also, the technology they need might not be available internally.

Innovation in Client-Provider Relationships

Wed, 19 Sep 2012 00:00:00 -0800

With the recent conclusion of ISG's Sourcing Industry Conference, Director Cynthia Batty shares at Info.ISG-One.com the resounding concern of clients, specifically innovation for their businesses.

Providers present at the conference responded on the issue, reiterating that in order for them to come up with feasible, innovative ideas, clients have to work with them. Parties should be able to identify who's responsible for what, which is why vague clauses in contracts regarding innovation can only fuel more confusion.

There are several instances wherein providers think that their ideas are ignored because the clients do not trust them fully, or the clients think that they are not capable of creating innovative technology, processes, etc. The providers noted that they are demotivated, they don't even believe in the term �gainshare�. However, both parties should be on the same page and be driven to create something new, as innovations could be crucial to the growth of a client's business and beneficial for the providers as well.

Here are some of the ways services relationships can work through the topic of innovation:

1) Prepare a detailed definition of innovation. First off, both parties should understand which areas of the operation are susceptible to innovation and which can be long-term or short-term goals. In this way, clients will not focus on the costs and other factors that could cause delay.

2) Consider other departments of the business. Innovation can either cover a specific area of a business, or the business as a whole. Creating an innovative plan that will affect all aspects of the business brings more value to the business.

3) Explain to clients why they shouldn't skimp on funds. Costs are usually the main concern of clients, and there will be times when the materials needed should be paid outright. Explain to the clients why they need to pay, or what the additional technology is for.

4) Innovation and improvement are two different things. Different levels of authority in businesses may regard innovation differently. For business owners, they would probably want new processes or technology, but for the managers, they might expect innovation that can improve business operations. Providers need to analyze what their clients want and deliver innovation without disrupting other functions.

5) Try multisourcing. The client can use multiple providers, each focusing on certain functions of the business. Of course, the client will act as the central hub that will direct all processes, overseeing if each department is getting the appropriate attention.

The Current Condition of Global IT Outsourcing

Wed, 19 Sep 2012 00:00:00 -0800

An article posted at ComputerWeekly.com highlights crucial information from KPMG's annual UK IT Service Provider Performance Study. Six hundred thirty (630) UK IT outsourcing contracts amounting to �14bn were examined and 230 firms with a total IT budget of �30bn were surveyed.

The study denotes that 76% strongly consider outsourcing IT services and cite cost efficiency as the most crucial factor, along with access to skilled workforce and flexibility. However, only 19% said they will outsource more, which is less compared to last year's 25%.

Included in the report were the developments in delivery models and benefits of proper insourcing, nearshoring, and offshoring practices.

Thirty percent of respondents came from financial services firms, 58% of which stated they will outsource more next year. Furthermore, 90% of public sector organizations are outsourcing IT, 29% of which procure IT services abroad.

Other segments in technology outsourcing like application development and management, infrastructure management, and network services were also analyzed.

According to KPMG's Technology Shared Services and Outsourcing Advisory Head Lee Ayling, technology and outsourcing are fuelling UK businesses, and in a rapidly evolving industry, IT providers should be able to accommodate new demands and trends.

Nonetheless, UK businesses are still anticipated to spend for IT services, but providers shouldn't be complacent as this could change over time.

Benefits of Outsourcing to the Philippines

Fri, 14 Sep 2012 00:00:00 -0800

There are numerous advantages of outsourcing business processes to the Philippines. Here are some of them:

What's Fuelling the Philippine Economic Growth?

Tue, 11 Sep 2012 00:00:00 -0800

The Philippines showed robust growth for this year's first half - even outpacing industry forecasts. Here are the key factors that contribute to the strong economic performance of the country.

The Current Opportunities and Challenges in Global Outsourcing

Mon, 10 Sep 2012 00:00:00 -0800

A press release posted at news.Yahoo.com features the upcoming International Outsourcing Summit (IOS) 2012, which will take place on October 7-9 at the country's renowned business district, Makati.

According to the Business Processing Association of the Philippines (BPAP), IOS event organizer, the global IT-BPO industry is entering the golden age as innovation, surge in demand for complex processes, and changes in public policy brought about by the extended economic crisis increase uncharted opportunities and challenges for the outsourcing sector.

Nearly 500 delegates composed of IT-BPO experts and executives are expected to attend the summit's fourth annual instalment, which is anticipated to grow even further due to the country's increasing reputation as a global provider for services exports and influence in the global IT-BPO industry. In fact, during the first three years of the summit, the industry's revenues have grown 40% from $7.1 billion in 2009 to $11 billion to 2011. Also, an increase of 44% in direct employment was identified from 423,000 to 638,000.

The summit will also be attended by clients from different types of businesses. Some of which are restaurant operators, global logistics firms, and international telecommunications companies.

Meanwhile, India's NASSCOM and BPAP said last year, 13% or $11 billion of the $87.32 billion global industry revenue was contributed by the Philippines. Revenues are expected to surpass a rather conservative forecast which is $13 billion or if the country grows at a rate of 20%, and can even lead to an increase in the total market share.

Furthermore, India still reigns as the leader of global IT-BPO, contributing 58 percent of last year's global revenues. India's software services and products make up 87 percent of India's services exports, and is anticipated by NASSCOM to grow 15 percent this year.

The country's voice-based segment continues to grow at a rate of 20 percent. On the other hand, its robust non-voice sector and strong position in non-voice services make it a compelling competitor in the outsourcing arena. Non-voice services such as complex processes ranging from health information management to engineering and project management services contributed 33 percent of its IT-BPO revenue last year. IT outsourcing (software products and services) grew 40 percent, while health information management posted a 170 percent growth for 2011.

More Captive Center Activity Seen in Q2 2012

Fri, 7 Sep 2012 00:00:00 -0800

In an article posted at BPOOutcomes.com, Dan Berthiaume recounted that for the second quarter of 2012, transactions for global in-house centers (GICs) or captive centers were at a stable rate, and were seen surpassing outsourcing deals even with the growing activity for high-valued services.

The �Key Market Developments in Q2 2012: Market Vista Briefing� webinar held by global research firm Everest Group pointed out several trends that affected the entire outsourcing industry during Q2 2012.

GIC deals are at a steady rate.
For Q2 2012, construction and development of GICs were at a stable rate, marginally growing from 18 to 19. At a year-over-year angle, it appears to have plummeted nearly 50% from 33. Still, the most recent figure is the highest recorded since Q1 2011. Meanwhile, Q3 2011 posted 20 and Q4 2011 posted 23. However, from last year's Q1, only one GIC was dissolved and it happened during Q3.

For the outsourcing segment, deals dropped 7% to 411 in Q2 2012. From Q2 2011, the number of deals fell 20%. However, Q2 2012 was seen as the period with the most number of outsourcing deals at 508.

Tech and manufacturing propelled GIC activity.
Technology and manufacturing sectors are the key drivers of GIC setups and expansions. Of the 37 GIC setups and expansions that happened during this year's first semester, nine came from manufacturing and 19 came from the technology sector.

On the other hand, traditional outsourcing is slowing down for the banking, financial services, insurance (BFSI), manufacturing, and energy segments. Proof of this is the 25% decline (year-over-year) in BFSI outsourcing deals from 98 in Q2 2011 to 73 in Q2 2012.

A 10% decline was seen for the manufacturing outsourcing deals, from 76 to 68. Technology, which relatively affected other outsourcing transactions (technology, telecom, travel & logistics and miscellaneous companies), fell from 178 to 125.

Data from Everest Group also showed that more and more outsourcing deals are done in Asia-Pacific, Latin America, and Africa where contracts increase 36% or from 66 in Q1 2012 to 90 in Q2 2012. For the same period, deals from North America, one of the major markets for outsourcing, dropped 12% from 150 to 132. Another region that experienced a decline was Europe (excluding UK) which posted a decrease of 22% from 137 to 107. However, UK posted a slight decline from 88 to 82.

Tips for Client Demand Management

Wed, 5 Sep 2012 00:00:00 -0800

There are times when clients and procurement specialists see service providers as antagonists in outsourcing arrangements, especially when clients ask for several additional requests that they want to be done immediately. Naturally, procurement specialists are caught in the middle of delivering requests and when the provider declines, their response will be taken negatively.

First off, clients need to understand the scope of their requests and how it will affect the current operation. The sourcing specialists, on the other hand, need to act as the middle man, and the providers need to communicate their concerns promptly and properly.

In an article published at info.ISG-One.com, ISG Director Jim Kane shares five ways procurement specialists can better manage the supply chain between their clients and providers, specifically buyers who are constantly firing off requests.

1) Flexible supply scale.
Service providers should at least have a scalable supply of resources so that when an occasion calls for additional end-products, they can immediately deploy and work on the additional order. When resources are not enough and providers fail to replenish, it will result to more delays and problems that may hamper operations. Sourcing specialist should also anticipate these types of situations so that supplies will not go to waste.

2) Update documents and agreements regularly.
With the rapid developments in almost all industries, several clauses in your initial contract may no longer be applicable three months after it was drafted or signed. Make it a point to review your clauses and make sure all parties involved are on the same page.

3) Treat the demand and supply sides equally.
Often times, the demand side in IT operations is overlooked because parties focus mainly on the supply. They forget that the physical assets involved in IT operations are crucial and need constant upgrading.

4) Foster a strong partnership.
Learn how to listen to your clients so that you can help them easily identify which processes are necessary and which will just bring about additional costs and concerns to the entire operation. If possible, provide alternatives to what they really want - options that offer business value.

5) Learn how to manage bottlenecks.
There will be instances wherein a hold-up of requests happen while clients are simultaneously sending more and more demands. See which issues need to be escalated and which ones can be pushed back so that things will still be accomplished even if challenges arise.

China Emerging as PH's Toughest Outsourcing Competitor

Mon, 3 Sep 2012 00:00:00 -0800

At www.MB.com.ph, Emmie V. Abadilla discussed the highlights of the 2012 Year-end Forecast of XMG Global, a research and consultancy firm. Based on the article, XMG sees China as the Philippines' up and coming competitor in the business process outsourcing (BPO) arena.

According to XMG, one of China's key strengths which could further propel its position in the BPO space is landing clients within the Asian market, unlike the outsourcing pioneer, India, which concentrated on Western markets specifically the US. XMG added that there's a huge possibility that China will best India as the leader in the BPO industry within the next three years.

According to Anna Juanillo, Research Manager at XMG, China's outsourcing industry continues to grow since it is focusing mostly on Asian markets. It is likewise unaffected by political challenges in Western regions which are predominantly covered by India and the Philippines. XMG added that politics and the capability of providers to meet the requirements of clients and keep up with the market trends will always play a defining role on the growth of the outsourcing industry.

Revenues of the Philippine outsourcing industry will increase from $11 billion in 2011 to $12.7 billion by the end of this year. However, when it comes to the overall position in the BPO segment, India remains at the top with revenues that will grow from $59 billion in 2011 to $63.2 billion this year - followed closely by China, with revenues from $45.7 billion to $53.8 billion.

Meanwhile, �real growth' is seen for China and India where the Philippines posted annual revenue growth at 25.4%, 23.6%, and 15.7% for 2010-2012 and China with 43.5%, 63.6%, and 33.0%. India showed that its revenue growth was deteriorating over the same period with 13.2%, 8.6%, and 7.1%

The increase in China's market share during the last three years' (2010-2012) growth cycle was more prominent with 35.76, 45.7, and 53.8 (US$ billion), compared to India's 54.33, 59.0, and 63.2.

In 2010, India's revenue was $18.6 billion more than China's, but in 2012, the difference was down to $9.4 billion. The Philippines, on the other hand, also posted increasing figures from $8.9 to 12.7 billion, a 43% increase and marginally smaller than China's 50% revenue increase.

Nevertheless, India still has the upper-hand as it was the first to dominate the services export or business process outsourcing space.

Philippine Healthcare Outsourcing Sector Gaining Traction

Fri, 31 Aug 2012 00:00:00 -0800

Amidst being acknowledged as the current global leader for call center outsourcing, the Philippines is anticipated to do well in another rapidly growing segment which is health information management (HIM)outsourcing.

In an article posted at news.IDG.no, a 172% increase was identified by the Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP) for the local healthcare outsourcing industry. It posted US$277 million in earnings last year, much higher than S$102 million in 2010. Moreover, the number of the sector's employees grew from 14,000 in 2010 to 25,000 in 2011.

Jeff Williams, Chairman at HIMOAP, said with the tremendous achievements the sector has brought to the country, there's no question that sooner or later, the Philippines will evolve as the leader in the robust healthcare services outsourcing arena.

Meanwhile, a 21.4% compounded annual growth rate (CAGR) was seen for the global healthcare outsourcing market by business market research firm Markets and Markets. At present, there are 256 million Americans who have insurance. It is expected to grow because of President Obama's stipulation that by 2014, all Americans should have insurance.

JL Botor, President at HIMOAP, said the Philippines have greater chances of becoming the global leader in the healthcare services sector. In fact, more and more investors are also seen kicking the healthcare outsourcing activity in high gear. Local organizations, on the other hand, are working to improve potential workforce, infrastructure, and regulatory environment.

HIMOAP, formerly known as the Medical Transcription Industry Association of the Philippines, Inc. (MTIAPI), is an organization that strongly supports the healthcare outsourcing industry. It provides programs that will further attract investors dealing with healthcare services to outsource to the Philippines. Some of its members include providers of clinical documentation, IT, and training services to entities in the healthcare sector.

The Philippines and Healthcare Information Management
Back then, medical transcription services were the only type of activity seen in the healthcare outsourcing arena, but it was progressively changing as the requirements of the market are evolving. Soon enough, clinical coding, disease management, revenue cycle management, and pharmaceutical benefits management were being outsourced by foreign clients.

One of the reasons experts believe that the country will do well in the global healthcare services industry is the oversupply of nursing graduates (400,000) as well as medical associates in the country. A report from Commission on Higher Education (CHED) showed that even with a low demand rate, more and more students are still taking nursing courses. At present, the HIM sector will be able to accommodate and provide employment opportunities to said candidates.

Cloud Takes the Lead in the Outsourcing Arena

Wed, 29 Aug 2012 00:00:00 -0800

One of the latest trends in businesses is cloud computing technology. It is a tool that companies use not only for process and product innovation but also to gain competitive advantage as economies across the globe are still on the road to recovery.

In an article posted at CloudTweak.com, Seth Bernstein shared major events in the Information Technology or IT outsourcing sector, particularly the cloud computing segment.

A report from research firm Gartner Inc. indicates that the IT outsourcing sector is valued at $251.7 billion and cloud computing is apparently the fastest-growing segment which reached $5 billion this year from $3.4 billion in 2011.

Evidently, the figures are dwarfed by the entire sector's value, but with the cloud segment's rapid growth rate, it is now considered a significant player in the vast IT outsourcing arena. Some of the factors that contributed to its growth are:

The cloud will be managed for you.
Instead of hiring additional staff or re-assigning designations, service providers will manage the cloud operation. Software applications will we updated by the providers, upgraded according to the specifications and needs of the business.

The cloud is readily available.
The stocks are limitless when it comes to the cloud. Providers have readily available bundles and packages that suit a company's infrastructure. They just need internet connection and sizeable data storage units.

Size will not be an issue.
The size of a cloud computing operation can be easily adjusted accordingly. For business owners, they need to list down the applications and software that they need and create a cloud environment that best fits the business operation.

Even if there are still several challenges in the sector such as data security and operation downtime, the cloud's tenacity has already been proven with its recent developments and rapid growth rate. It won't be too long before it becomes the most outsourced process in the ITO industry.

Five Outsourcing Mistakes and How to Avoid Them

Fri, 24 Aug 2012 00:00:00 -0800

A lot of business owners believe that outsourcing can help reduce costs, which is true, but clearly, there's more to outsourcing than that. It can help align goals and enable businesses to pursue innovative processes that can help improve the entire operation and increase the value of the company in the long run.

In an article posted at SMH.com.au, Sylvia Pennington shares some insights of industry experts from an interview done by IT Pro. Here are a few things that business owners should look into before signing an outsourcing contract:

1. Don't forget the other factors.
A lot of executives tend to fixate their attention on the costs, even to the point where their providers no longer have a breathing room to move and grow. This could result to lack lustre performance and output from the outsourced team. If the supplier realizes that they are not making money on the deal, chances are they won't be proactive and motivated to work for you. Plus, they will be too bootstrapped to even bother to look for innovative processes that could help your company.

2. Strive for a strong partnership.
Clients should reciprocate and even initiate the efforts of establishing a relationship. Some suppliers, especially the ones located in Asia, tend to be more timid compared to their counterparts in other regions because of their culture. Issues will be easier to handle if both parties are involved and have already established a sound relationship.

Another factor that can help an operation is to have a dedicated �troubleshooter� who will handle problems within the operation.

3. Bringing your best arsenal upfront.
With new IT outsourcing deals, providers that put their best foot forward are likely to create a strong partnership. This process is included under the project management where providers are getting to know more about the clients.

4. Include trust as a major factor.
Clients should also see that not everything they want can be and should be followed. As the saying goes, �just because you can, doesn't mean you should.� Just because you are paying the provider for the services they will be rendering, it doesn't necessarily mean that your orders will be followed down to every detail, because providers should also be given the right to voice out their concerns because after all, they are the experts in the process.

Clients can design a reward and penalty system where they can impose counter-charges if the agreed upon processes aren't followed, and rewards if they over perform.

5. Determine the type of contract that is most suitable to the business.
Long-term contracts are more practical in terms of business flow and overall costs, but if not managed properly, dedication of each party may gradually decrease. Short-term contracts, on the other hand, can result to higher costs and constant disruption of operations.

A provider that agrees to help you review and alter the contract from time to time is what clients are currently looking for as trends and challenges are constantly changing.

When Outsourcing Partnerships Turn Sour

Thu, 23 Aug 2012 00:00:00 -0800

There are several reasons outsourcing relationships crumble and solutions for each case vary. Some of the factors heavily depend on the location of the outsourcing provider and scope of the partnership.

Amidst all the obvious factors, industry experts can attest that the real reason behind a dwindling outsourcing partnership could be caused by mismanagement of the entire operation where both parties act as instigators.

In an article posted at Info.ISG-one.com, the common signs of unstable outsourcing partnerships were identified in hopes of helping business owners recognize the stance of their operation and restore whatever is worth saving because after all, executives initially sought outsourcing services to improve the company and not to acquire additional problems and costs.

Where green actually means red. Some service providers are puzzled when all of the signs point to a good and smooth operation, yet the client is breathing down their necks. What they are missing out on is even if they are coming up with good figures, the client might not be happy with something else, which then fuels a misunderstanding between parties. Like a �watermelon�, things are green and dandy on the outside but red and unstable on the inside.

Providers must keep in mind that they should also align their efforts with what the clients want and how they want it to be done. This should also resound to the employees - they should follow whatever is written in service level agreements.

Contracts are not updated. Partnerships that refer to the contract often could mean they have trust issues. A good and ISG-approved exercise is for partners to periodically update their contracts to change the ineffective clauses and tweak the ones that could be more beneficial to both parties.

Old issues keep showing up. Like in any relationship, previous arguments that were not properly handled or solved will most likely come up during current confrontations. Providers and clients should meet halfway so that past issues wouldn't interfere with current problems and they could finally move on instead of gaining more challenges - or worse, they may start avoiding each other.

Communication gaps. Most industries, especially the ones that deal with technology, are constantly evolving. One reason businesses fail to keep up with the changes is poor communication within the operation itself. There may be instances wherein top management wants to get something done but job orders are lost in translation from the managers to the service providers. The more open the communication is, the better each employee could understand the importance of a task.

Failing to keep up with the new movements in the industry. Another concern of clients is that providers are not up-to-date with the latest technology or trends of the industry. For the providers, they also see that clients aren't inclined on learning new ways to encourage their partners to create new things and processes that could be beneficial to the entire operation. Clients also need to show their support when dealing with new projects and innovations because these could make or break the workflow of the operation.

Common Language Problems in Multisourcing Operations

Thu, 16 Aug 2012 00:00:00 -0800

Sometimes, businesses have outsourcing operations with different service providers and they usually face a common hurdle - proper dissemination. Problems are normal in all operations, but for companies that subcontract offshore, these problems are intensified due to language barriers.

An article at Business2Community.com highlights common language problems when businesses outsource to several service providers:

Progress of the projects will slow down.
With a multi-sourced operation, new processes are harder to put into effect as providers that serve certain processes are located in different regions. There might be a delay since processes and protocols will need more time to reach a certain department because with some companies, they would have to alter the announcement in a certain way that a specific region can clearly understand the instructions.

Improvement of internal processes might be hampered.
All companies should work like a well-oiled machine, but if language barriers limit effective communication in the company internally, then growth and improvement not only of the business itself, but also professional relationships amongst employees, will be affected. Chances are problems will be overlooked because of limited feedback.

Employees might understand goals differently.
Even in a regular operation where departments speak the same language, miscommunication usually occurs and goals are not achieved. This can be more frequent in offshore teams as they might have a different understanding of what lead generation, leads, and prospects are.

Challenges are intensified.
Internal issues will be harder to pacify and small problems will be blown out of proportion because local and offshore members might have a hard time understanding each other. They can also misinterpret actions done by the outsourced team because for them, what they did was okay, but for the local team, it could be something that does not meet the requirements.

Authority of managers may be affected.
Every department of an operation is spearheaded by a leader. For a multisourcing operation, there will be several leaders from different parts of the world. There will be instances where leader A will be asked to communicate with leader B and its team members. However, trying to explain the goal to a different team with a different culture will again be a great challenge.

For businesses that are planning to outsource functions to different service providers, they could circumvent all these language barrier issues if they acquire all their services from a single third party outsourcing provider - one that has a good track record and is multi-faceted when it comes to outsourcing services.

Commonly Outsourced Processes

Mon, 13 Aug 2012 00:00:00 -0800

There are numerous business functions that are being outsourced today. Business executives have reported that they subcontract processes that range from basic back office to high-valued technical functions.

Apart from trying to stay competitive in a tough market, businesses are driven to outsource to cut overhead costs and align business goals. Below are some of the processes that are commonly outsourced by businesses based in post-recession-stricken regions.

1. Transcription services - Transcription is procured for several reasons, but the industry that needs it the most is the field of medicine. Med students and practitioners are the ones who need accurate documentation of a certain procedure or presentation, which is why audio/video data are meticulously transcribed into a file.

2. Call center functions - A lot of renowned corporations outsource customer support as it often requires a lot of workers. Segments under this process are customer service and technical support. It is outsourced offshore to countries that have a large supply of English-speaking workers.

3. Payroll and bookkeeping - Nowadays, a lot of back office functions are being outsourced offshore - payroll and bookkeeping are examples of these. A lot of regions offer payroll and bookkeeping services at much lower rates compared to local ones, which is why companies use this to their advantage.

4. Information Technology (IT) - Software development, application development, and web development are some of the disciplines under this category. IT services are highly sought after in more advanced countries, which is why in some cases, talent shortage and high labor costs become challenges for them which in turn fuel the need for information technology outsourcing.

5. Recruitment - This function is often outsourced by large, multinational companies that often face a shortage in resources, have overhead issues, or have a sudden increase in positions that need to be filled immediately.

There are other processes that can be outsourced. The great thing is that no matter what business function companies need to outsource offshore, there are several delivery models that they can choose from, making outsourcing a much easier process to deal with.

Five Tips for an Effective Sourcing Strategy

Fri, 10 Aug 2012 00:00:00 -0800

Atul Dogra, a Senior Consultant at research and advisory firm Information Services Group (ISG), shared five ways on how businesses that are planning to outsource can construct a well-prepared sourcing strategy.

The article posted at Info.ISG-One.com highlights factors that can help foster a sound sourcing strategy for strategic services and functions, which can also enable companies to minimize unnecessary expenditures in the long run and align goals with the objectives of the business.

1. Prepare an outline of your current expenditures. Documenting your business' current base cost will help simplify future plans as you already have a point of reference. This can be used to generate a realistic comparative cost analysis. For example, you can compare the cost of your current operation to your alternative plans, as well as point out the areas in which budget can be increased or decreased. It will also give you an insight on what is the current market rate for services and if you are complying with market standards.

2. List down elements that fuel the need for outsourcing. Not only will this help you come up with cost estimates - it will also help you create contingency plans for future challenges, as well as create a flexible operation that can adapt to developments in the industry.

3. Study the available service providers. Another thing to consider in sourcing strategies is the scope and scale of service providers. You can start by reviewing each provider's past clients and activities. Also, keep in mind that service providers are working against several factors such as competitors, service demand, etc. which is why you'll probably come across a diverse pool of service providers.

4. Create mock-ups. Testing the sourcing strategies by creating mock situations will help you gauge the success of your plans. Apart from making sure that resources are complete and optimized, it will leave less room for mistakes as you have everything that you would need even before the operation starts.

5. Consider all possibilities, even unfavourable ones. The best way to minimize problems in the future is to prevent them. Having a list of all the possible challenges will help you create executable contingency plans that can help minimize the effect on the entire operation.

Four Ways Startups can Gain more Leads

Thu, 2 Aug 2012 00:00:00 -0800

The tight competition among startup companies and the vague state of economies worldwide make the business arena a worrying adventure. Apart from staying afloat, new businesses need to defy detrimental factors to generate leads and make profit.

There's no doubt that larger companies equate to a more stable premise than startups, which in turn will make it even harder for the latter to scout for experienced sales candidates.

Before small and new businesses resort to closing up shop, they fail to realize that there's still hope, and there are options. The playing field is now even for the big guys and small players. An article written by Matt Ford posted at Business2Community.com indicates four ways on how they can attract credible sales personnel who could help boost the volume of their sales leads.

1. If you can't find it locally, outsource it. Outsourcing has long been one of the simplest and easiest solutions to alleviate talent shortage and budget constraints. It is also flexible compared to other staffing models as business owners can add employees to the team or downsize depending on the needs of the operation.

2. Foster a healthy relationship. Get to know the candidates on a more personal level to understand some of their working habits, areas they excel in and what they want in a job. There are certain levels of expertise and of course, you'd want to know what could stimulate them to work for your company.

3. Show your worth. Showcase your company's strengths and present to the potential candidate the areas you are at par with larger counterparts. For example, your company has the potential to become one of the fastest growing providers and he/she will be part of it.

4. Give them a preview of their future with your company. Sometimes, it's not always about the salary. You can also share with them what makes you different from larger companies like the array of personal benefits, job diversity, and the fun working environment.

As you are looking for the right candidate, imagine yourself making a sales pitch as well. It all depends on how you deliver your message and intention and how you can help them in reaching their own goals.

3D Modeling in the Philippines

Thu, 2 Aug 2012 00:00:00 -0800

The Philippines is known worldwide as the leader in offering voice-based outsourcing services, but the country has long been providing non-voice processes to a wide range of clients from different parts of the world. One of these is 3D modeling.

3D modeling is widely used in several industries such as architecture, computer gaming, movies, and even for educational purposes. For businesses that operate online, 3D modeling is a tool that can help provide a different user experience. Latest software programs and devices enable 3D model designers to come up with high quality outputs that cater to the ever evolving needs of customers.

As more and more countries struggle to find ways to minimize costs for a wide range of services, they resort to 3D modeling outsourcing where work output is at par with other media companies offering this 3D modeling services. The great thing about outsourcing 3D modeling work is that companies can take advantage of the labor arbitrage, enabling them to lower costs in labor and operations without compromising the quality of deliverables.

There are Filipino 3D model designers who are now making waves in the creative design and art industry. Some of the Philippines-based 3D modeling companies are in fact producing 3D games for renowned game publishers from other countries.

Service providers in outsourcing destinations such as the Philippines offer 3D modeling outsourcing through different delivery models:

Clients can outsource 3D modeling work on a per project basis. Also called project outsourcing, the type of work has a specific timeframe and set deliverables. This applies to companies that do not have a constant need for 3D model designers. They can just contact the service provider when necessary.

For long-term 3D modeling requirements, clients can outsource through offshore staff leasing. In this model, the service provider will help look for suitable candidates for the job. They will also be responsible for the workstation, telecom setup, as well as the operations management of the employee/s who will be working exclusively for the client from the offshore location.

Why Outsourcing Providers Lose in the Bidding Process

Tue, 31 Jul 2012 00:00:00 -0800

Outsourcing service providers have their own strengths and weaknesses. Apart from pitching their company's achievements to nab outsourcing contracts, executives of outsourcing providers need to go head-to-head with other competitors in several factors such as outsourcing pricing, quality of work (can be presented using testimonials from clients), and level of expertise.

There must be something that makes clients select one service provider over the other, one marginal thing that some providers tend to overlook that makes all the difference.

A post at info.ISG-One.com identifies five common mistakes that service providers do during proposals.

1) Inadequate background check. Failing to fully understand the needs of the client can lead to an opportunity lost for the provider. More often than not, providers immediately jump to the conclusion that clients only want to sell and earn money immediately, which is why they prepare strategies that are not for the long-term benefit of the client.

2) Forgetting the vital players of your team. Sending the wrong players to pitch for your end can jeopardize your company's chances to win the deal. The sales team should also coordinate with the servicing team to help produce a credible presentation.

3) Doing multiple pitches and failing to focus on each. Some providers are often too eager to win multiple deals to the point that they haphazardly work on each presentation. They end up with poor demonstrations that put off some clients. Providers who succeed in winning accounts are usually the ones who select the most appropriate clients and prepare meaningful pitches that help them land the deal.

4) Proposals that are inappropriate to the client's requirements. Most providers use a template for all of their presentations. The detrimental fact about this is most of the client's requirements or questions aren't covered or are left unanswered. Naturally, clients will select the provider who did their homework and was able to answer questions effectively.

5) Disorganized team and presentation. Every provider should remember that everything starts internally, and whatever's happening among the team members will reflect during the actual presentation. Having a properly mapped-out strategy will help reinforce your chances of winning the deal.

The Emerging Game Development Sector in the Philippines

Fri, 27 Jul 2012 00:00:00 -0800

The Philippines has made a name for itself in the business process outsourcing (BPO) arena. Apart from besting other countries as the top destination for voice-based processes, Filipino BPO workers are being recognized for their work in the healthcare, back office, and even game development segments.

Although game development outsourcing is fairly new to the country, Filipino talent is not to be mocked as more and more Filipinos are making a mark in the game development world. Take for instance this popular game in Facebook called Wordtrotter by Gil De Palma, a proud Filipino game designer/developer. It may not be in the levels of more popular role playing games (RPGs) such as DOTA and World of Warcraft, but being able to infiltrate one of the largest social media websites in the world is enough of a feat.

As the demographic of computer users becomes expansive, game development companies look for other ways to market to each niche. There are educational games, games that are based on sports, strategic ones, and let's not forget the violent segment where players will be required to eradicate opponents.

Filipinos are inherently conservative and open minded, which can be traced back to influences from Spain and the US. Yes, Filipinos are aware of all the latest and popular games out in the market today. They are also aware of which gadgets they could use or which will give them the maximum gaming experience. However, some game developers in the country fail to see windows of opportunities. For instance, there are gamers who are conservative and there are those who have tried everything out in the market. An example is the Bible-based role playing games as suggested by Manila Archbishop Antonio Tagle to the Catholic Bishops' Conference of the Philippines (CBCP). Majority of the Filipinos belong to the Catholic community, so having an educational, Bible-based game seems pretty enticing, especially for kids and grandparents.

Other sources of opportunities for the local game development sector are countries that are looking for candidates to fill their game development positions. Nonetheless, with the Philippines' talented game developers, the country may be next in line as the leader of the game development outsourcing segment.

Gartner Reveals Accelerated Growth in Global IT Spending

Thu, 26 Jul 2012 00:00:00 -0800

In a recent market analysis data collected from over 200 business and technology analysts by research firm Gartner, expenditures on IT products and services worldwide will increase 3% and be valued at $3.6 trillion, which is higher than the initial 2.5% estimate in growth for the sector.

In line with that, outlay for IT services is anticipated to grow 2.3% and reach $864 billion in 2012. Meanwhile, hardware spending is anticipated to grow 3.4% and reach $420 billion this year.

There are actually several segments where budget will be allocated this year. Bulk of the entire IT expenditures (46.4% or $1,686 billion) will be for telecommunication services. During 2011, spending for this category was $1663 billion, which only makes sense because most of the IT products and services sought after by the consumers are portable devices that can easily be connected to the internet, other users, and are enabled for various types of apps.

Gartner's Research Vice-president Richard Gordon said IT providers shouldn't be complacent with the figures posted by the second quarter as changes are inevitable.

One of the noticeable IT segments nowadays is cloud technology, due to the fact that more and more companies are beginning to realize its benefits. For this year, Gartner predicted that spending on this segment will reach $109 billion, $91 billion more than last year's figures. The firm added that by 2016, enterprise public cloud services will reach $207 billion.

On the other hand, the most popular type of cloud service is outsourcing where companies are increasingly integrating cloud technology to their system via a service provider, and their data in physical facilities are migrated to the cloud.

Mr. Gordon added that even if business process as a service (BPaaS) represents the lion's share in enterprise cloud spending, other segments like software as a service (SaaS), infrastructure as a service (IaaS), and platform as a service (PaaS) are growing rapidly. PaaS will be the least costly, although it is still a vital tool for companies that avail of cloud services. In fact, spending on PaaS will only amount to $1.2 billion. By 2016, it is anticipated to reach $27 billion.

Other noteworthy predictions are the full migration of digital media and data to the cloud by 2016 and the health care market will be adopting the cloud technology wherein it will be worth $5.4 billion come 2017.

Source:
http://cloudtimes.org/

How to Properly Evaluate Service Providers

Wed, 25 Jul 2012 00:00:00 -0800

As you are waiting for service providers to respond to your request for proposal (RFP), it would be best to draft a rating system that can help you choose the right service provider. The ball is still in your court and you are able to align the strengths of the provider to the immediate needs of your company.

An article by ISG Director Owen Wheatley posted at ISG-One.com features basic things business owners should take into account when drafting metrics for evaluation:

1. Get your investors involved. Since the chosen provider will either contribute towards reaching the company's goals or hinder them, why not invite the investors since majority of the decision making will come from them? Apart from opening the doors for communication among the executives, project managers, and providers, it will help align the requirements of the company. Also, having all the executives there will make a more compelling scoring guide since they know more about the business than anyone else.

2. Classify providers. Coming up with different categories based on the objectives that you sent out along with the RFP will help show the strengths and weaknesses of each service provider. The one with the highest score across all categories will obviously be your best bet.

3. The scoring model should be flexible. There will be instances wherein you will be asked to make minor adjustments for the provider as there are several unexpected factors that can affect the position of each. Basically, you'd want to be as neutral as possible to avoid overlapping in each category. In the end, you will yield better results.

4. Design a multi-purpose ranking model. Apart from having additional data after all of the providers have presented, you can now use the results as a tool which can help improve areas that are vital to the company. Moreover, it's ideal to design the ranking model based on the company itself and modify so it can be used as a guide for future operations, or when problems arise as the operation progresses.

5. Don't base your decisions solely on the results. Keep in mind that the ranking model serves only as a guide for the entire decision-making process. It shouldn't cloud the deeper debate regarding the risks, the impression that the providers leave you and the investors, and the possibilities that each provider offers.

Everest: FAO Market to Post 11% Growth in 2012

Wed, 18 Jul 2012 00:00:00 -0800

Finance and accounting outsourcing (FAO) is predicted to grow by 11% this year, even if the global economy is still on its way to recovery.

An article published at GlobalDeliveryReport.com discusses the recent findings of global management consulting firm Everest Group regarding the FAO market. Factors that are set to drive the growth of the FAO market are the upcoming renewal of contracts, diversification of business sizes venturing into FAO, and the growing number of clients coming from Latin America and Asia Pacific.

Practice Director of BPO Research at Everest Group Abishek Menon said the actual contract value (ACV) of the FAO market will reach USD 4.5 billion, largely due to contract renewal activity. Furthermore, contracts that are set to be renewed were primarily long-term deals and will amount to $14 billion this year.

Menon noted that since the global economy is improving, small and medium players are more open to buying shorter outsourcing contracts and FAO services.

Rise of high-value services in FAO
Before, only basic finance and accounting functions were being outsourced, but according to Menon, �judgment-intensive� processes such as financial planning and analytics (FP&A) are gaining traction. Proof of the rise of FP&A services is the study done by Everest Group, indicating that in 2007-2008, 50% of FAO contracts were FP&A and grew 61% in 2010-2011. Another prominent FAO process in 2007-2008 was risk management which took up 19% and grew almost 50% in 2010-2011. Internal audit services also grew during that period.

Majority of FAO contracts are from traditional industries such as manufacturing, high tech/telecom, and financial services. The professional services industry is seen to be getting more interested in FAO. Menon also said India is the leading provider of FAO services.

Different FAO delivery models
Different FAO functions make use of delivery models according to the specifications of a project. As stated by Menon, the captive model, coupled with shared services, is the favorite of FAO buyers. In the near future, captive services and basic third party outsourcing services will be simultaneously used to align processes, but in general, the fusion of captives and shared services will take the center stage.

The fate of FAO relies on mergers & acquisitions, technology
The FAO provider arena is predicted to get smaller if mergers and acquisitions (M&A) increase. Even with the anticipated tight competition amongst providers, small and medium-sized businesses (SMBs) will be seen buying more FAO services.

Another crucial factor identified by Menon is technology. Providers will soon work around what their buyers have and purchase technology as needed, instead of purchasing technology as an initial investment. He added that FAO vendors will soon establish technology depending on the industry.

Boost Online Sales with Effective Customer Service

Mon, 16 Jul 2012 00:00:00 -0800

Online sellers have an advantage over businesses that do not have online presence. Apart from having access to a larger market, the former can make use of various tools such as social media and even old-fashioned ones like email marketing. However, one factor remains crucial to both business types and that is customer service.

Customer service affects the way customers perceive a business, and it doesn't just stop once a product has been purchased. It can be an aftersales process that can influence future transactions. For online merchants, this means their businesses rely heavily on contact center agents as it is up to them to close a deal and increase revenue.

An article by Wendy Shooster, posted at MultiChannelMerchant.com, shows five customer service tips for online merchants:

Always be ready for inquiries.
Having someone who'll attend to a customer's inquiry whether via chat, VoIP, call or even on your social media accounts can help lessen opportunity losses. This would also mean that these channels should have staff on standby to promptly reply to potential customers.

Customer service is a continuous process.
Marketing trends come and go, but a good way for companies to make themselves noticed or gain recall is a sound customer service operation. Customer service is a huge factor for improving customer experience and increasing the number of patrons. It's something better or more efficient to offer to customers who can be easily swayed by attractive ads online.

See which works well for you: internal staff or outsourcing.
If budget is an issue, outsourcing will be a business owner's best bet because most of the online channels will be a 24/7 operation and capital expenses will be better spent on core processes. One thing's for sure though, local and internal call center agents will be more familiar with the brand and company's goals as they have easy access to its history and culture.

Look into other issues as well.
Let's say your business is in fact boot strapped - that doesn't mean you have to fixate yourself on costs alone. Kate Legget, Senior Analyst at research and consultancy firm Forrester, said other things should be reviewed when planning to outsource. These are the efficiency, consistency, and standardization of a business' customer service operation.

Team up with a service provider that will help the company grow.
Keep in mind that the outsourced staff will carry out the brand and mission of a company. Customers will identify them as people who are associated with your company, so whatever they do will instantly reflect on your brand. Find an outsourcing partner that is easy to work with and is willing to make adjustments according to the needs of your company.

Be more Valuable to your Outsourcing Provider

Thu, 12 Jul 2012 00:00:00 -0800

The way buyers treat clients often affects the output of an outsourcing operation. Like it or not, some service providers often group clients into several profiles, and sometimes, take things personally. It is usually done across several classifications like the client's paying habits, level of dedication to the project, and even basic knowledge about the processes being outsourced. As much as possible, buyers would want to be on the neutral side to keep operations simple and smooth, and also avoid issues that may come from the service provider.

At PCAdvisor.co.uk, Stephanie Overby wrote 10 simple ways on how you can make IT outsourcing service providers prioritize your company without having to bribe or manipulate them. It highlights simple, non-invasive ways to get more attention for companies that have chosen to take the outsourcing path:

1. Don't push your luck during negotiations. Providers tend to identify clients as being difficult if they always try to micromanage every single detail right off the bat and try to low-ball the standard pricing of the functions that will be outsourced. It would be better to just mention your company's preferences during the negotiation and work on them as you go with the project since it would probably be a long-term operation.

2. Be transparent. The ideal customer will be able to provide information about the company - important details such as asset inventory, current state of the operation, and identification of those who will be involved in the process. This will help providers understand where the client is coming from and enable them to provide workable suggestions.

3. Follow the outsourcing contract. When both sides have agreed upon a contract, they should do their part and follow each clause dutifully to avoid issues. Having a well-written contract, one that favors each party equally, will also prove that you were able to work on your differences right from the start.

4. Provide tokens of appreciation. This can be tricky but let's face it, providers love revenues. This can come in various forms like additional projects in the pipeline, more opportunities in other departments or bonuses, if applicable.

5. Be proud of your outsourced operations. Outsourcing is one of the processes frowned upon in many countries, but an authentic testimonial from a reputable client is very useful. This will help providers earn trust from other businesses and gain more clients in the long run.

6. Inspire your provider. If providers see that you are willing to learn new things with them and work on innovations that can help both of your businesses, they will likely give you more of their time and attention.

7. Have margins for your budget. Clients need to see that not all cost estimations will be followed as is. There will be instances wherein services, even technology, will cost more as the operation develops. Review the proposed changes that providers present you and approve if the operation really needs them.

8. Keep in mind that the operation is also about teamwork. There will be instances wherein vendors will fail to meet the requirements. They may have their reasons, but it can also be caused by external factors, so it would be better to work with them in finding solutions rather than adding more pressure.

9. Be a diligent buyer. If customers do not pay on time, the cash flow of the providers will be disrupted, which could lead to delays. Since they are depending on the money you put in their company to pay off salaries etc., it would be sensible to pay them on time.

10. Treat your service provider nicely. In a nutshell, providers will treat you the way you treat them, but this doesn't mean that you should let your guard down and let them take over the operation. This simply means that you have to be nice and treat them with respect.

Communication and Management Tips during the RFP Stage

Tue, 10 Jul 2012 00:00:00 -0800

Johanna von Geyr, Senior Consultant at ISG, a leading technology advisory services company, shared five things that can help clients have a more comprehensive transacting prowess during the sourcing request for proposal (RFP) phase at info.ISG-One.com. Based on the high number of outsourcing transactions last year, ISG identified that it is essential to accurately get the message of the company across all those who will participate during the sourcing RFP stage.

Stakeholders, in particular, will benefit from a properly-managed sourcing RFP deal, as it will help align the provider to the specific needs of the company, thus making the operation more successful.

1. Assign a chief management team. This group will be responsible in communicating all plans to the departments including C-level subdivisions of a company, as well as internal management that will be receiving the services from the chosen provider. This is also a great way for executives to ensure that somebody will be accountable for the entire project and the functions being worked on by the service provider.

2. Keep communication lines open. There should be a directive that if ever a problem comes up from either side, they should inform the other party properly. Another purpose of having an effective and open communication during the sourcing RFP phase is that if a company has already selected a bidder, but feels like they might need the services of other bidders, it would be easier for them to transact in the future.

3. Keep the internal group in the loop. First and foremost, everyone in the company should be aware why there's a sourcing RFP initiative in the first place. Also, if the internal team has questions, even without their supervisors, they should be able to voice out their concerns.

4. Manage your investors. There will be times when the company will perform several sourcing RFP sessions for different functions. It is only normal to review and analyze which specific investors will be affected by the operations.

5. Build a portfolio. Having a portfolio that describes the operation or end product can help companies land clients in the future. It would be best to document everything early on so it would be easier to explain and show those who will be interested in the product/service.

Factors that Make the Philippines an Ideal Outsourcing Destination

Mon, 9 Jul 2012 00:00:00 -0800

Lauro Vives, Founding President and Chief Executive Officer at IT consultancy company XMG Global, recently posted an article at TheSauce.net.au about the stance of the Philippine government regarding the robust outsourcing industry of the Philippines.

It is quite obvious that the current administration is all for innovation or getting investors excited at the thought of outsourcing basic and complex office functions as the business process outsourcing (BPO) industry is one of the major revenue generators for the country.

Here are the key factors that make the Philippines one of the renowned destinations for outsourcing:

The Philippines has a large pool of skilled workers.
The country's available workforce, composed of nearly 440,000 graduates for 2012-2013, is known to have a 92.6% literacy rate. About 50,000 are focused on the IT segment, equipped with extensive background as most schools are supported by several notable IT companies.

The fresh graduates are suitable candidates as they are highly trainable, which means companies can help hone their skills according to the needs of their business.

The Philippines' BPO sector is backed by the academe.
It is a well-known fact that the Philippines is largely influenced by the Western world. Apart from being colonized by Western nations, the inclination of Filipinos towards the Western culture plays a huge role on how students are being taught in school. In fact, the Philippines was the first to have a �normal� university in Southeast Asia in 1901, built by the Thomasites. It was a teaching university based on a Western model.

Filipinos have a neutral English accent.
A test done by the Global English Corporation in Brisbane, California showed that the Philippines scored above 7.0 BEI level, surpassing Slovenia's 6.19 and Norway's 6.54. Having a score of 7.0 or higher would mean Filipinos are able to participate in complex business arguments, as well as difficult tasks at work.

Even if accents play a minor factor when an investor is deciding where to outsource, it is still highly considered especially for voice-based processes. In fact, the Philippines has overtaken India as the call center destination of the world, even if the population of the Philippines is smaller. This is probably because Indians have a more pronounced accent, whereas the Filipinos, who have fostered a strong relationship with Americans since 1898, are more inclined to speak English with a neutral accent.

Operating in the Philippines is inexpensive.
If a business decides to operate in the Philippines, the owner will be able to save nearly 15,000 to 22,000 US dollars annually. In line with that, XMG Global's report showed that on average, Indian talent costs 37% more compared to Filipinos. The country also has fewer paid holidays.

Medical benefits are a priority.
Majority of employees look at the terms and coverage of the health benefits being offered to them, and more often than not, consider HMO package as a key factor if they should accept the job. Another thing that applicants take seriously is the work-life balance as most BPO employees work on a night shift.

The Philippines has a budding multilingual workforce.
XMG Global recently helped in creating a team-up between IBM and Board of Investment for projects that can help candidates hone other language skills apart from English, as the multilingual market and demand for multilingual services are increasing. This effort will then help reach targets such as the $25 billion revenue for 2016.

More and more Filipinos want to enter the BPO workforce.
One of the reasons Filipinos strive to work for BPO companies is they offer attractive benefits and compensation packages. Gone are the days when call center positions are the only opportunities available for graduates, because today, more and more functions are added to the services line-up, which means they can find work according to their specialization like IT, design, medical transcription, etc. The trend to work for BPO companies is growing amongst graduates. In fact, 41.6% of professionals prefer to work in the outsourcing industry.

The BPO industry helps in the country's economic growth.
Another XMG Global report also showed that the BPO industry is the country's largest private sector, employing as much as 610,000 workers last year. Apart from that, the sector helps the country by contributing revenue and increasing investments.

Numerous BPO hubs emerge.
The Philippines has numerous BPO hubs scattered all over the country, from business districts to rural areas. The economic zones are managed by the Philippine Economic Zone Authority, together with local government bodies. Each BPO hub receives strong support from the government. These are the ones that look for zones which can be developed into credible BPO locations. Also, they assist in building infrastructure and ICT connections.

The Philippines is a paradise amidst industrialization.
Where else can business executives work and relax at the same time? Investors can explore top tourist spots in the Philippines during their free time. Apart from getting corporate satisfaction, personal leisure will also be taken care of. Employees are also given the best of both worlds - a decent paying job and not having to leave their loved ones to work abroad.

Things to Consider in Social Media Marketing Outsourcing

Tue, 3 Jul 2012 00:00:00 -0800

Many believe that social media marketing is as easy as setting up a personal account. What they fail to see is that a profile/account for a business is very different as it would need to come from a more professional point of view.

For companies that are new to the social media scene, there are various platforms which they can use for different types of content. These are blogs which can be used for press releases and news, micro blogs for simple updates, photo blogs for products and images from events, and even social networking websites that can cover these and more.

One of the known ways social media marketing can be handled nowadays is through outsourcing. One of the challenges for this specific function is that since it's basically 24/7, administrators should be on standby most of the time, but for some companies, this would not be possible because incurring additional costs coupled with the economic challenges that executives face will affect the company.

Even the outsourced social media marketing operation will face several challenges. Maciej Fita of Bostinno.com shares ways on how social media marketing should be outsourced to get the desired results.

Set a goal for the outsourcing service provider.
Businesses need to have a goal should they choose to outsource social media marketing. This may include the type of social media platform to be used up to content plans and replies to posts of users/customers.

Business owners and service providers should always be on the same page.
Service vendors should inform their clients what social media is all about and why they have to use it so that they wouldn't have a hard time making decisions that could help get the project moving and yield great results.

Keep a record of the services rendered.
Social media management is a very active process wherein every incident, solution, and content plan should be recorded. It will serve as a log for all the services done. Documentation will also make it easier to determine which areas they should work on more as a team.

Signs of Informality in Outsourcing Relationships

Fri, 29 Jun 2012 00:00:00 -0800

As multisourcing and project-based transactions are gaining traction, large long-term operations are still common nowadays. These are the ones that date several years back before flexible service offerings were pitched to business executives, specifically the owners of small to medium-sized businesses (SMBs).

Businesses that are involved in long-term outsourcing partnerships have a common denominator and that is the challenge of maintaining a professional relationship with their respective service providers. In some cases, providers become too familiar and lax in their position that they tend to forget that they are business partners and not part of the internal team.

Frank Usher, Managing Consultant of Outsourcing-Center.com, shared six indicators that an outsourcing partnership has become too informal:

1. Metrics are based on short-term work instead of the operation as a whole. In meetings, providers are the ones who give suggestions.
2. Software and technology are not updated. When basic technology is not updated, other segments of the operation are disrupted or simply do not have the capability to move forward.
3. Budget is not allocated properly.
4. Providers wait for the clients to voice out their concerns before working on the tasks. Also, the pipeline is usually disregarded.
5. Standard operating procedures have become a thing of the past. Even if both sides have suggestions, they do not make the effort to collaborate and try the suggestions.
6. Company code, procedures manual, and contract clauses are out-of-date.

In general, the client should always be on the lookout for signs that the partnership is veering towards a relaxed relationship, which could lead to numerous issues that may affect the company in the future.

Since outsourcing relationships are far different from traditional ones, having a designated team to manage the vendor will help streamline processes and provide a monitoring system for both the internal group and the service provider. It will also help foster an effective environment wherein the provider stays proactive and the client is diligent in supervising the operation and making critical decisions.

All in all, it is safe to say that an outsourcing relationship that is too informal can affect the output of the operation. Keeping things professional on both sides can drive a business to its full potential.

Tools for a Successful Program Management Office (PMO)

Tue, 26 Jun 2012 00:00:00 -0800

Program management office (PMO) is often pushed to the sidelines of an operation, even if it is the group or department that sets the standards for an operation. PMO workers are usually assigned to creating reports and updating plans, instead of helping the company reach goals according to industry standards.

Sometimes, some of the tasks supervised by the PMO department go beyond providing standards and methodology functions of a company. These can also include roles related to monitoring and reporting on current projects, and disseminating information to executives regarding the condition of the projects.

An article by Theodore Isaacs, Senior Consultant - ISG, posted at info.ISG-One.com, shows that IT leaders are now well aware that the key tools to improve the efficiency of IT services for PMO processes are the right people and a proper system so that in the end, companies can have a sustainable and sufficient IT-enabled PMO department. The article also included steps on how to build a PMO that can help a company become more optimized and work efficiently to reach desired goals and maximize value for money in each project.

Assign a focal point. Project managers report to and solicit decisions from the head of PMO. No project will be approved unless a go signal is given by the PMO head. The focal point is also the one who oversees other operating arms of the company, creating communication lines across all projects and programs.

Establish order of command. Having a system that properly allocates roles and goals across projects and programs will lead to proper accomplishment of objectives and, soon after, the company can reap the rewards and benefits. It will act as a framework that can be used as a guide as projects are being worked on.

Make sure that each function is relevant. Each PMO function should have a significant contribution to the company to reduce redundancy and of course, cut costs.

Clearly define goals. To maximize return on investment have sustainable operations, goals should be clearly defined for the PMO. IT leaders should constantly inform the PMO about changes in plans and strategies so that all projects and programs remained aligned.

Manage staff properly. Provide a workable estimate for the number of staff on each project. Service heads should also oversee additional training and assessment of each department and optimization of functions.

A Look at the Diminishing Trust in IT Outsourcing

Thu, 21 Jun 2012 00:00:00 -0800

Tony Bradley's article at PCWorld.com highlights the shift of the buyer's behaviour in procuring IT business process outsourcing (BPO) services.

A lot of business owners perceive outsourcing as a simple solution to cut costs, but a survey done by Lieberman Software shows different results. During the recent InfoSecurity Europe 2012 summit, 71 percent of IT experts said they outsource majority of their IT operations, 42 percent said their outsourced operations cost a bit higher than their actual budget, and 16 percent ended up paying significantly more than what they were expecting.

The figures ultimately showed that a lot of the participants who outsource IT operations paid more than what they anticipated, contrary to popular belief that it will in fact lead to significant cost savings. Their experience has now somewhat created a negative image when it comes to IT outsourcing.

The study also indicated that quality and trust are crucial factors for buyers. One third of the respondents saw that the quality of work done by the outsourced team is inferior to what in-house employees deliver.

Moreover, 64 percent said their outsourcing providers are deliberately inflating the actual costs by adding unnecessary work. This bothered Lieberman Software President and CEO Philip Lieberman more than the results' collective indication that it may not be ideal to outsource.

Granting that there's a developing worry over IT outsourcing, the process is needed by several companies, especially small and medium-sized businesses (SMBs) as it is the only direct solution to budget woes, reinforce manpower, funnel internal processes and in some cases, it is the only solution for specific processes because the in-house team lacks the skill to finish a certain project.

In line with that, outsourcing can still outdo the entire negative connotation it has reaped if handled properly. Buyers should be well-informed and aware of the challenges and exert more effort in building relationships with trustworthy IT outsourcing providers as the study has clearly proven that cost is no longer the main factor for every operation.

What CIOs Should Do to Maximize Cloud Potential

Wed, 20 Jun 2012 00:00:00 -0800

More and more businesses are using the latest technology such as the cloud and SaaS to their advantage. While these processes are now being adopted by a lot of IT leaders, some still doubt the benefits of cloud-based services because of lack of information.

IT leaders who are familiar with the process said cloud services offer several benefits. Aside from information security, it can accommodate different scales of businesses and of course, it is less expensive compared to traditional IT.

An article written by Forrester Research's Vice President and Principal Analyst James Staten was posted at CIO.in, indicating that to reach the cloud's full potential, businesses or IT leaders should have better understanding of the matter and manage the cloud operation properly.

The sooner you start using the cloud, the better.
Expect rumours about the cloud, especially from those who haven't tried it first-hand. Be prepared to: distinguish which areas of your operation can adopt the cloud, the current industry standards, and come up with your own system that can help give you a better understanding of the cloud, its capabilities, as well as its weaknesses. The best way to learn about something is by taking it head-on.

Don't shy away from compliance and security.
It was identified that clients are usually hesitant to push through with the cloud due to compliance and security issues. The best thing that clients can do is apply the cloud to segments of their operation that do not deal with a lot of compliance requirements and regulations. This enables them to safely gauge the cloud while actually integrating it to the company's processes. If all works well, they can gradually add other segments of the operation to the cloud.

Cost isn't always everything.
Other IT leaders see the cloud as a way to costs or in some cases, a financial burden to the company. The thing is there will be instances wherein the cloud can actually help the business grow, or provide what CIOs and their team members can't. In fact, a study showed that the cloud is being used mainly for its ability to help companies become more flexible and workable.

Make your own based on the needs of the company.
The CIOs know more about the IT needs of companies than other people, so cloud operations can be created internally based on what the operation needs. In order to get there, CIOs should understand how the cloud works. They can learn about it by asking other cloud developers and through a basic app or solution for in-house purposes.

Not every thing tagged as cloud is cloud.
Other businesses and vendors are joining the cloud hype that they try to introduce products and services as actual parts of the cloud even though these are not related to it. Cloud services are identifiable as having high degrees of automation, economies of scale, and cloud economics. If the vendor pitching a cloud service to you does not have all of these, they are not offering the cloud.

Emerging Locations for Outsourcing

Mon, 18 Jun 2012 00:00:00 -0800

When it comes to outsourcing, one country comes to mind - India. It has taken the lead for more than 10 years in the services export arena, thanks to its large talent pool and low-cost services.

However, things have changed over the years. A lot of factors came in to the picture. One of which was the emergence of new players from various parts of the world, offering high quality services at competitive rates. This, in turn, has somewhat affected India's position as the leading outsourcing provider.

An article at Huffingtonpost.co.uk enumerates several competitive outsourcing destinations that provide quality outsourcing services to firms that are looking to get significant cost savings.

Chile
Its outsourcing sector boasts strong support from the Chilean government, which is also politically stable. Incentives and investment in infrastructure are provided by the administration over the last six years. Chile is also known to take the lead when it comes to mobile telephony and broadband among Latin America countries. Moreover, it has a 96% literacy rate, and has the same time zone as New York.

Ghana
If companies worldwide are looking for the most affordable location for outsourcing, Ghana is their best bet with its low taxes, rent, and labour costs. In fact, wage rates are 50-55% lower than Egypt and 60-65% lower than South Africa. Ghana is also working on several projects such as technology parks and increased research and development activities, both aimed at attracting more investors. It has the same time zone as the UK.

Jamaica
In the Caribbean, Jamaica is the frontrunner in the outsourcing arena and is referred to as the location to watch by global consultancy firm Gartner. Its vigorous telecommunications system and advanced financial services industry found in the Montego Bay Free Zone make Jamaica a viable outsourcing location. It also has low attrition rates, with outsourcing employees earning 40-60% lower than their counterparts in the US. Some of the services Jamaica is known to provide are debt collection, finance and accounting, customer services, insurance claims, and technical support.

Poland
Poland is a great candidate for voice-based processes as its government has widely invested on foreign languages. It is home to nearly 500 IT service vendors that provide analytics, embedded systems, and network services. It is also armed with a well-educated and reliable workforce and decent telecommunications system.

Romania
The country is not making much of a buzz compared to other locations but it is known for outsourced IT product development, particularly chip design, embedded software, and information security. The country's talent pool is equipped with language and mathematical skills. It was ranked 25th on A.T. Kearney's Global Services Location Index last year.

Russia
The key propeller of Russia's growth in IT outsourcing is its robust educational system. Russia's low-cost and highly skilled IT workforce adds to its attractiveness, plus it has strong IT support from the government. Russia serves as an offshore software development hub for organizations such as Siemens, Alcatel, and the London Stock Exchange.

South Africa
Unlike in other countries, South Africa's weak currency is working to its advantage. It is a prime location for German companies because of its German population, but in general, it has a multilingual population. UK companies outsource document production functions in South Africa as it is known to have good data and IP security policies.

The Philippines
The Philippines is the destination of choice for US-based companies. The country has decent infrastructure and technology. Its skilled workforce is very affordable and has excellent English communication skills. It is widely known for voice-based processes, but it is also making its way into high-end services.

UK
It is a nearshore option for neighbouring regions that want to closely manage operations. Apart from being close to home and similar time zones, South Wales, Glasgow, and Belfast are able to provide skilled candidates at a lower cost. Glasgow is a region coveted for its work ethic. Moreover, grant assistance, sound infrastructure, and cost-effective commercial property, including purpose-built business parks, are provided by the government.

Vietnam
Software development is Vietnam's strongest suit, with over 3,000 IT providers and nearly 15,000 engineers. The key drivers of its outsourcing industry are the increasing costs in China and trade issues between China and the US. One of Vietnam's well-known feats is the opening of Intel, a $1-billion chip manufacturing operation. Factors that make Vietnam a suitable outsourcing hub are affordable office rent, hardworking workforce, industry-competitive wages, and a low cost of living.

Everest Predicts 6% Growth for HR Outsourcing this Year

Fri, 15 Jun 2012 00:00:00 -0800

According to the latest study entitled �Multi-process Human Resources Annual Report 2012 - Continued Reinvention� by global consultancy firm Everest Group, and published at DigitalJournal.com, the global Multi-process Human Resource Outsourcing (MPHRO) market grew two percent last year, and is projected to grow six percent in annual contract value (ACV) this year. The MPHRO market is also anticipated to reach US$3.3 billion this year.

Factors that affected the industry's marginal performance for 2010, and predominantly 2011, were smaller-sized contracts, fewer renewals, and dissolution of large deals. Meanwhile, the development and expansion of other deals contributed to the growth of the MPHRO market.

Other highlights of the report are:

- Multi-tenant Business-Process-as-a-Service (BPaaS) services are gaining traction.
- Asia-Pacific and Latin America are new regions are seen to further adopt MPHRO.
- Contract terminations will help provide pipelines for the market. Meanwhile, an increase in transfers and change of plans will be seen as providers become more versatile.
- Upcoming MPHRO deals will retain stable activity.

Rajesh Ranjan, Vice-president of Everest Group, said not many service providers are facing contract termination. More and more buyers are now focusing on their current operations and are eyeing expansion. He also noted that sourcing will widely affect spending related to HR.

Latest Developments in Outsourcing this Year

Thu, 14 Jun 2012 00:00:00 -0800

TPI Momentum Chief Research Officer Paul Reynolds recently gave a sneak peek of their report entitled �Momentum Market Trends & Insights 2012 Vertical Industries Report� at Info.ISG-One.com. The study highlights the developments in year-on-year outsourcing spending, covering 27 sectors. A 12-percent decline was seen for consumer durables, compared to the 53-percent influx on spending activity on utilities as service providers aim to meet new standards. The report also shows key indicators of the outsourcing habits of clients and what drives them to avail of services.

These are the top five most noticeable factors across all segments:

1. Clients always want to improve their business model/process. Service providers know this by now - majority of clients want to outsource because they want something new that could improve their business. Some of which are new strategies, improved Software-as-a-Service (SaaS) operations, and even increase in outsourcing activity.

2. Cloud integration. Different verticals use the cloud for different reasons. These industries deal with sensitive data that can affect the client and its customers if not handled properly. The cloud is more compatible with digital companies that need basic data storage such as software & services, as well as technology hardware and equipment.

3. Usage of social media and mobile technologies. There are some industries that greatly depend on digital social activities and the latest in mobile technologies, which is why firms look for service providers that are experts in these fields.

4. Service value over costs. In 2011, cost reduction was seen as the primary reason firms outsource business processes. ISG even saw that more and more clients opt for standard offerings to make way for lower prices. However, this can also change as the cloud becomes more popular.

5. Clients want flexible pricing. Clients want a more flexible pricing model, which not only covers price variability - they want to get the most out of what they are paying for.

ITO Contracts Worth Over US$85B to End in 12-18 Months

Wed, 13 Jun 2012 00:00:00 -0800

In the next 12 to 18 months, the information technology outsourcing (ITO) sector will see an end to a significant number of contracts, with a total contract value (TCV) of more than US$85 billion. Moreover, IT contracts that are up for renewal are smaller compared to deals in the previous year. This is according to global services advisory and research firm Everest Group in its study �Impending Contract Renewals: Back to the Future� in a press release published at Virtual-Strategy.com.

Everest Group's Senior Vice-president Ross Tisnovsky said a large part of ITO deals come from infrastructure outsourcing, data center, and network tower segments. Meanwhile, cost reduction is not the only reason for outsourcing- overall service quality is seen to affect the purchasing habit of clients. The rapid adoption of the cloud is likewise seen as a factor in IT outsourcing.

The study also covers the following highlights:

� Cloud computing will be a game changer for data center and applications projects.
� The number of remote infrastructure management outsourcing (RIMO) deals is rapidly increasing and gaining foothold.
� The gradual increase of mobile technology and data issues will affect the decision-making process of providers.
� Multi-sourcing and more focus on pricing models are seen in new deals.
� The banking and manufacturing sectors get the lion's share of IT contracts which are coming to an end while manufacturing and healthcare lead the TCV of BPO deals.
� Majority of the TCV of IT and BPO deals that are up for contract renewal in the next 12 months are from North America, with Europe closely lagging behind and is set to follow suit in the next six months.
� Other sectors that are involved in single-tower operations and have contracts that are due to expire in the next 12 months are human resource outsourcing and contact centers.
� The defense and public sector valued at US$20 billion will be up for renewal in the next 12 months.

Should You Outsource Your IT Processes?

Fri, 8 Jun 2012 00:00:00 -0800

Not all IT operations in businesses are implemented for long periods of time. In fact, most IT managers now prefer to outsource certain IT processes to save money and finish short-term work while in-house IT personnel focus on their core functions. The decision-making procedure usually focuses on one thing, and that is determining which IT process they should outsource and which can be kept in-house. Another factor that IT managers consider is the availability of skilled IT professionals in their region.

An article at VentureBeat.com shares factors that IT managers should look into before shifting work to a service provider.

Clearly identify the purpose of the project.
IT projects can generally be classified into two types - long-term and short-term. Long-term projects usually bring more to the table as these are the processes that affect the strategic goal of a company. Short-term projects usually address the immediate needs of the company. This is also the easiest type to outsource since it involves less restrictions and shorter timeframes.

Is your in-house team capable of performing different IT tasks?
Another thing to look at is the skillset of your in-house IT team. It would make sense to hire service providers for tasks that your employees are not familiar with because if they cannot execute the tasks properly, chances are you would have to spend more to correct less impressive work.

Is your manpower adequate?
Some companies have no choice but to outsource as their in-house team can no longer handle incoming tasks. This prevents work from piling up and enables the team to concentrate on the core processes of the company.

Will you be able to manage both teams simultaneously?
Knowing how to handle both teams is crucial to an operation as each group has their own set of issues that can affect the relationship and output. An example is the difference in culture and practices. The manager should likewise maintain constant communication and address even small issues to achieve a smooth running operation.

Outsourcing Social Media as Part of a Marketing Campaign

Thu, 7 Jun 2012 00:00:00 -0800

An article written by Rupert Hodgson at SourcingFocus.com discussed how firms can utilize social media outsourcing to stay competitive.

When social media came into the marketing arena, everyone was quick to take part and use it to connect with their customers, suppliers, and even competitors. It has become a means to broaden the reach of a company, collect and provide information, and view opinions of consumers.

While a lot of companies feel that managing a social media campaign is easy, many seem to forget that corporate profiles and personal profiles are very different. They also overlook the fact that it is a platform that is constantly evolving, which is probably why some get stuck on their initial plan. Apart from having to monitor the campaign 24/7, minute details posted by the account admin or users can immediately affect the image of a company.

Not all companies have the resources to do the necessary steps thoroughly. So what should marketing executives do? Should they outsource this type of process to service providers which are not only experts in the field, but can also manage the company's social media profile while they sleep? Or keep it in-house?

Raman Sehgal, owner of PR firm Ramarketing, noted that time is the most crucial factor that can affect a social media campaign. Also, it should be executed properly. It should be able to echo other marketing efforts done by the company, making the campaign more personal and in return, bring in more customers and create more buzz.

Outsourcing social media work can help companies find new technology and easily tap international markets. They need to identify the goals of the campaign and see if their internal team can handle the fast-paced operation. If now, outsourcing can be the solution. Not only will it give companies significant cost savings, it will also enable them to stay up-to-date and active in the social media world. With outsourcing, social media strategies of companies will be implemented properly, as long as the service provider that handles the campaign understands what the clients want to get out of social media. In this time and age when consumers are online most of the time, establishing a strong presence in the world of social media becomes inevitable.

Ways to Improve Relationships with Virtual Teams

Mon, 4 Jun 2012 00:00:00 -0800

Since technology has paved the way for globalization in the business arena, companies are now able to maximize opportunities in other countries. Even the process of putting up an offshore operation, whether handled by internal management or via a third party service provider, is now easier.

Internet connectivity is crucial in this type of operation, but how can employees foster a harmonious working environment if their co-workers are miles away from them?

An article posted at Noobpreneur.com discusses how global businesses can hold virtual team building sessions that help promote solidarity among their employees from different parts of the world.

Here are four basic ways on how to improve relationships with virtual teams:

Take time to introduce each member properly.
Employees will be able to socialize more properly if they know each other's roles in the company and how their roles affect the business. This is also a way to build confidence in employees as they will feel that the business heads know them and their contributions to the company. When doing this over Skype or other online communicating platforms, another thing that could help everyone be at ease is a simple form of appreciation. When people feel they are appreciated, naturally, they become more confident.

Foster trust among team members.
Trusting someone whom you haven't seen personally is quite difficult, so if members say they will finish on time, give them the benefit of the doubt so that you can assess and have basis for your upcoming projects. Always remind them that you are keeping a schedule and it should be strictly followed.

Corporate and social networking
There are so many ways to stay connected with team members. One of which is Facebook where each employee sees the more personal side of his or her team members. Facebook also allows groups to be made, a sort of a forum for the entire team where they can discuss non-work stuff. It would also be a great way to show each other the fun side of work and introduce a part of their working habit since they come from different locations which have different work cultures. Pictures, videos, and other types of digital media can help employees interact with each other better.

Foster understanding and patience.
Since not all employees can speak the universal language or understand basic jargon other employees are using, misunderstanding might come up. Department heads should take the lead and show employees how to deal with employees with a different culture by not necessarily giving them special treatment, but perhaps show more patience and exert more effort in understanding the situation.

What You Should Know about Insourcing

Fri, 1 Jun 2012 00:00:00 -0800

Outsourcing is still a business process that is gaining ground year after year, but even with the growing trend, some companies that have previously outsourced certain processes found themselves absorbing the services back home. Some of the possible reasons for this are: a directive from the CEO that affects the company's sourcing strategy, as a solution to an outsourcing deal gone wrong, and even a combination of outsourcing and insourcing.

An article written by ISG Director Kyle Spencer at info.ISG-One.com shows that various factors can indeed affect a business leader's position regarding insourcing. Even a hybrid of outsourcing and insourcing is often needed just to align the processes of a company.

The article also highlights several things that can affect an originally outsourced operation as it is being transitioned to insourcing. In some cases, it is actually harder to insource a process because strategies need to be re-organized and re-aligned with the goals of a company. These are some of the things that business leaders need to closely look into if ever they decide to bring operations back home:

1. Have a concrete plan.
If possible, prepare a sample case and list all the possible situations that may occur during the transition. Align goals with the risks and challenges that can affect the operation. Once that is done, executives should test the business model to see if the process is actually attainable and which business factors will be affected. After that, you now have a concrete business plan that you can present to upper management for approval.

2. Define the goals of the operation.
What do you want to achieve and why do you want to insource? These are the questions that you should be able to answer before taking action. Having a �blueprint� will enable companies to eliminate risks and confusion that could affect future operations.

3. Coordinate with the service provider.
If there's anyone who knows about the process more than you do, it would definitely be the service provider. You will also need to clarify crucial factors such as ownership of assets, transition costs, and even staff turnover.

4. Double check the possible outcome.
Services will surely become susceptible to new challenges during the transition. It would be a good idea to be ready for issues before it can affect the quality of the service.

5. Insourcing could be a means for new opportunities.
Since it's virtually a new project or blank canvas that can be moulded into a new operation for different functions, there would be more room for improvement and it can enable business owners to design the operation in a way that all the tools can be maximized.

Of Business Relationships and Independent Contractors

Wed, 30 May 2012 00:00:00 -0800

Different services are now being offered by service providers around the world. Even freelance workers outsource work, creating an ecosystem that connects all types of industries.

Freelancers now play an important role not only for small businesses but also for large established ones that are recovering from the economic slump. But since freelancers and third party service providers are not actually part of the core group, some business executives have no idea just how to treat or nurture them as an integral part of the team.

Nellie Akalp, CEO of online legal document filing service CorpNet.com, shares five ways on how a rewarding outsourcing relationship can be established between a contractor and a client.

1. Treat your contractors as part of the business.
They bring not just tangible products to the company, but new ideas and capabilities that can help a business grow as well. Foster a more personal working environment for them by including them in simple office functions and even events that are not directly related to work. If you are looking to work with them for a long period of time, it is also ideal to inform them of your long-term goals by sending them basic company emails.

2. Start managing them early on.
Investing time and effort to your contractors may not be such a bad thing if you intend to keep them for future or extended projects. Some of the things you can start with are: the way you want your brand to be presented, nature of the business, basic processes, and many more.

3. You will get what you give.
Since you want to coexist and build a sound relationship with your provider, give back and be appreciative of what they do for your business. Of course, we are not talking about monetary incentives but just by appreciating the work and time they put in to your project can work wonders for your partnership. If you are difficult to deal with, they are likely to become less interested and motivated in giving you the results you were hoping for.

4. Do not push your luck during negotiations.
Although it is customary to ask for discounts or waived fees, keep in mind that your contractors still need to earn money. If contractors feel that you are low-balling them, they might give you low quality services in return. If you have no idea what the going rate is, you can easily browse websites or ask several contractors so you can compare it with the budget you've prepared for the contractor.

5. Be transparent at all times.
If the client provides a comprehensive introduction to the contractors during the first few steps of the process, they will at least have a starting point to work on. This is crucial to companies that contract providers which are in different locations and have a different culture. They should also be able to share all the information needed for a project, even good and bad news, because this would mean they would have to deal with the problems and find solutions as a team.

Where to Outsource your IT Processes

Tue, 22 May 2012 00:00:00 -0800

GrowBiz Media CEO Rieva Lesonsky shares her own experiences about outsourcing business processes locally and internationally at ReadWriteWeb.com. Her article highlights the benefits and drawbacks of each and aims to demystify one of the crucial factors of an operation - the location of the service provider.

Offshore outsourcing
One of the known locations for offshore outsourcing is Southeast Asia, a region where majority of employees working for business process outsourcing (BPO) companies work during night time. The upside of this is work assigned to the offshore team can be done while you sleep.

However, since you are in different time zones, it would mean that you would have to spend more to hire someone who will manage your offshore operation. Language barrier and cultural differences can also make offshore outsourcing more difficult.

Outsourcing nationally
This is making a comeback as more and more Western companies, particularly in the United States, are unhappy with the results of their international outsourcing efforts, which is even amplified by the US government's aspiration to bring jobs back home.

This year, nearsourcing or ruralsourcing is said to be one of the top trends, according to industry body International Association of Outsourcing Professionals (IAOP). In fact, Georgia, North Carolina, and Arkansas are now recognized to have a supply of skilled tech workers who get relatively lower salaries compared to those living in other states.

Language barriers are minimal (or non-existent) and communication amongst the client and provider is easier. The time zone may be different but it can be easily managed.

The downside, she says, is that some of the service providers they have encountered are the ones who make use of offshore outsourcing.

Outsourcing Locally
When it comes to outsourcing processes locally, communication is very easy, which will be a plus for small businesses and start-ups. Information is easier to disseminate and corrections can be worked on immediately. If the occasion calls for it, they can meet face-to-face without having to schedule a flight or drive for several hours. Another advantage is that you can easily absorb your trusted contractors should you decide to hire fulltime employees.

The downside is still the cost because the provider will probably follow the going local rate.

Finding the Right Vendor for your IT Services Strategy

Fri, 18 May 2012 00:00:00 -0800

Clients are looking for dependable providers which are experts in the field of IT services. In most cases, they avail of services from several IT vendors in hopes of creating a cohesive business operation that can be operated via a central hub. Not only do buyers want each service provider to work as a team, they also want to align the entire IT strategy with the goals of the business.

Stephanie Moore, Vice President and Principal Analyst at global research and advisory firm Forrester Research, wrote and published an article at CIO.com, which tackles the complexities of multi-sourced IT operations, tips on how to form the dream IT services team, and how strategies and business goals can be aligned.

Perform an extensive background check. Just because vendors look good on the outside doesn't mean everything's fine and dandy on the inside. Do not be easily impressed by service providers overselling their services and products because this may be a ploy to lure clients in, even if they are financially and legally incapable of operating. Ask other business owners and learn a thing or two on their experience with service providers.

Analyze people-management protocols. Knowing how vendors manage their employees can provide a clearer insight as to what to expect from the service. Things that buyers should look out for are the technical skillset of the personnel, training programs, and the sales or accounts executives. Clients should also diligently investigate if the vendors are prone to subcontract processes or are likely to share client's information to third party providers.

Once these factors are sorted out, clients and providers should meet at the middle to maintain a healthy relationship. Some of the areas that both parties should simultaneously be working on are:

� Proper training and documentation of processes.
Clients should properly document all the processes and issues they encounter while working with a provider. This maintains a well-balanced methodology for the company, and is a good way to track areas that can be modified or improved.

� Knowledge sharing
Both parties should openly share competencies and system/process upgrades. This specifically involves companies that are actively making use of Agile and software-as-a-service (SaaS) process. Because of the rush of information coming in to accommodate the process, the internal staff should be well-prepared in handling, managing, and upgrading the system.

� It's not always about the size of the service provider.
Depth and breadth are two different things. If a service provider has hundreds of services on their menu, that doesn't mean they are experts on each segment.

�Service-specific providers
Some vendors have a specific vertical in terms of services. This would mean clients can optimize and innovate using the IT vendor's expertise, according to their business' needs without disrupting other processes.

� Analyze the capacity of the provider.
Clients should see to it if the size of the service provider can accommodate the pending operation. If vendors say that size isn't an issue and they can adjust accordingly, then review the manpower capabilitie

The Growing Market of the HRO Industry

Wed, 16 May 2012 00:00:00 -0800

A press release posted at news.yahoo.com covers the human resource outsourcing (HRO) market report from Global Industry Analysts, Inc.

In the report, the HRO market is anticipated to reach $199.6 billion by 2017. Some of the key drivers for the industry's growth are business solutions that can help align internal processes, specifically HR, reduce costs, improve operational standards and framework, and maximize the latest technologies. Human resource outsourcing is also becoming more and more popular among large companies that are seeking to expand business operations internationally. Furthermore, since HRO providers offer flexible terms and services that can tap markets worldwide, they are able to land multi-purpose HRO contracts.

Human resource outsourcing mainly deals with people management services. It can cover processes such as people management, software and hardware, needed for business operations, and even operations management services.

Outsourcing major HR functions is especially beneficial to businesses that are in transition and are working to meet compliance regulations. But like any other market, growth mainly depends on the vendors' ability to market services, skills, and ability to manage and prevent problems, services menu, and regional and cultural advantages.

Majority of the buyers in the HRO market are large companies that operate globally, but small and medium players and emerging markets are also beginning to take interest in outsourcing HR functions due to availability of workable business models.

The regions predicted to adopt HR outsourcing services are the UK and Continental Europe. Meanwhile, industries such as technology, financial services, manufacturing, and telecom are also expected to contribute to the market's growth.

On the provider side, even if India is the leading outsourcing vendor, other outsourcing locations, specifically in Eastern Europe and Southeast Asia, are rapidly developing. Also, buyers are now more likely to request for contracts that are smaller in size, and are only outsourcing minimal and select functions to tackle problems head on.

The report also stated that the United States and Europe get the lion's share of the global HRO market, while Asia is expected to post a rapidly growing compound annual growth rate from 2009-2017.

Tips to have an Effective Outsourcing Business Case

Tue, 15 May 2012 00:00:00 -0800

Business executives often believe that drafting an actionable outsourcing plan makes an operation impervious to problems. The process itself is stressful enough, but try adding the step of looking for a service provider and negotiating after the RFPs have been sent. Clients are eager to improve business operations and cut costs. Vendors, on the other hand, are in it to make money and build a brand.

ISG Senior Consultant Sven Geissler shares an article at Info.ISG-One.com that shows five basic precautionary measures that businesses can look into before inking an outsourcing deal. These steps can also help avoid having a seemingly flawless outsourcing business case but ends up with more costs.

1. Use all financial data you can legally get your hands on. What better way to start a financial plan than with the company's data resource. To map out the plan, make use of the projections for the incoming year such as trends, incoming budget, and the timeline of the operation. Also, it would be better if initial investments and variable costs are identified outright so that whether the costs come up or not, the budget will remain intact.

2. Set financial boundaries. Before an operation starts and processes add up, a party should clearly be stated as legally and financially liable for all the services, equipment, and even assets of the outsourcing partnership. This is to avoid additional costs and unclear ownership of the elements involved in the process.

3. Try the volume-based pricing model. Have proper estimation of the number of staff, volume of output, and the resources consumed by the operation to see less budget problems in the future. A good thing to base the pricing model on is the current in-house operation, and then additional margins can be added for the outsourcing operation.

4. Prepare estimations of the total expenses of the outsourcing operation. It is a known fact that the cost of doing an operation in-house is a far cry from the amount the company will be shelling out for the outsourcing operation. The goal is to save money, not spend more. Make sure that all the stakeholders are aware of which processes will be outsourced, how much the initial costs will be, and of course, how much they will be able to save if the operation becomes successful.

5. Prepare a measuring system. Having metrics will enable business owners to properly monitor the performance of their operation, and see if the goals are met. It would also help identify the areas of the plan that can be a risk to the entire operation.

Latest Trends in the Outsourcing Industry

Fri, 11 May 2012 00:00:00 -0800

An article by Stephanie Overby at CIO.com shows just how fast the outsourcing industry is evolving. As the end of this year's second quarter approaches, trends that can widely affect an outsourcing operation are still emerging.

1. Contract sizes are declining. Information Services Group (ISG), an outsourcing consultancy firm, stated that even if the volume of large and medium-sized outsourcing contracts had remained normal over the past decade, IT services transactions were seen getting smaller in size. In fact, contracts which are less than $100 million have increased three-fold.

2. Pricing models are getting trickier. As outsourcing vendors are striving to get more revenues, they are predicted to cross the safe zone by applying engagement models, output-based pricing, establish new partnerships, revenue-sharing measures, and an additional quality control process.

3. Establishing a control hub. Nowadays, clients who contract several providers for each of their processes are left clueless as to what to do with their fleet of suppliers. For some IT companies, managing multi-sourced operations has become one of the services that they offer, while others hire specialists to keep the providers in line.

4. Stricter security protocols. One of the things that would probably never stop evolving is a company's security policy. Since data and information are the backbone of businesses, executives are always coming up with better, stricter, and more efficient ways to protect them from security breaches. This is also considered as one of the greatest challenges for both parties.

5. Cloud-based services. Global consultancy and research firm Everest Group says clients are now looking into services such as remote infrastructure management, which is why service providers are doing their best to iron out issues that may affect a buyer's decision to use the cloud.

Everest Predicts more FAO Activity this Year

Wed, 9 May 2012 00:00:00 -0800

In a press release published at news.yahoo.com, consultancy and global services research firm Everest Group expects the Finance & Accounting Outsourcing (FAO) market to bounce back with a 10-15 percent growth rate and is seen to post $4 to $4.5 billion in annual contract value (ACV) this year.

According to Everest's Finance & Accounting Outsourcing Annual Report 2012, ACV in 2011 increased by 11 percent, though it is lower than the 18 percent growth reported in 2010.

Everest Group's Vice-president Saurabh Gupta said even if the market was not able to meet growth levels last year, there were still a lot of strong market indicators such as the 200 contracts which are up for renewal and new transactions. However, fewer multi-processing contracts were seen because of the shift in the purchasing behaviour of clients. They are now more cautious, trying to avoid as many risks as possible. All in all, outsourcing is still a solution for high operating and labor costs, but this time, it can also address other challenges in business strategies and streamline core processes.

These are the other highlights from the report:

� The FAO market is seen to post continuous growth. Sixty percent of last year's FAO transactions are from manufacturing, financial services, high tech and telecom, and professional services accounting industries.

� The Asia-Pacific region is rapidly becoming a credible market for FAO processes. The US, on the other hand, is responsible for more than half of the total number of FAO contracts last year.

� More FAO contracts from firms with revenues which are less than $5 billion were awarded last year at 60 percent, compared to 2008-2010 at 40 percent. SMBs, on the other hand, doubled FAO contracts.

� With almost 50 percent of new FAO contracts signed for end-to-end processes in 2011, it just goes to show that buyers are now looking for far-ranging business solutions rather than quick fixes.

� Delivery centers are now more physically accessible and are bringing FAO processes onshore.

Gupta noted that competition in the FAO market is getting tougher. Proof of that is the sudden drop of market share of the top three providers from 65% to 50% within five years. Also, FAO providers were seen to invest more on technology.

Are Outsourcing Contracts Getting more Difficult to Handle?

Tue, 8 May 2012 00:00:00 -0800

As outsourcing evolves and becomes more popular, technology is becoming easier to understand, which also makes new products and services more attractive to clients and consumers. However, the persistent issue is that contracts are also getting more complicated and are harder to set in stone as clients get more experienced in outsourcing and are thinking of other ways to get the most out of the process.

An article written by Stephanie Overby at CIO.com discussed the noticeable changes in outsourcing contracts and negotiations.

In the 2012 Legal Pulse study done by KPMG, 41 percent of outsourcing lawyers said they gradually experienced or saw more complex transactions. Moreover, with the ever growing outsourcing industry, it is unquestionable that vendors and clients are facing not only basic outsourcing challenges but issues in contracts as well.

Stan LePeak, Director of Research for Advisory Services at KPMG, said even if processes that can make outsourcing transactions easier emerge and buyers use these new tools to their advantage, they still have to overcome the diversity of service providers, various types of service delivery models, and issues in vendor locations.

Identify Possible IT Issues

In outsourcing contracts, parties involved should voice out their concerns even before a contract is drafted. LePeak said if these are not discussed during the first few stages of meetings and pitches, these will definitely take a toll on the operation.

Another important thing to consider is to check if the estimated level of effort to be exerted in complicated outsourcing situations is within the scope of the operation. More often than not, contracts turn sour due to an overprotective buyer or overselling vendor.

Outsourcing lawyers usually use a standard pricing model and come up with measurable goals to overcome issues, but 27 percent of survey participants said there is �little to no standardization� when it comes to defined terms. According to LePeak, the development of outsourcing comes with expansion in new territories as far as scope, goals, and location are concerned.

One of the pressing issues is that parties do not want to take responsibility for problems, insurances, damages or anything that could be a risk on their part. For providers, it is more on the financial aspect of the contract including termination fees, termination rights, service levels, and transformation and transition fees.

LePeak said transformation is often included as an add-on for parts of the operation that can be modified and improved but hard to justify. He adds that it is hard to conceptualize a clause for something that is not concrete or entails several factors. Transformation-related issues are 17 percent higher compared to last year since more clients tend to consider transformation as one of their objectives in outsourcing.

Drawbacks of Software/IT Outsourcing

Thu, 3 May 2012 00:00:00 -0800

Cost reduction has been a major reason businesses outsource to offshore locations where labor and operational costs are relatively lower. One segment that thrives in an outsourcing-fuelled environment is software development. It is one of the most expensive segments to cover and putting cost issues aside, outsourcing software-related services and products provides more leg room for executives to easily manage their operations.

However, as time passed and software outsourcing matured rapidly, the software activity is seen to be slowing down as more and more factors are starting to affect the activities of providers vs. clients, providers vs. providers, providers vs. Technology, and many more.

In an article published at SeekingAlpha.com, one of the contributors shared five reasons it may not be a good idea to outsource software-related processes.

Labor arbitrage doesn't carry as much value as it used to. Before, the salaries of workers in Western countries are known to be triple the value of their Asian counterparts, which is why moving jobs to Asian regions became popular. Now, low labor costs are no longer the main factor in software deals. Large profit margins are pushed aside and the quality and quantity of output are now strongly considered in contracts.

Risks become shared in supplier-client relationships. It became more and more evident that actions, whether good or bad and done by either party, will have a certain effect on one's image.

Big players are gradually entering the arena. Other titans such as IBM and HP are expanding service offerings and are now tapping the consulting arena. Apart from presenting a complete roadmap to clients, they also offer lower labor costs. On the other hand, companies like Accenture (ACN) are an end to end provider covering management and technical consulting, a sterner competitor that also has global authority.

Salary issues. The salaries of offshore programmers continue to increase, while the US-based employees only get pay cuts. At some point, wages become no longer an issue since both options present similar rates.

Lousy profits despite extra efforts. It became apparent during this year's first quarter performance based on earnings that outsourcing does not deliver as much as it used to. Infosys did ok, while IBM and Accenture gain traction, thanks to the right combination of product offerings and consultancy services.

Tips towards a Successful Captive Operation

Wed, 2 May 2012 00:00:00 -0800

A lot of large companies have been depending on their captive operations during the past couple of years. However, planning for strategies across all departments of the company is hard, and is sometimes overlooked because apart from internal operations, executives now have to reorganize so they can maximize what they have invested in on their captive operations. Also, the sluggish recovery of various business sectors from the downturn adds to the growing list of challenges.

Atul Dogra, Senior Consultant at Information Services Group (ISG) shares an article at info.isg-one.com which covers five factors that can help companies reinforce their captive plans and operations.

1. Create a plan that will efficiently work across all departments of the company. Even if the captive operation is an external entity, its objectives and processes should still coincide with the main company's. Processes should be consistent and provide room for adjustments, periodical evaluations, and upgrades if needed to maximize productivity.

2. Develop strong employee retention programs. Hiring the best is one thing, but making him or her stay is a different issue. Captive operations should develop programs such as extensive growth opportunities for employees and niche specialization-based jobs that are widely sought after in various markets, so that attrition rate will be lower, and wage inflation will be easier to handle.

3. Clearly enumerate the roles of the captive and the third party service provider. To clearly define the performance of each side, proper alignment and a standard framework can help identify which areas should be worked on and whether or not the targets are met. Furthermore, having a fixed scale can help business owners decide which location can provide the number of candidates needed for the captive operation.

4. Parties involved should be transparent with one another. Even if each team or captive is located in different regions that uphold different cultures, they should be able to simultaneously work and synergize to meet the company's objectives.

5. Manage the expenses. Analyzing the factors that make up the value of the captive can help business owners see how expenses can be maintained or even reduced. It would also provide margin for variable factors that can help alleviate pay-outs during initial investments. Moreover, an in-depth analysis of the captive's current economic environment can help achieve proper cost allocations like labor arbitrage and adjustments on infrastructure costs.

New Pricing Models for IT Outsourcing

Tue, 24 Apr 2012 00:00:00 -0800

IT outsourcing services used to be paid for like these were normal items in a shop. So if a company needed server management services, application development, or even network monitoring, they would look for a provider, get the job done, and pay for the materials used and services rendered at a definite price.

Customers in this day and age expect more value from their IT operations, which then pushes IT service providers to reformulate pricing models to tap the rapidly growing market for high end sales.

A partner at K&L Gates, Shawn Helms, said vendors now construct pricing models based on what the clients are typically looking for and are looking for ways that can maximize earnings. Furthermore, Steve Martin, partner at outsourcing consultancy firm Pace Harmon, said the new pricing models aim to cater to companies which have detailed/segmented IT processes or are having a hard time transitioning from traditional ones.

In an article written by Stephanie Overby and published at CFOWorld.com, various IT outsourcing pricing models were discussed along with their advantages and drawbacks. These are the new pricing models for IT outsourcing:

Gain-Sharing Pricing Model
This pricing model focuses mainly on the volume or quality of output. This is typically used by vendors for clients who don't mind paying more for maximum output or quality. This model works best for buyers who'd want immediate results and a strong partnership with vendors.

Ross Tisnovsky, Senior Vice-president at outsourcing consultancy firm Everest, believes aggressive collaborative effort from both parties is crucial since they both aim to maximize the expertise of the supplier to come up with the best and most number of outputs. Also, for this model, the budget for the suppliers is usually not restricted.

A huge drawback for this pricing model is initial cash out needed to start the operation. It would also mean that both parties should be transparent to create a relationship that can share risks and rewards. This is hard to do because according to Martin of Pace and Harmon, it is common that neither of the parties involved want to fund the initial budget, unless there is assurance that they will be able to see return on investments.

Incentive-based Pricing Model
This model allows vendors to receive incentives if they were able to over deliver. This is usually an add-on to basic pricing models. It is used by customers as motivation to push vendors to deliver more. If all goes well, both parties win.

It is advised that this type of pricing model be used by buyers who have ample experience in dealing with IT vendors, so that it would be easier for them to quantify or measure the performance and output of the operation.

Consumption-based Pricing Model
In a nutshell, this pricing model means pay as you go through the process or pay-per-use. It works best for companies that have varying needs or those who only need service for a specific segment. The most popular platform that uses this pricing model is the cloud.

Transactions are also easier since instead of having one huge bill or an initial investment, it becomes an operating expense. Likewise, it would mean that determining the annual cost is harder since there will be months when you are not using the service and vice versa.

Shared Risk-Reward Pricing Model
This model requires the buyer and the team to synergize for a specific period of the contract. Go big as they say, which means buyers put everything at stake, like a captain aboard a ship portrayed by the vendor. If the ship sinks, the captain will be the last to jump.

According to Gartner, the model somewhat alleviates risks since it is evenly distributed and both parties will be accountable for the outcome. Since there will be a lot of sharing, results will be hard to measure and varying opinions will definitely take its toll on the entire operation.

Things to Know to have Successful Outsourcing Relationships

Thu, 19 Apr 2012 00:00:00 -0800

As industries become more diverse and platforms in achieving goals are evolving, it is safe to say that more and more clients have raised their standards when looking for the right outsourcing partner. During the first few years of outsourcing and to combat the effects of recession, buyers were initially inclined to go for the more affordable business solution, but that's no longer the case.

Quality of output and long-term solutions are what high-end buyers are looking for nowadays, and some of the factors that affect their decision-making process are the actual costs of the entire operation against supplies used, sustainability of the operation, and specific expertise of labor pool. This becomes a window of opportunity for the IT sector as the market has grown and new services are added.

So how should clients deal with their service providers, now that the outsourcing industry is evolving? An article posted by iGATE Patni Senior Vice-president David Kruzner at ITWorld.com enumerates things to consider to have a successful outsourcing relationship with vendors:

Look for the vendor that will give you the most value for your money.
When finding a business solution, avoid looking for an easy way out. Make a hypothetical scenario in your head on how the solution will help your company grow and how it will culminate itself as a valuable arm to the company. Also, since you probably have assessed what the operation will require, there's no need for you to ask the incoming outsourcing partner to redefine what is lacking in the operation.

Clients should be able to spot the right vendor based on the previous work they have done and what the vendor can contribute to the company as a partner.

Consider vendors as team members.
To create synergy in the operation, clients should treat the service provider as an integral part of the team. This would mean that the vendor will carry out the values and goals of the client. They should also incorporate the outsourcing process as a long-term business solution rather than a quick fix to internal problems. Also, integrating the IT department and outsourced party is a great way to maximize the expertise of the latter because they are given the chance to look into other opportunities.

Proper alignment and definition of tasks for service providers
With the economy that businesses are facing today, stricter management practices and metrics should be applied for IT outsourcing partnerships. Having a specific goal and working around it was one of the factors that �gainsharing� in the 1990s lacked, which was why most of the partnerships back then failed.

True partnerships work together by eliminating risks one by one, and achieving goals as they progress. Cost-cutting and labor arbitrage are a thing of the past, as new clients strive to achieve long-term goals and grow with their outsourcing partners.

Gartner: Five Cloud Computing Trends to Watch

Thu, 12 Apr 2012 00:00:00 -0800

Cloud computing is definitely one of the fastest growing processes being adapted by numerous companies all over the world. Any mismanagement of the cloud can be detrimental to a business' image, budget, and sales prospects. Regular system maintenance and constant updates are crucial so that the cloud solution remains relevant. But how can a business do all of those when the cloud is extremely far-reaching and is constantly changing?

Gartner Fellow and Vice-president David Cearley explains that cloud computing has in fact broken through several businesses in various industries. It is an IT platform that enables companies to monitor, control, and implement business processes, mostly via the Internet. This would mean a flexible IT operational environment with less dependence on traditional software and hardware licensing models.

In an article posted at Gartner.com, experts at the renowned IT research company said businesses and individuals should think ahead and look at the trends when it comes to creating cloud strategies.

Careful examination of cloud benefits and challenges
Buyers tend to become overwhelmed by the slew of benefits that the cloud has to offer, some of which are more flexible environment, reduced operational costs, and simpler processes. It also enables business owners to shift focus to other high-end IT processes, as well as make way for business improvements. But with several challenges that buyers will inevitably deal with, they should expect longer waiting time for contracts to be final, because they now have to really consider the possible obstacles such as data security, quality, lock-in clauses, etc.

Fusion of internal applications and cloud services
Since there are several types of cloud services (public and private) and companies have varying requirements, it will not be long before applications and services are mixed and matched by buyers. Gartner says it is more ideal to look for short-term solutions, integrating application and data, and creating a hybrid setup where internal applications are linked to external ones.

Cloud Service Brokerage
Since buyers don't usually know where to find the best deals for cloud services, having cloud services brokerage (CSB) will make things easier for vendors and clients. Gartner says CSB will be more popular in the next few years as more and more businesses consider the cloud solution.

Creating an allowance for the adoption of cloud computing
Expect the cloud to proliferate more. If you are a business owner, would you like to be left behind? Of course not! A lot of businesses will eventually discover the benefits of the cloud approach. However, it is essential to note that there are certain factors to take into account when it comes to developing cloud-centric applications. Consider not only the benefits but also the scope and limitations of this business solution.

Cloud computing on data centers for flexibility
Cloud computing involves the enterprise as the buyer and the cloud services vendor managing the data center and operational models. As the enterprise establishes its own data center, there will come a time when it will be influenced by the implementation models of the service provider. Enterprises are advised to make use of cloud concepts to future data centers for flexibility and operational efficiency.

The Decline of Global English Fluency

Tue, 10 Apr 2012 00:00:00 -0800

The English language has always been the universal language, and since procuring services and supplies from offshore locations has become very popular amongst IT companies, executives are still apprehensive when it comes to making transactions with vendors abroad. The main hurdle, they say, is finding an offshore outsourcing hub with employees who not only understand and respond to basic conversations, but can also comprehend and give their insights to business presentations and discussions.

Stephanie Overby of CIO US shared an article at PCAdvisor.co.uk, analyzing the results of a test done by GlobalEnglish, an online provider of English language instructions to renowned companies like Cisco, Procter & Gamble, and GM.

More than 200 companies from 76 non-native English-speaking countries participated in GlobalEnglish's test. This aims to determine how well the participants know the language, how they use it via different platforms (written or spoken), how it is being used in varying situations - from brainstorming with the team to sales pitches with potential clients, etc.

The rating system is from one to ten, with one covering basic English skills, and 10 representing more complex tasks. The test results show that the average score of the participants is 4.15, a seven percent decline from the 4.46 grade posted in the previous year. This would then mean that for every 10 workers, four would not be able to communicate and grasp basic ideas during face-to-face discussions.

Meanwhile, 60.5 attained a score between 4.0 and 7.0, which is still acceptable and is only a few points below the intermediate level. This means that a large number of participants are not able to take on crucial roles during business meetings or handle presentations.

According to Alex Lowrie, Senior Director of strategic account management at GlobalEnglish, it is possible for the 2012 score to be lower than the previous year because companies that are venturing into the global market have premature strategies when it comes to leveraging the English language in business deals.

Based on the size of labor pool, the Philippines is the frontrunner when it comes to fluency in business English with a score of 7.11. This would mean that Filipino workers can participate in business meetings, comprehend complex matters, and provide inputs. India ranked second with 5.57, followed by Canada (5.45), Indonesia (5.28), and the United Kingdom (5.24). On the other hand, Colombia (2.75), Brazil (2.95), Turkey (2.97), Japan (3.40), and Mexico (3.50) did not perform well in the test.

Tips to have a Successful Service Integration and Management Process

Wed, 4 Apr 2012 00:00:00 -0800

Multisourcing is now widely accepted by a lot of organizations for faster and less expensive internal and external operations. It means that two or more providers are engaged to do several segments of a process. More often than not, unavoidable challenges arise and sometimes, project managers wish they have at least come up with a good service management plan before utilizing the multisourced operating model.

Another factor that adds pressure is the cloud adoption. Basic management skills are a thing of the past since the usage of the cloud entails a more complex environment for the entire business. It can put sensitive data at risk and expose the company's trade secrets. Having the cloud in an operation would also mean all the service providers should comply with the standards of the industry. This is another factor that should be addressed immediately because if one of the suppliers isn't competent enough industry-wise, it would cause delay and businesses will lose money.

What would make a multisourced operation work properly is the creation of a service integration and management (SIAM) function. It is a management system that dictates which functions should be assigned to each provider. It will also make sure that the providers are doing their part.

The Director and Chief Research Officer at Momentum, Hannah Patterson, shares an article at Info.tpi.net that covers five tips which can help create an effective SIAM function.

1. Map it out. Make sure everyone involved knows the role of the SIAM function and how it will be implemented across all business aspects. Identify the scope of the function. This may include not only IT but also facilities and other services.

2. Have a sense of ownership. If you represent a group of service providers or you brand yourself as the hub of several outsourced services, you will be held accountable if one of the service providers under you fails to meet the standards of the client.

3. Don't let the SIAM fall into pieces. In large operations, some of the service providers tend to break apart from the entire operation if they are not happy with the setup or if they feel they do not play an important role. It is up to you, the main hub, to keep the synchronization among service providers.

4. Provide clear contracts. The clauses in your contract should be echoed within the SIAM function so that it would be easier to identify goals and make sure that all parties involved are always on the same page.

5. Be independent. Providers work together to meet the goals, but bear in mind that the integrator of the process serves as the client's agent that delivers services independently from providers responsible for infrastructure, for instance.

Strategies QA Organizations Use to Deliver Value

Fri, 30 Mar 2012 00:00:00 -0800

A recent article posted at BizTech2.in.com discourses the Financial Services World Quality Report done by Capgemini and Sogeti. The report indicated that amid the cloud-related risks that Financial Services (FS) organizations are facing, they continue the adaptation of the technology in hopes of alleviating challenges that would affect the entire operation.

The IT department of each FS firms oversees if the newly acquired cloud service complies with the needs of the organization, helps the business grow and of course, saves the company from additional expenses. On the other hand, the Quality Assurance (QA) organizations are the ones responsible for making sure that the tools and processes used such as the cloud, Software as a Service (SaaS), outsourcing, Testing Centers of Excellence (TCoE), and mobile services readiness are contributing to business growth.

Majority of the surveyed firms indicate funds as a concrete hurdle, as well as the constant changes needed by the applications. With those issues, QA organizations find solutions that help firms maximize operations and circumvent challenges:

The IT infrastructure and services are upgraded by making use of SaaS models and integration of the cloud. With the upgrades, simplification of processes, lesser operating costs, increase reaction time and cater to a wider market are also being worked on by QA organizations. The Testing Practice and Rightshore Leader at Capgemini Global Financial Services, Govindarajan Muthukrishnan said organizations still doubt the security risks of the cloud but see the technology as a cost effective and easier way for testing since it can be accessed anywhere and utilized as a pay-per-use model. In fact, only 15 percent are hesitant to apply upgrades and 73 percent indicated that between 1 percent and 50 percent of their operations will be migrated to the cloud.

Outsource QA to third party service providers. According to Anurag Gupta, Testing Leader for Financial Services at Capgemini India, even if 70 percent of FS organizations outsource testing to third party vendors or employ contractual testers, only six percent outsource large segments of their testing operations (around 76-100 percent). Gupta noted that this is a clear indication that FS organizations can maximize outsourcing benefits for QA operations.

Create a Testing Center of Excellence (TCoE). Time, money, and qualified experts are crucial in operating a TCoE. A lot of FS firms may see this as another obstacle which is probably why only one percent of the group have a fully operational TCoE. Meanwhile, 55 percent are seen planning for a future TCoE or have started putting up the process. Having a TCoE can help businesses and their QA develop a cohesive environment. It can also create a benchmark for companies for their testing operations and of course, reduce costs.

Prepare for mobile application domination. Since more and more users, clients, and investors are using mobile devices, it just follows that the FS industry and its QA teams are preparing for changes that will come in terms of utilization and security. It is considered as the �New Normal� and QAs need to rapidly acquire new sets of skills to keep up with the changes.

More room for growth. Anurag said QA organizations of today are eager to know where they are in the playing field and want to immediately asses which areas they need to improve on. Meanwhile, the FS industry is one step ahead of other segments in terms of test organizations since they deal with sensitive data.

However, to improve testing processes, minimize errors, ensure security, and have better turnaround time for QA processes in the FS industry, proper regulation of tools and processes is crucial.

A Look at Data Center Services Markets in Different Regions

Thu, 29 Mar 2012 00:00:00 -0800

More often than not, service providers offering data center-related services overlook the needs of clients from different regions. In accordance to the recent study from research firm Gartner, the preferences of buyers coming from different regions vary, even when outsourcing data-related services.

Chris Preimesberger shared an article at EWeek.com, which gives an in-depth analysis of the data center services (DCS) market report from Gartner. The report highlights how the current DCS market is transitioning from traditional processes to more diversified ones, and how location is affecting the decisions of business owners. Some of the modern services being adopted by business owners around the world are cloud computing infrastructure as a service (IaaS), platform as a service (PaaS), and infrastructure utility services (IUS).

According to Claudio Da Rold, Vice-president and renowned analyst at Gartner, traditional markets have been looking for more room for growth and are considering on expanding current DCS operations. Enterprise organizations look at factors such as usage patterns, volume of each segment applied to the process, and market drivers.

In North America, hosting (42 percent) and cloud IaaS are two of the most procured services. On the other hand, other locations are more inclined to outsource data center-related services.

These are the highlights of the report:

North America � For 2011, the data center outsourcing (DCO) market was valued at $33 billion. Meanwhile, both web hosting and data center sharing amounted to $23 billion. This location also takes up 60 percent of public cloud services globally.

The growth rate of traditional DCO services slowed down since IUS solutions, lower-price IT outsourcing (ITO), and industrialized models have been made available. However, the DCO/IUS market increased progressively via modern offerings like storage as a service.

Europe � This region took up 23 percent of the global public cloud services. The DCO market reached $38 billion last year but web hosting and co-location, valued at $8.6 billion, was far from North America's figures.

Asia/Pacific � This region had the least transactions in the DCS market which was valued at $10 billion last year. Public cloud adoption was only at 9.8 percent in Japan and 3 percent for the rest of the region. Web hosting and co-location were valued at $2.5 billion.

Things to Watch Out For in Outsourcing RFP Responses

Thu, 22 Mar 2012 00:00:00 -0800

When business owners decide to outsource a part of their IT operation, they go through a tedious process of preparing a request for proposal (RFP) to send out to known vendors. The request typically includes the details of the project such as requirements, estimated budget allotments, security clauses, and even a set timeline for meetings and negotiations.

Since vendors nowadays are actively looking for prospective clients to make a sale and the outsourcing industry becoming more saturated, it will only be a matter of days before business owners receive overly enthusiastic responses.

The client's decision should never be clouded by superficial contract details or even personal excitement that can ruin a theoretically efficient and money-making (saving) IT outsourcing operation. At ITWorld.com, Stephanie Overby enumerates nine things that customers should watch out for when going through RFP replies.

Discount rates that are too good to be true
According to Mark Ruckman, one of Sanda Partners' outsourcing consultants, the vendor who's pitching the lowest rate is probably pulling your leg or knows nothing about the business. This is because service providers usually know the going rate and what their competitors are charging the customers.

Shared financial rewards
Randall Parks, co-chair of the global technology, outsourcing and privacy practice group at Hunton & Williams, pointed out that gain sharing practices are used to cover up the bigger agenda of vendors which is to make clients believe that they have to purchase the price-reduced offerings so that they wouldn't have to spend more or go over budget.

Esteban Herrera, COO of outsourcing analyst firm HfS Research, said gain sharing contracts are unclear most of the time, affecting the relationship between the parties. Steve Martin, partner at outsourcing consultancy Pace Harmon, chimes in, saying that it is the vendor's duty to help a client save.

Credits and Demerits
Vendors often sneak in clauses in Service Level Agreements (SLAs), stating that if the vendor does something wrong, they will be given demerits, which could mean that the client can get a discount from their billing. When the vendor does something right or over performs, they will be given credits. Betty Breukelman, partner at outsourcing consultancy firm Everest Group, said this type of clause in contracts can create an imbalance, especially if the tasks can be easily executed.

They always agree with you and your demands.
Think twice when the vendor nods at everything you say, because this could mean that the service provider doesn't care about your project or worse, doesn't know what you are saying. They should at least clarify your requirements or ask for more information before starting the operation.

Cost of transition
In some cases, IT service providers will ask the client to shoulder additional costs brought about by the transition, and yes, it usually costs a pretty penny. The director of KPMG Shared Services and Outsourcing Advisory, Marc Stark, stated that it is a common problem faced by business owners.

Changes in the contract are endless.
Having flexible SLAs can be useful, but if customers listen and fulfil every whim that their vendors throw at them then changes in the contract will never end. It will create a win-lose environment. It's a �win� for the providers because they are entitled to get rewards and �lose� for the clients because they can't do anything about it since it is already set in stone. Another scenario is when customers purchase add-ons that they don't really need - the vendor wins yet again.

The slowpoke
Even if you have set your eyes on a vendor, but they lag behind the others in terms of presenting ideas to you, Ruckman said this could indicate the type of treatment you'll get in case you sign them on to be your IT outsourcing partner.

�Equal� rights in billing
Some vendors will tell customers that they have equal rights in billing. However, this can only mean one thing - you are subjected to pay before the due is past because in the contract, it would appear that the time they gave is sufficient, because it is the same number of days they can work on making an invoice. The thing is, customers need to audit the invoice before paying it, making sure that the billing details are correct by backtracking through the work submitted by the service providers. Martin of Pace Harmon said customers should be given more time because backtracking is far harder than creating an invoice. Besides, what if the allotted time given by the vendor to the clients to review the invoice expires? How can the clients contest unscrupulous charges?

Quality vs. Rate
Ross Tisnovsky, a senior VP at Everest Group, said clients might become fixated on the rate of the candidate, thinking that expensive ones are highly skilled. Customers need to review the level of skills their operation needs and parallel it with what the vendor can offer.

Top 5 Noteworthy Things about Outsourcing in 2011

Tue, 20 Mar 2012 00:00:00 -0800

An article published at Info.TPI.net for Information Services Group (ISG) dissected the �2011 Momentum� Market Trends & Insights Series Annual Report�, a study which shows how the previous year raised the bar in terms of volume of outsourcing activity. Also, numerous service providers from different locations were seen to have benefitted from the abundance of outsourcing deals propelled by the increasing demand for the business model. The report highlighted five factors which were believed to have driven the outsourcing industry globally:

1. Highest volume of outsourcing activity - 2011 had the most number of signed outsourcing deals at 870, each amounting to almost $25 million or more. The total value of all the outsourcing contracts is $95.4 billion, a record high for ISG. Furthermore, the organization sees that 2012 will remain a good year for all outsourcing service providers.

2. Opportunities in the contract renewal market - Since 572 outsourcing contracts ended last year, opportunities in the renewal market for service providers are aplenty. The trend for contract renewal last year was multisourcing wherein companies transact with two or more service providers. Clients were also beginning to diversify the services that they prefer and started to adapt the cloud. In 2012, 686 contracts valued at $19.5 billion are anticipated to be added to the renewal market.

3. Recently added companies in G2000 become prospects. - Under Forbes' Global 2000 (G200), a ranking of the largest public companies that dates back 2004, 2,291 firms have either joined or have been dropped off. Those companies that were taken out of the list are more likely to outsource, same with those ranked from 1,501 to 2,000. However, the firms that recently left the G2000 list are seen to spend more than the ones in the 1,501th to 2,000th position.

4. Growing BPO market - The 336 business process outsourcing (BPO) contracts signed in 2011 indicates a growing market for the segment. In fact, average contract value (ACV) and TCV of these contracts grew since 2010. Meanwhile, even with a larger market, the ACV and TCV for information technology outsourcing declined.

5. Asia Pacific becomes a cultivating ground. - Majority of G2000 companies are seen in the Asia Pacific region which has become a nurturing location for companies. In fact, 31 companies that recently joined the G2000 list are from China. Also, ITO and BPO deals grew in the region last year, but spending in the ITO segment was lower compared to 2010 figures.

Source:
http://info.tpi.net/

Six Ways to Get the Most Out of Cloud Computing

Wed, 14 Mar 2012 00:00:00 -0800

Cloud computing is still a relatively new medium for companies that have recently dabbled in the high-tech process. It is seen as something that can help a business grow, but not without a few challenges such as security issues and privacy.

Eric Chabrow of GovInfoSecurity.com shares six principles from ISACA's publication �Guiding Principles for Cloud Computing Adoption and Use�. It highlights how proper IT governance can be executed and what factors affect a cloud computing operation. This is especially helpful for companies that are just starting to include cloud computing to their business strategies, and avoid drastic damages to the business by letting operational managers make IT decisions instead of IT experts.

1. It's not just an add-on. Cloud computing is not just for a particular segment of a business or a mere attachment to an operation. It can reinforce strategies and connect internal departments.

2. Rate the rewards of the process. Since cloud computing is an ongoing and constantly evolving process, there is a need to have proper long-term estimations. Also, keep in mind that not all platforms are the same so costs will definitely vary.

3. Look at the big picture. Instead of micro-managing by focusing on each department, it would be better to look at the entire company and how cloud computing can help each business unit.

4. Look into the offerings. Match what the company has internally with that of the cloud vendors' roster of services to maximize the cloud computing operation's potential.

5. Be clear with responsibilities. The least that you'd want in an operation is to have the providers and internal management pointing fingers when problems arise, so before the start of the operation, clearly state the responsibilities of each party.

6. Build a strong partnership. Cloud solution relies on a strong partnership, since it covers sensitive data. Establish a good relationship to ensure that the goals are met.

According to Rams�s Gallego, Security Strategist at Quest Software who is also involved in ISACA's Guidance and Practices Committee, cloud computing has enabled small to medium organizations to operate alongside large, multinational companies. Also, since the platform is widely available, more and more enterprises can experience the benefits the cloud has to offer.

Five Tips towards Sustainable Sourcing

Mon, 5 Mar 2012 00:00:00 -0800

The industry leaders of today's world are noticeably incorporating more and more factors to their goals and initiatives to help create a positive image. One of which is choosing suppliers that can help a company grow while having a sustainable and economical procurement practice. In fact, many companies are spending a lot of money in their ad campaigns just to enlighten consumers that they are actually making great efforts in becoming more environmentally conscious.

However, experts believe that if suppliers do something unacceptable towards the environment or the community, it can impose adverse effects on the image of their clients. They should somehow adhere to the sustainability regulations of their clients to create substantial partnerships.

Shahid Bhatty, Principal Consultant at procurement outsourcing firm Information Services Group (ISG) shares via TPI.net five tips that can help companies create a convincing image of having sustainable and green procurement processes.

1. Walk your talk and be a role model for the entire organization. Having a comprehensive sustainability plan that resounds throughout the entire organization, even with the suppliers, can definitely empower a business. If possible, executives can put their mark on advertisements and other publications to assure customers that the goals of the company are legitimate and that the upper management strongly believes in the disposition of the company towards becoming green.

2. Provide sustainability-related guidelines that are set in stone for key suppliers. Doing this not only sets a clear agreement between parties but can also be used as gauge to see if the suppliers are up to par.

3. Use sustainability as a benchmark when looking for suppliers. If a business executive is sticking with his/her plan in shifting the entire operation to becoming more sustainable, then of course he/she would have to make sure that the suppliers have the same green goals. If they don't, are the suppliers willing to modify their offerings to comply with your company's goals? Performing due diligence can help alleviate stress in selecting the right supplier and avoid the long bidding process. Also, requiring the suppliers to present a genuine certification can help companies to easily identify the credible ones.

4. Clearly define the factors for Supplier Relationship Management (SRM). For sustainability-oriented partnerships, having clear metrics and a predetermined set of requirements can help business executives point out which functions the suppliers need to improve on, if they are qualified or not, or help executives identify if they have reached their targets.

5. Make sustainability part of governance frameworks. This is crucial when outsourcing core processes. Both parties should go for sustainable efforts that will be beneficial to their business relationship.

What Offshore Outsourcing can Offer aside from Cost Savings

Thu, 1 Mar 2012 00:00:00 -0800

In this day and age, there are several reasons business executives choose to outsource IT-related processes offshore. Offshore outsourcing used to be a strategy for money-stricken companies that would want to cut costs. However, as businesses and industries evolve and the once coveted benefits of labor arbitrage start to become monotonous, business owners are now realizing that there is more to the process than just a way to get cost savings.

Stephanie Overby of CIO.com shares some insights on what makes offshore outsourcing a viable solution for many business owners:

The advantages of moving work offshore may have become uninteresting for some as researchers at Duke University have identified that labor arbitrage had indeed lost its appeal after three years. The same holds true for the studies done by researchers at the Center for International Business Education (CIBER) and the International Offshoring Research Network's (ORN) Project at the Duke's Fuqua School of Business.

ORN's survey findings indicate that the number of corporate leaders who believed that offshoring enabled them to gain better access to a skilled talent pool dropped from 53 percent in 2010 to 40 percent last year. The number of leaders who said that offshoring helped in improving customer service likewise fell from 46 percent in 2010 to 41 percent last year.

According to Fuqua Professor of Strategy and CIBER Director Arie Lewin, those who have been using offshore outsourcing for quite some time lead their companies to becoming more flexible - internally. It was found out that executives who said that offshoring helped boost their organization's agility increased from 48 percent in 2010 to 66 percent last year.

Also, survey participants made use of delivery models or captives in different locations as a strategy to maximize an operation and avoid issues such as economic and political problems in those countries where they have assigned a specific function. This strategy is said to be 2.8 times more effective in boosting a company's agility. Enterprise strategy, on the other hand, only has a 1.7 chance of improving organizational flexibility.

Furthermore, Lewin said that companies based in the US are seeing the attributes of outsourcing that can help them remain competitive, and flexibility will definitely prepare them to compete globally especially in new markets.

Three Tips to Ensure Outsourcing Success

Mon, 27 Feb 2012 00:00:00 -0800

In outsourcing, establishing a sound relationship right at the beginning - even during the negotiating process, is crucial. As the contract builds up and operations begin, problems will definitely arise from poor partnerships which can lead to the demise of the entire operation. Kit Burden shares an article at TechRepublic.com about three important factors that can help outsourcing deals become successful.

Outright Honesty
Trust in outsourcing deals is probably one of the biggest issues, with all the data and ideas being shared back and forth. Both parties want to gain something from their respective partners. Vendors want to charge more to earn more; customers want to get the best deal at the lowest price.

Open Communication
If one of the parties does not understand a certain part of the deal, the unaffected group should be able to provide resources or answers to lessen disparity in outsourcing contracts. Also, a certain level of openness and control over data should be arranged before closing a deal. An example is when one of the servers suddenly shuts off, affecting the whole operation, the provider should immediately inform the client while finding a solution to the problem.

Variations and Plan Bs
Even if the clauses in contracts are precise and gridlocked, the economic environment and the industry itself might not be so stable. This will then test the flexibility of the vendor-client relationship. It is also hard to predict what's going to happen next, which is why having margins for errors is a great way of minimizing additional costs.

These outsourcing contracts will of course go back and forth from vendor to provider. These will go through several revisions and will affect the relationship of the partnership. All in all, both parties should help each other grow and learn.

While there are other factors outside the realms of the outsourcing contract that affect a provider-client relationship, having a crystal clear contract in which both parties have a better understanding of each other's roles and responsibilities is indeed essential to make the outsourcing project successful. Build trust. Keep everything transparent. Be prepared for any challenges.

Proper Ways of Outsourcing Social Media Work

Fri, 24 Feb 2012 00:00:00 -0800

Businesses that incorporate social media into their marketing strategies have definitely profited from the various advantages this digital marketing process has to offer. It has become an avenue for brands to have a wider reach for customers, suppliers, and even prospects. It provides a new way of gathering data for market and industry analysis. It also enables companies to have a more personal approach when promoting products and services online. Social media marketers and marketing specialists are presented with various social media platforms wherein they can interact with users immediately through discussions, comments, likes, and shares.

Social media management has also become one of the most outsourced processes globally. To help companies as well as marketing professionals understand how to properly outsource social media work, Deepali Sathe of ValueNotes Sourcing Practice shared an article at SourcingNotes.com that highlights the basics of social media marketing outsourcing.

Monitoring online activity is labor-intensive.
Yes, putting social media strategies to work is easy, but monitoring the activities of users will definitely be strenuous on your end. In most cases, addressing negative reactions from users is the hardest part of the procedure, since it is real-time and coming up with a means to put out the flames needs thorough study and critical judgment. Business owners need to have proper control of the entire social media campaign because you can no longer sweep the issues that can hurt your brand under the mattress, as these are easily shared and will be blown out of proportions if not properly handled immediately. Having a team that can monitor your social media campaigns when you can't is definitely an advantage.

Outsourcing plans have to be accurate.
Social media strategies should remain congruent with the brand's goals and beliefs. Having an open communication with the outsourced team eliminates time-consuming remedies for negative online publicity. Data collected from the social media campaign can also be made into useful analytics for benchmarking, which means data security is also crucial when transmitting information from service provider to the company. All in all, companies that have chosen to outsource social media work need to have a well-concocted plan so that the outsourced party has a clear vision on what is expected of them.

Find the right partner.
Gone are the days when high labor and operational costs are the main factors that drive companies to outsource. They are now looking not only for the best deals - business owners want the best on their team, one that has a reputation in the industry and a high level of professionalism that can manage the recruitment process up to the reporting stage.

It will take some time but finding the right partner instead of rushing into things can save both parties time and money. They can start outsourcing small social media processes and jump off to larger responsibilities.

Cloud Computing Trends for Growing Enterprises

Wed, 22 Feb 2012 00:00:00 -0800

From the point of view of business owners, aside from meeting the growing demand in the market, they have to be more innovative in expanding their respective companies. One way to achieve it is to create new data integration and management strategies. With large volume of data to be managed, they now have to take into account the assortment of data, storage facility, volume, and the amount of effort they have to dispense for each account.

One strategy that got the entire business world buzzing and accomplished the things mentioned above is migrating data to the cloud. Certainly, as the use of cloud computing picks up speed, security will change and it will be the system that business owners will run to for cloud-based data integration and data management solutions.

Here are the cloud computing trends to watch out for in 2012, written by Martin Tantow and published at CloudTimes.org:

The market is going mobile.
Since businesses are seeing that consumers are highly inclined to use the internet, they are pushing for their marketing, services, and transactions to be available online as well. This resulted to businesses competing for the best applications, even the ones focused on commerce APIs or mobile payment systems.

Increase in monitoring infrastructure.
Business activity monitoring (BAM) will be required as the cloud would prompt businesses to put up an in-house station to stay connected with the cloud-based processes. This will make it easy to monitor the processes, customer activity, and cloud services.

Third party service providers will take the center stage.
Aside from the strain outsourcing brings to an operation, businesses that avail of cloud services on top of outsourcing face more challenges. To address these issues, cloud services brokerages (CSBs) will become more popular as these units are known to provide insight and expertise in cloud integration and management, even with other cloud providers like CRM, EAI or B2B.

Business owners will look for more control over cloud data.
Since the volume of data is increasing at a high rate, demand for security, storage space, accessibility, upto-date business processes, and system reviews will also grow.

Businesses will have a unified system.
Businesses will be more interconnected, pushing the business-to-business (B2B) model. Companies will make use of Enterprise Application Integration (EAI) to connect backend processes to the cloud computing world. Software-as-a-service (SaaS) will also be used to support the entire operation.

Storage size will matter.
Imagine the growing number of firms that are migrating data to the cloud - of course this would call for data storage expansion and improved accessibility. This will work best for providers that offer varied content, data provision, cloud services brokerage, and other cloud services and applications.

Providers will offer more Master Data Management (MDM) services.
Cloud solutions provider will push the application and usage of Master Data Management (MDM) services. It is the complete deal for clients who want a little of each of the entire cloud services menu and will be much preferred by business owners since it costs less.

Cloud integration will require additional processes.
Providers are expected to shoulder the additional workload as moving data to the cloud will need more processes to look out for. This would include closing deals with cloud service providers, which would fall under management, then maintenance, which is usually overlooked. However, clients will be expected to improve the entire operation and work on the business process modelling (BPM).

PaaS' flexibility will boost its popularity.
The ability of platform-as-a-service (PaaS) to provide companies with various means to access and translate data to the cloud platform makes it a feasible model. PaaS is also being considered by firms that haven't upgraded to the cloud yet.

Security will progress, so will the challenges.
This rapid phenomenon brought about by the cloud has led to several issues and challenges. Restrictions will be made nonstop by organizations that are protecting both the providers and clients who are thriving in the business industry. No matter what type of information, customer and business protection is always the priority for cloud computing services.

Don't Shun the Sales Guy

Mon, 20 Feb 2012 00:00:00 -0800

More often than not, managers become flustered when they are assigned to manage the upcoming outsourcing operation. When these managers begin to scout for the right service provider, things might get a bit out of hand. Sooner or later, dozens of sales representatives will be bombarding them with sales pitches such as outsourcing ideas and packages.

To remind managers and business owners who are quick to shun these sales guys, here are Information Services Group's five reasons they should show professionalism to the sales rep, published at TPI.net.

Show them why you deserve the deal. You have to keep in mind that the company you are working for is not the only one striving to remain competitive in this tough economy, so is the sales guy. Although sales guys offer varying factors such as pricing, turnaround time etc., you have to exert extra effort in showing how professional you are because after all, you too are representing your company. So if you are serious when meeting with them, they will be confident enough to tell themselves, �I need to level up my offerings to this person because he/she knows what's best for the company and amid the numerous providers, he/she took the time to listen to me. I have to give him/her the best package there is.�

You want the best candidates. Like in any company, candidates are often grouped into team leaders, seniors, and juniors. Unlike the belief that providers base the deployment of candidates on the size of the deals, the sales guy knows what's best for you and is in it for you to win in the industry.

You are up against time. Clients usually blame the sales guy for the delay of the deal's progress. This often results to an unenthusiastic reaction from the providers. Why? Because if clients start to ask about what was recently discussed and begin to re-set meetings, the sales guy will lose his drive to give you what you need. Listen to what the sales guy has to say so that you don't have to review what went down during the previous meeting. More importantly, treat them fairly so they will be motivated to work for you.

You want good rates? Beef up your relationship. Whether you like it or not, the sales guy is the only one who can bend the pricing rules for you. He is working to get you that extra price cut and long-term discounts. Be sure to keep him on your side because if you can treat him extra nicely, you will have better pricing results.

You want an ironclad deal. Don't be disappointed when the arrangements are taking a while. In most cases, the sales guy is working twice as hard to get your contract reviewed by the legal department and make marginal adjustments, ensuring that you are presented with the best deal based on your requirements. Avoid being indecisive because the clearer and faster you give directions, the faster they can secure the deal for you.

Why Businesses should Outsource this Year

Fri, 17 Feb 2012 00:00:00 -0800

In today's economy, one of the known revenue generators is outsourcing. It is the process that businesses used to combat the effects of the economic downturn that happened not too long ago.

In an article published at SupplyChainDigital.com, IT services and business consultancy firm Capgemini explains that aside from cutting costs, there are 10 more reasons companies should consider outsourcing.

It can expand your business' coverage. Because companies are now also trying the offshore outsourcing setup where they acquire the services of a provider or establish a captive overseas, they have also increased their customer reach and are now able to segment their processes properly.

Control over ongoing and capital costs. Outsourcing also allows businesses to have more control in allocating their budget, as initial investments or capital costs can now be transformed into an ongoing cost.

System upgrades or restructuring? CIOs can now use different variations of technology services like Infrastructure as a Service (IaaS), Business Process as a Service (BpaaS), and Software as a Service (SaaS) instead of constantly reconstructing the core operating system of the company.

What you see is what you get. Along with business level agreements, providers now have a fixed metric so that buyers know what to expect. This eliminates discrepancies in contracts and can give clients a head start on how they will draw their strategy.

Labor fees are lower. Whether we like it or not, the cost of labor in other countries for high-end services is still lower than the local rate, which is probably why businesses outsource in the first place.

More control over the entire operation. As the company expands, more and more processes are overlooked and become redundant, causing losses to the company and inferior quality of output. Outsourcing enables companies to centralize control over the entire operation and rule out the unnecessary steps that cost money and time.

Outsourcing can help businesses meet the standards. Trying to keep the operation up to par will cost business owners money and time. A credible provider, one that has quite the experience in streamlining business processes for companies, can help reassure businesses that they can achieve, monitor, and maintain standards according to the industry's requirements. Companies can also choose to outsource only the basic processes instead of sharing sensitive internal information.

It can ignite a business' capability to grow. Outsourcing offers several business frameworks, enabling companies to expand and maximize their potential.

Increase options for resources. Having an outsourcing operation overseas makes it easier for management to gain access to the fresh talent pool and compete with other global players in the industry. It can also reinforce merger acquisition plans and help fill open positions.

Providers can take care of the basic stuff. Outsourcing companies can take on the processes that are usually considered as additional tasks by the client, providing all the necessary tools and management skills that can help executives focus on their core processes.

Market Research Predicts 21% CAGR for Global Healthcare BPO

Wed, 15 Feb 2012 00:00:00 -0800

In a press release published at Yahoo! Finance, global market intelligence provider, MarkerResearch.com, predicts that a compound annual growth rate (CAGR) of 21% will be posted by the global healthcare business process outsourcing (BPO) market. More than half (64.3%) are attributed to pharmaceutical contracts. This is expected to post a CAGR of 14.6% from 2011 to 2016.

These estimates are based on the report entitled "Healthcare BPO market - Payer (Claims processing), Provider (Medical billing & coding) & Pharmaceutical (Clinical trial & contract Manufacturing) outsourcing - Global analysis & forecasts (2011 - 2016)" that aims to shed light on the vast world of the global healthcare outsourcing market for both the clients and providers.

Meanwhile, changes in the coding system of healthcare provider outsourcing from ICD-9 to ICD-10 in October 2013 will result to a high growth rate of 31.9%. The forecast period also shows a 30% growth rate for the healthcare insurance outsourcing market.

US posts the highest demand for healthcare outsourcing. India remains the top destination of choice when it comes to payer and provider outsourcing, mainly due to the country's large pool of healthcare workers, lower cost of living, and lower turnaround time in sourcing and hiring. However, the Philippines is now emerging as an ideal location. On the other hand, pharmaceutical processes are commonly outsourced to onshore locations.

Everest: 2011 Outsourcing Deals Declined, Captive Activity Increased

Fri, 10 Feb 2012 00:00:00 -0800

PRweb.com shares Q4 2011 and 2011 market activity reports done by global services advisory and research firm Everest Group. These are: Market Vista: 2011 in Review and Market Vista: Q4 2011.

The reports show that compared to 2010, outsourcing transactions in 2011 declined as the latter half of the year posted fewer transactions - 2011's Q4 posted the lowest figures since 2009's Q1. On the other hand, 2011 saw an increase in captive activity compared to 2010, even with the slight decline during the second half of the year.

Research managing partner Eric Simonson explained that 2011 showed a recurrence of what was seen during 2010, where the first two quarters posted an increase then a slight drop was seen in Q3 and Q4. Also, the robust captive segment shows that captive models are great tools to support business strategies. However, several factors may have an impact to the captive activity this year, including the financial situation in Europe, anti-outsourcing efforts in the US, as well as the emergence of new technologies.

There was a slight drop in the number of outsourcing deals last year compared to 2010 (from 1,979 to 1,929), though there was an increase in contract renewal and restructuring in 2011. About two-thirds of the total number of outsourcing transactions were from the IT outsourcing segment, while 32 percent were BPO deals.

Here are the other highlights of the Everest Group reports:

� Finance and manufacturing sectors contributed the highest number of outsourcing transactions.
� US outsourcing transactions significantly went down last year, while UK posted a 32-percent increase compared to 2010 figures.
� Four mega deals with contract values reaching more than US$1 billion each were signed in the last quarter of 2011.
� Brazil and Poland turned out as mature global outsourcing destinations.
� The political situation in North Africa highlighted the need to manage/mitigate risks in outsourcing portfolios.

Ways to Protect Data and IP in the Cloud

Thu, 9 Feb 2012 00:00:00 -0800

It seems like more and more business owners are learning the ropes of cloud computing. Customers and service providers alike are now drafting contracts that not only involve basic cloud outputs, but complex procedures as well like software and IT infrastructure management and development. In most cases, these processes are considered as core components of a company.

The demand for cloud services grew at a fast rate and there's a huge chance that cloud providers are acquiring the services of subcontractors. This may lead to additional security issues as more and more parties gain access to the business' sensitive corporate data. These organizations may come from different locations worldwide, and they may have varying laws and level of enforcement regarding intellectual property (IP) policies - again, another factor to consider.

Even though there are precautionary measures in cloud computing contracts, IT experts saw a trend amongst customers; they saw retractions due to intellectual property security, and as the cloud rapidly matured, it accrued various intellectual property challenges. Aside from keeping the physical assets such as data centers, network cables, and servers secure, business owners now have to worry about the virtual properties in a cloud operation.

At CIO.com, Stephanie Overby shares helpful insights and experiences of information technology experts regarding these issues, as well as nine tips on how customers can properly protect their data and intellectual property in the cloud.

Tit for tat. Companies that want to join the cloud bandwagon should do an intensive research about various providers. Factors should not solely be based on costs but industry risks and threats as well. Credible providers are easy to identify as these are usually the ones that offer solutions for possible threats and require higher security standards. So if business owners do a botched job in choosing the provider, then naturally, they will get less than impressive results.

Start small. Business owners shouldn't get too excited about having one of their processes upgraded to the cloud, to the point where they sign off one of their major IT functions in a heartbeat. They should at least start with the basic services to get a better understanding of the entire IT process.

The Jekyll and Hyde syndrome. Contracts that are initially presented by providers should be properly analyzed. Some vendors often dupe clients in to becoming liable for illegal acts, plus put their information at risk. Like in any marketing agenda, what is initially presented to clients in ads, emails and etc., may be the opposite of what will actually be given to them. Some providers will purposely mislead the customers in hopes of making a sale.

Prepare for the unexpected. For complex cloud services, iron cladding the contract is essential. Go for measurable, unexpected clauses that can be considered as added precautionary measures. Some of these are regular check-ups, performance and progress reports, right to disclose the locations where data and applications will be processed and stored, right to approve subcontractors, a change control process that provides for advance notice and opportunities to work around or mitigate pending changes, and reasonable liability for non-performance by the provider.

Stingy people are not welcome. Cloud computing services are often inexpensive, unless customers want a customized system for their business - which is usually the case. This will definitely incur costs due to constant upgrades.

Intellectual property may come along the way. There are instances when the initial cloud services that are being rendered do not contain sensitive data about the company but later on, additional processes may be added and security from the provider should be looked into as information can be transmitted and obtained quickly. Also, providers and clients should look into the coverage of the IP laws in their respective locations.

Impose security measures manually. If a business owner wants to guard additional IP like Alcatraz in its heyday, then they would have to design the encryption themselves rather than wait on the providers. The type of protection where all the activities done whilst in the cloud is tracked and the owner will be alerted when something's out of the ordinary.

Have equal control. Clients and providers should have equal control over the operation/service. If in case the client fails to meet the standards of the provider or does something completely against the contract, providers give clients the time to properly extract their files and data. But that usually isn't the case, which is why clients should have access to their IP anytime.

Always be on guard. Since technology is always on the move, there's no question that new threats can always come knocking at your datacentre's doorstep. This can be in virtual (malware, viruses, etc.) or in physical (spy from the competitor, tech support guy makes a mistake and short circuits one of the servers) form.

Cloud may not be the solution. In some cases, moving operations to the cloud is just not the answer. They should be able to back away from a deal instead of losing money and precious time.

Outsourcing IT Security

Fri, 3 Feb 2012 00:00:00 -0800

The rise of Anonymous and LulzSec, two of the most notorious hacker groups in the world today, had shown that cybercriminals are increasingly becoming sophisticated in their attacks against government and corporate websites that host sensitive data.

The breaches in security that happened last year to Sony's PlayStation network, when thousands of user info were compromised, and the hack attack that happened on Internet security firm VeriSign two years ago, show that even with the best tools and the best people, cybercriminals work 24/7 to exploit vulnerabilities in the virtual world.

With money to hire Internet security specialists to manage and protect precious, virtual assets, large companies have the resources to defend themselves from cybercrimes. What about small and medium-sized businesses? How will their websites, their information assets, fare against hackers?

Outsourcing has given birth to specialty firms that provide knowledge-based services to other companies, such as accounting firms, human resources agencies, and even IT services. Small and medium-sized businesses that do not have the requisite resources can immediately set up virtual defenses against cybercriminals by outsourcing their IT services.

According to Small Business Center of Fox Business, an increasing number of small companies are turning to managed-security services providers for their IT security needs. These providers, composed of IT security veterans armed with the latest Internet security technologies, offer cost-effective solutions - a more viable alternative to establishing an internal IT security department.

Companies are also expected to increase their budget for managed-security services - from $8 billion in 2011 to $14.9 billion in 2015, as quoted by the article in a report by research firm Gartner, Inc.

Contracting the services of a managed-security services provider only involves the cost of the service. On the other hand, even if a company has the budget to create its own IT security department, the decision would be cost-prohibitive due to the steep cost of equipment and the high demand for IT security experts.

Outsourcing security services also enables a company to focus on their core services. Instead of shifting resources towards protecting their virtual assets, the same resources can be used to improve product lines or strengthen service offerings.

Managed-security services providers offer a set of services that can be customized for a client. A customer can take advantage of cloud technologies, opt for equipment installed to their sites or even go for an effective combination of cloud services and equipment to get the service they need. Aside from customized services, providers also offer flexible rates - this can help a company quickly adjust their operational budgets relative to market conditions.

Protection against cyberhacking does not need to be expensive. Outsourcing IT security to a managed-security services provider is cost-effective as it provides flexibility in managing expenses and more time to develop core services.

Changes in ITO Contract Sizes Reveal Issues in Multisourcing

Tue, 31 Jan 2012 00:00:00 -0800

NetworkWorld.com recently released an analysis of Information Services Group's (ISG, previously TPI) 2011 quarterly statistics report, where data revealed that the sizes of contracts in the information technology outsourcing (ITO) sector are shrinking for the past decade. Moreover, smaller contracts, which are valued at around $100 million or less, are believed to have ballooned three times their size since 2002 and have now surpassed medium to large deals.

The report from ISG likewise showed that since 2009, the smaller IT deals-bracket has been accounting for 70 percent of the total contracts, a trend that started years back. Furthermore, even if the number of signed deals during 2011 jumped eight percent from the previous year and has increased 85 percent since 2005, the overall values of signed contracts decreased marginally every year during the fourth quarter and for the whole year since 2010. The total decline was at six percent or $66 billion.

John Keppel, ISG's Partner and President of research and managed services, said those who are new to the business process outsourcing (BPO) industry favour smaller contracts as the clients are more vigilant of the quality and capability of organizations. In fact, those who know their way around in the ITO sector are now more inclined to ink smaller contracts. He added that clients nowadays are trying to apply multisourcing or the process of isolating their ITO processes into several sections, and outsource each vertical to a different provider, instead of hiring just one provider.

Keppel warned that even if multisourcing is an ideal model, it comes with several major challenges:

Poor Management of the Multisourcing Operation
There are several problems in an ITO operation which can be brought on by the clients. Some of which are mismanagement of hired providers and having no sense of ownership of responsibilities whatsoever.

This is where service integration comes in handy. It means collectively managing multiple IT service providers internally to streamline the entire ITO process. The process should be able to alleviate performance, quality, and cost issues that may affect an operation's objectives. It can either be rendered by a third party provider or managed internally.

ITO clients who are already established in the industry are likely to develop a system in managing different IT providers. Control over the multisourcing model is very crucial, which is why proper delegation of tasks and responsibilities should be worked out long before the operation starts. The providers should also align their processes with the clients' goals and expectations should be discussed before drafting a contract.

Keppel said since globalization has paved the way for ITO and BPO, multisourcing will be one of the foremost models that will be used by customers.

Vague SLAs
Contract ambiguity will remain an issue as customers are still getting used to the idea of multisourcing and only a handful have had the experience of making use of the model. This will also result to ineffective service level agreements (SLAs).

Security Issues
Trepidations over intellectual property and data security can affect the growth of an operation. More often than not, further development in a multisourcing operation is hampered if service providers disagree with one another.

Expectations and Job Descriptions are not Properly Identified
Usually, when plans miss the mark, the providers blame each other or the customer. This often results to precious time lost in trying to find a proper remedy for the situation, which also costs money.

Outsourcing Opportunities for SMEs

Thu, 26 Jan 2012 00:00:00 -0800

Since technology is constantly evolving, companies - especially small to medium enterprises (SMEs) - have a hard time coping with the latest trends. Keeping technology up-to-date and having what the big players have not only empower the smaller organizations but also keep business offerings fresh and more marketable to consumers.

For SMEs, having to upgrade the technology means more overhead costs as it is always changing. But most players in the SME division cannot afford to continuously invest on temporary features, which is why some of them consider outsourcing minimal or their entire IT operations.

Clive Longbottom, Service Director at Quocirca, shared with executivebrief.com other alternatives that can be adopted by SMEs to resolve their IT needs.

Weighing in on the Outsourcing Option
Companies that do not outsource have one thing in common - they have full control over the entire operation, which means triumphs and downfalls will be credited to them. The downside of not outsourcing, however, is they should be able to provide ample facility to accommodate IT equipment. The other one is having adequate technological know-how in managing the operating systems and maintaining the facility. Lastly, keeping everything economical and congruent with the business' needs is also considered a struggle for SMEs.

Segmented Outsourcing for SMEs
Outsourcing a segment of an operation, like support, to a third party provider is probably the easiest way to alleviate issues internally and maximize the potential of a company's IT infrastructure. Larger organizations are often the ones that make use of this by hiring systems integrators like IBM, CSC, and HP to manage their data center fully or otherwise.

By doing so, they can have a flexible IT environment and lesser issues to deal with because they now have a supplier that will shoulder the tasks for them. In outsourcing, service level agreements (SLAs) are also customized according to the needs of the company, usually covering recommended and basic processes like replacement and repair of equipment, root cause analysis (RCA), and base problem identification, along with remediation where possible and the overall asset life cycle management from the installation, regular systems checkup and replacement, depending on the coverage of the warranty of the kit.

SMEs are still accountable for the Data center and IT Equipment.
When SMEs outsource the IT function, they will be given the option to keep the equipment in-house or be located in a shared facility for all the SMEs' IT equipment. But since they are sharing the space and in fact, the owners of the IT equipment and software, SMEs are still accountable for them. SMEs are also given the option to adopt the design presented to them by the provider. This reinforces the fact that SMEs need to have basic knowledge in creating the appropriate environment for their IT infrastructure. If an SME decides to outsource IT and opt for the co-location setup, third party providers are expected to manage the facility, power distribution, uninterruptable power supplies (UPS), cooling, internet connectivity, and physical security of the data center.

Have the Service Provider do it All for You.
Another popular model is the hosted one. SMEs can also acquire the services of a hosting supplier, which will provide the location (whether shared or private) and IT equipment.

One of the most talked about versions of hosting is the cloud where it acts like a virtual data center, which means it is accessible almost anywhere, although the leading model is still SMEs renting IT equipment, along with the operating system like Linux or Windows, and gradually adding applications as the operation goes. The host manages the facility, equipment, and operating system, while the SME only looks after the applications. Granted SMEs opt for this model, they can acquire or rent physical or virtual equipment (depending on the needs of the business) and even hire popular providers like Memset, Rackspace, UK2, and 1&1.

Getting Ready to Outsource

Fri, 20 Jan 2012 00:00:00 -0800

Outsourcing as a business strategy continued to mature last year as companies faced challenges in the global marketplace. However, outsourcing, just like any business strategy, is not capable of solving a company's woes by itself. As a tool, outsourcing is only as good as the organization that wields it.

Companies that want to explore outsourcing to stay relevant in the marketplace may think about 10 tips that industry website Business Finance says can help organizations in deciding whether to outsource or not.

Results versus process. Outsourcing, according to Business Finance, has two types now - �black box� and �white box�. Black box outsourcing refers to results-oriented outsourcing - SLAs, SOWs, and service deliveries are designed to deliver results, with less emphasis on how the results are achieved. White box outsourcing, on the other hand, is process-oriented - the outsourcing framework is designed to maintain efficient and effective processes.

Create the criteria before issuing RFPs. To maintain an objective approach and at the same time, streamline the outsourcing evaluation process, ensure that outsourcing goals and objectives are set in place before issuing any Request for Proposals (RFPs). The company knows their system best - weaknesses and all - and they should offer this info to any prospective outsourcing service provider.

Take charge of bidding. Do not let the outsourcing service provider dictate how the negotiation progresses through pre-packaged services that do not specifically consider the company's unique requirements.

Check the resources of the outsourcing service provider. Top service providers even suffer from a varying level of quality among their employees. Choose a service provider not only because of its credentials, but also because of the quality of its staff.

Peg transition costs to real market values. Transition costs of outsourcing are usually underestimated, as change management costs and losses due to transition delays are not factored into cost equations. A comprehensive outsourcing transition plan will ensure that hidden costs are revealed.

Take advantage of innovation. Due to technological innovation and process improvement, most service providers are increasing their profit margins yet offer the same rates to their clients. With a properly-structured outsourcing agreement, clients have much to benefit from their providers.

Be prepared for change. Transitions involve teams of people who may be working with each other for the first time. The complexity of the whole operation may require forming a transition task force and even the hiring of transition specialists. As with any process, the transition phase must be organized with milestones and quantifiable factors.

Create SLAs that are relevant to the organization. Too much metrics can actually complicate Service Level Agreements (SLAs), resulting to lost productivity hours and administrative nightmares. Establish few yet relevant metrics that contribute towards making the outsourcing agreement as productive and efficient as possible.

Do the homework first before negotiations. Clearly outline the role and responsibility of each member of the negotiating team. Identify possible deal breakers, and draw up a list of unfeasible alternatives that the provider may offer.

Don't lose focus - the negotiation is about to outsource or not. Companies may take up outsourcing without really realizing what they are signing on with a very aggressive outsourcing service provider. The outsourcing solution is not for everyone - it can only be as effective as the company relying on it.

What to Expect from the BPO Industry this Year

Thu, 19 Jan 2012 00:00:00 -0800

Gareth Pritchard, CEO of BPeSA Western Cape, shared with ITNewsAfrica.com his predictions for the business process outsourcing (BPO) industry in 2012. He cited major innovations and of course the economic downturn as key indicators of what lies ahead in the BPO landscape.

India's no longer the go-to voice hub.
2011 had seen several UK-based customer service companies bringing call center processes back home from India to reduce the risk of losing customers over the quality of service. For them, cutting costs during a bootstrapped economy is one thing, but losing a customer because of a transaction gone wrong is more critical. They are also keen on spending more just to keep their customers. Nearshore providers such as South Africa can also benefit from this as they can use their time zone and cultural affinity to their advantage in the voice-based outsourcing sector.

Unemployment level leads to creation of US anti-outsourcing bill.
With the likelihood of another recession and no evidence of the unemployment levels improving, Republican Tim Bishop (D-N.Y.) and the Communications Workers of America (CWA) are rigorously working on getting a House Bill approved that aims to discourage US firms from outsourcing to offshore locations. It would also restrict government aides such as loans and grants. It is predicted that outsourcing destinations such as India and the Philippines will be affected as these countries mostly provide voice-based and back office services to the US.

In outsourcing, quality comes first before reduced costs.
Outsourcing will still be seen as a valuable tool and will definitely grow in 2012 as businesses brace for the recurrence of another economic depression. Business executives will find ways to cut operational costs without sacrificing the quality of work. In fact, a study from Horses for Sources stated that 25% of organizations will remedy the looming recession with outsourcing as it has proven its worth to the services industry.

The cloud will prevail.
Technology is definitely one of the important components of a company's success. The cloud is seen by numerous companies, especially by small players, as a viable solution in terms of cutting costs and incurring other ground-breaking benefits. The demand for the cloud will grow, as well as the service itself in 2012.

Social media is now widely integrated into business plans.
In recent years, social media has become a great tool for businesses to address customer-related concerns. It also helps in the marketing efforts of companies, and in making a mark in the online world.

Also, this trend has paved the way for other types of customer support in 2012. Call center services will be a mere addition to a bigger package that includes various platforms such as chat, social networking sites, and micro blogs where customer concerns can also be addressed in a timely manner, just like in voice-based services.

Outsourcing Tips to Keep IT Projects Moving

Mon, 16 Jan 2012 00:00:00 -0800

While data security concerns stop some business owners from outsourcing IT-related functions, many remain confident that the process will be beneficial to their operations. Aside from cost reduction, the most obvious reason for outsourcing, clients can utilize talent and expertise that may not be readily available locally. Outsourcing also enables clients to tap new markets and bring their products and/or services closer to their target customers.

Company owners who have been outsourcing IT functions are enjoying the benefits of the process. However, nowadays, many offshore service providers are downscaling their on-site team and resources. Visa application of employees and profit margins are considered common reasons service providers reduce the number of offshore IT employees who coordinate with clients regarding outsourced work.

Stephanie Overby shares at ITWorld.com five tips on how to keep IT outsourcing on track despite the decrease in on-site employees:

Take a look at the process design.

There should be IT professionals who will fill the crucial roles of the operation for it to be effective and successful. For short-term requirements, companies may need to look for employees on a contractual basis, according to Amneet Singh, Vice-president of global sourcing for outsourcing consultancy firm Everest Group.

Develop a communication plan for users.

Singh said companies need to have a change management or communication plan to handle consumer inquiries and needs in case there are changes to the outsourcing delivery model.

How about nearshoring?

Esteban Herrera, Chief Operating Officer of outsourcing analyst firm HfS Research, said there are service providers in other locations that do not have to deal with concerns in visa applications. Companies are advised to look at nearshore options for better knowledge transfer and project management.

Ramp up your in-house technological capabilities.

Service providers may utilize more advanced technological platforms to make up for smaller on-site teams. Singh said outsourcing buyers need to make sure that they have the right setup and proper training on how to use high-end IT tools.

Review contract pricing.

Now's the time to talk about pricing terms, especially when the service provider is reducing the number of its IT employees. It pays to discuss better ways on how to make IT outsourcing a great business solution for both parties.

Developing a Mature IT Process

Thu, 12 Jan 2012 00:00:00 -0800

Business processes are often streamlined to thorough efficiency through strategic decisions meant to leverage existing resources and processes. However, these strategies, bound by time-proven frameworks, are limited in scope and effect by the amount of discipline and loyalty to process among stakeholders - from the encoder to the Chief Information Officer (CIO).

A high level of discipline in adhering to IT processes directly translates to improved efficiency in routine IT processes and faster resolution of IT-related challenges. How does a company achieve that level of discipline? Chris Pfauser, Principal Consultant at Compass, shares with sourcing advisor TPI the following tips:

Clear-cut roles and goals. Enable the IT staff to have well-defined roles and responsibilities within the process flow. With a clear set of functions among employees and managers, identification and resolution of issues become faster. This also gives the added advantage of viewing challenges from the perspective of the whole organization, and not just within the isolated context of the IT department.

Process ownership. Accountability emanates from ownership, and when a process is clearly owned by someone, the blame game is stopped. Process ownership can also serve as motivation for results-driven leadership, since accountability is clearly illustrated when it comes to efficiency and improvement initiatives.

Resolution time versus response time. Gone are the days when record-keeping only meant activity tracking. Records are now being analyzed to see what areas of a process need improvement. A quick resolution time is now considered better at improving processes compared to a quick response time.

Catalogued services. With processes outlined and resolution times drawn up to real scenarios, a catalogue of services can be created. Documenting these services is an important task towards realizing an efficiency-driven strategy in managing IT services.

Costing tools. The impact of costing decisions can be immediately derived from a costing sheet. The costing sheet, based on the service catalogue, improves decision-making at all levels, since rising costs affect operational efficiency.

A mature IT process demands a high level of discipline among its stakeholders in adhering to the process. Such a process enables a company to stay competitive and efficient in the global market.

The Right Questions for IT Service Providers

Wed, 28 Dec 2011 00:00:00 -0800

Multinational and large companies have their own IT departments due to the big role that IT plays in their business processes. However, IT has permeated our daily lives, from our personal finances to our utility bills. Any important transaction now is recorded beyond mere paper documents - a financial account has a hard copy and a �soft� copy.

In such context, small and mid-sized businesses need IT support more than ever. However, SMBs do not have the budget to spend on an IT department. Thus, many SMBs have turned to outsource their IT needs to a service provider.

Finding the right IT service provider is also akin to finding the right employee - there is a need to thoroughly screen service providers to get the most out of an outsourcing relationship. In an interview with InformationWeek, TeamLogic IT Vice-president for IT Vince Plaza named four questions that SMBs can ask of prospective IT service providers.

What makes you better than other service providers? Being shy of asking the right questions will not give you the best outsourcing deal. It's also a way to test a provider - providers which know their services well will take advantage of this opportunity to showcase their company.

What will you do to help my business keep pace with the competition? As the global marketplace gets smaller, companies are also becoming more competitive among themselves. Will the service provider be able to enable your company to keep pace with modern technologies?

What will you do to give my business a fast ROI? An IT service provider should provide more than the hardware and software, says Plaza. Quality service providers enable business owners to understand how their investment in technology will help their ROI rate accelerate.

Who will provide support when my business needs help? Working with a service provider means you also have to know how they work. Who provides support when problems crop up? How fast do they act on a problem? Does the person have the right credentials to help you solve an issue?

These are just general questions for a prospective outsourced IT deal - your business will provide you with more specific questions, such as the number of your IT equipment, the scope of work that needs attention, software deployment, among others. Location and vendor partnerships are also major influences in choosing an IT service provider, although most service providers can provide support to major technologies, i.e. from Apple, Google, and Microsoft.

12 IT Outsourcing Trends to Look Out For in 2012

Tue, 27 Dec 2011 00:00:00 -0800

Now that we are treading the last days of 2011, the year when the IT outsourcing industry saw smaller deals, customers were doubtful of the process, and cloud computing was talked about a lot, it is believed that 2011 developments might resonate throughout 2012. However, economic issues will still take its toll on the entire sector.

At CIO.com, Stephanie Overby listed down 12 IT outsourcing trends that may be seen next year, according to industry experts:

1) International firms are set to look for other locations besides India.

Phil Fersht, founder of outsourcing analyst firm HfS Research, said India will see slower growth. Cost efficiency will no longer be the main reason international companies outsource offshore. They will now consider expanding their skills and knowledge in back-support and other processes by tapping into countries like Brazil, Malaysia, Mexico, South Africa, Romania, and Bulgaria.

2) Expect sterner IT security.

Mark Ruckman, outsourcing consultant at Sanda Partners, predicts �2012 will be the year of security�. He believes that sooner or later, one of the numerous IT service providers worldwide will experience an embarrassing security breach, which is why he thinks outsourcing firms will definitely find better ways to protect their client's data.

3) Application development will likely be sourced from the US.

Financial service firms have long sourced fragments of their codes from offshore providers, but will realize that it is actually more affordable to do so by establishing captive centers or acquiring the services of third party providers in secondary US cities.

4) IT outsourcers will try different things.

Everest Group believes IT service providers, specifically the ones offshore, will find new and innovative ways to counter the pressure brought about by pricing issues to reinforce growth and profitability.

5) Failure to put backsourcing words into action.

Steve Martin from Pace Harmon predicts companies that are fed up with procuring IT services offshore will make impulsive decisions to the point of scheming a plan to bring back work in-house, only to realize that it's too much for them.

6) IT Outsourcing clients might axe account managers.

Phil Fersht of HfS Research believes account managers of IT service providers should not focus on sales to the point that the core requirements are brushed aside. There is a need for account managers to think about not just the revenues but building relationships as well.

7) Opportunities in Infrastructure building.

Offshore IT providers are set to expand their service offerings by trying their hand at infrastructure building. They have actually been working on developing the process and honing it to move past application development and maintenance work.

8) It's time for small players to shine.

Outsourcing providers will try to bank on smaller enterprises as they have exhausted their leads from the Fortune 1000 pool.

9) IT vendors will remain fixated on labor arbitrage.

Outsourcing buyers will be looking for more factors other than low costs before signing deals. Service providers, on the other hand, will still focus on keeping costs low.

10) The cloud will be more defined.

The hype around the cloud will definitely mellow down as IT providers shift their focus on improving the service by calculating the risks and providing the service in areas where clients need it most. Stricter regulations for the cloud will also be implemented by 2012.

11) Outsourcing buyers will be on guard for another recession.

The decisions for improvements and expansions by outsourcing buyers will most likely be put off until they are confident enough in the economic situation. Most of them will see large contracts as a business solution that entails a lot of risks, said Everest Group, and added that there may be slow activity during the first half of 2012. However, there's a great chance that it'll gain stride in the following months.

12) 2012 will be made up of M&A combos.

Fersht of Hfs Research said providers will avoid large mergers due to scarcity of the business model that they actually need and want. One example is a flexible structure that can accommodate expansions and reductions.

In the US, Fersht sees large providers that have merged are making use of cloud-based tools. According to Ruckman, there's also a possibility that three mid-sized companies will merge and make up a large IT service provider.

Marketing Practices that Need to be Retired

Thu, 22 Dec 2011 00:00:00 -0800

Many IT outsourcing service providers today are offering innovative, highly customizable solutions for companies that seek to use outsourcing as a strategic business tool to remain relevant and competitive in a global marketplace.

However, some of these service providers market their services using irrelevant and outright archaic marketing tools - tools that came out of a traditional and static marketplace. Industry website CIO compiled ten of the worst marketing strategies used by IT outsourcing service providers in making sales.

Solutions packaged for the provider's own benefit. Instead of offering clients with solutions that specifically solve their problems, some IT outsourcing service providers present packaged deals that only solve part of the client's problems. Outsourcing consultancy firm Pace Harmon principal Marc Tanowitz says providers must propose solutions that are parallel with what the client wants.

Sales that talk too much. Clients come to an outsourcing service provider to seek solutions from experts, not from sales people who focus on hollow statements on EBITDA impact and other irrelevant issues. According to outsourcing analyst firm HfS Research COO Esteban Herrera, although salespeople are critical in the process, they should let the subject matter experts directly speak with the clients.

Boring PowerPoint presentations. Everybody now does a sales pitch with slides. It may pay to stand out from the crowd - a straight, nonchalant conversation with clients about what their companies need and what the service provider can do to fill those needs. Herrera says clients remember those who actually spoke with them and started a conversation.

Misleading introductions. Some outsourcing service providers bring along a VIP on an initial client meeting, creating the impression that the VIP will be working on their project. Sadly, the impression is wrong from the start, and the client feels short-changed. Herrera suggests bringing along to the meeting a customer who can personally testify to how the service provider has helped his or her company.

An expert in everything. Sanda Partner Founder Adam Strichman comments that industry-specific expertise is 85% marketing - some sales teams peddle expertise that is actually a label only instead of actual experience. Strichman says supplying answers to a client's business headache is better than proposing solutions that are off-target.

Closing a deal to be changed by the legal department. Usually, outsourcing deals begin as fair, verbal agreements between client and provider, until the provider's legal department draws up the document. IT service providers can include lawyers early on during the negotiations to thresh out key definitions and only include what is needed for the contract.

Big discounts just to close the deal. Intelligent clients know that surprise price drops are not exactly healthy for the business. Two things come to mind when big discounts are suddenly laid on the negotiating table - either service levels will suffer due to the lower profit margin or the sales team was playing them. Transparency in negotiating the contract, especially in pricing services, contributes a lot towards a healthy business relationship.

Slow presentation for a big finish. A company executive wants to quickly know how an outsourcing service provider can help. Do away with all the excess information drawn up on documents - a business wants to know how to be more efficient and competitive.

Persistent calls and visits. Repetitive follow-ups are annoyingly unproductive, says KPMG Advisory Services Principal Ron Walker. A simple rule of thumb - three calls will do. If they are interested, they will definitely call back.

Selling the deal to the higher-ups. Most salespeople spend more time selling a deal to their executives rather than to their clients. Experts say the smarter thing to do for a sales team is to familiarize themselves with a client's need in order to draw up a deal that effectively delivers solutions.

10 Worst Sales Techniques by IT Service Providers

Fri, 16 Dec 2011 00:00:00 -0800

IT service providers continuously engage in innovation especially when it comes to product and service development. Their sales techniques, however, come as an exception. Buyers observed that they have been using the same methods since time immemorial and these tricks only bring about frustration rather than an actual sale. Based on consumer and market feedback, Stephanie Overby of CIO.com produced a list of the least effective sales techniques employed by IT service providers.

Can you hear me now?

Service providers miss out on understanding their customers' specific needs because their perspective is based solely on standard set delivery models. Outsourcing companies are found to propose packages that suit their own business needs and furthermore compromise customer requirements just so it fits a solution that's convenient for them.

Alternative: Sincerely listen to every customer's requirements before carrying on with the usual spiel. Afterwards, present only service offerings relevant to their needs.

A little knowledge is a dangerous thing.

A typical salesperson starts any endeavor with an adequate amount of research. Then they start a meeting with highlights on net profit ratios and effects on EBITDA. While these technicalities are useful to mention, they are not effective to spearhead a sales pitch.

Alternative: Tone down the sales and use real subject matter topics that are worth your clients' time.

Death by a thousand slides.

With the usual sales call's long and dragging PowerPoint presentations, you're bound to think the number of slides impact commission. This is not at all helpful in pursuing a deal.

Alternative: Engross your clients in an actual conversation. Talk to them, hear out their needs and concerns, and address their questions. You will easily be handpicked among a sea of PowerPoint slides flashed by competitors.

The old bait and switch.

Providers create an illusion of high service delivery by bringing in a VIP in a meeting with a client. They say a big shot will be dedicated to your project when the truth is, same top performers are also being promised to other clients and you'll never see those VIPs again.

Alternative: Take in an actual client. Fly in a customer and treat him/her to a nice stay at a resort nearby. Bring your customer in the meeting and allow the prospect to ask questions.

I'm the XXX Expert.

Introducing people with varying titles to reflect industry expertise is a marketing strategy that clients can detect. Most of the time, the same pool of people is utilized to service all existing clients.

Alternative: Work on becoming an industry expert and ask your clients valuable questions that can lead to crafting effective and customized solutions.

A deal until the lawyers arrive.

There exist providers who start with fair and mutually benefiting agreements that are eventually overhauled with new terms and clauses by a legal department. Customers find a gap between what has been agreed upon to what they are being made to sign.

Alternative: Define terms and develop negotiating options with your lawyers. It also helps to revisit your business objectives to be reminded of what you can and ought to provide customers.

The last-minute price drop.

Outsourcing deals are crafted to deliver at least 20 to 30 percent profit margin. This gives providers leeway for a price drop. Then again, when a significant discount is suddenly offered to a customer, it can rouse apprehension among buyers. It's either their provider was initially trying to extort more money out of them, or the discount will lead to lower profit and equally lower service quality.

Alternative: There is no need for surprises. It's far more assuring to customers if providers remain transparent with pricing all throughout the deal.

Burying the lead.

Salespeople are fond of the slow buildup before they get to an actual selling proposition. Customers want a solution that's straight to the point, a proposal that will clearly reduce costs and improve efficiency in their practice.

Alternative: In your next presentation, open with the grand finale. Start with the supposed final spiel, your value proposition in summary.

The never-ending check-ins.

Consistent follow-up calls can be annoying. Customers find it irritating and unproductive.

Alternative: Stop being a bother after checking in with the prospect thrice. Stop calling or sending messages. They will reach out to you when they need you.

Inside sales.

A typical sales lead will exhaust efforts in convincing internal management that a new prospect has potential and can be a good deal. More time and resources are spent selling internally rather than making a pitch to the client.

Alternative: Focus more time and resources on understanding a client's needs.

Common Outsourcing Mistakes when Looking for IT Talent

Tue, 13 Dec 2011 00:00:00 -0800

A lot of companies in various industries have turned to information technology (IT) outsourcing to utilize resources of third party providers so they can focus more on their core competencies and to improve productivity. In fact, it has become one of the greatest financial and quality reinforcements for any operation to date. Some of the most commonly outsourced IT functions are systems administration and networking engineering, and it's been proven that outsourcing has a positive impact to the entire business operation.

IT providers worldwide now have more options which are beneficial to clients, their customers, and service providers themselves.

Since the IT industry never ceases to develop, value added resellers (VARs) have come up with different ways for more sales opportunities by expanding their service offerings. For example, businesses nowadays can outsource IT professionals - this saves them time and money in training yet provides their customers the same experience with local employees. VARs can also take advantage of the sudden growth of the market by providing outsourcing infrastructure models.

However, in most cases, companies that choose to outsource tend to overlook the actual quality of the candidates presented to them by the service providers because they are too absorbed on the low rates.

Astreya Partners' Jim Illson recently shared with CRN.com common mistakes companies make when looking for the right outsourced IT personnel:

Not hiring locally

Skipping out on local talent while establishing an office offshore may put any operation at risk. Why? Having a new branch in a different location may well be a fish out of water. If the outsourced employees don't have a clue on what's going on around them, chances are they will have a hard time understanding their market.

Forgetting to evaluate the employees

Almost all industries use performance metrics as a gauge to see how effective the talent is for the process. Clients should also be able to participate in such evaluation so they can personally see if they are actually maximizing their funds and both parties are following the service level agreements (SLAs). Evaluations also enable clients to point out which area the service provider should improve more on or just give them a pat on the back for a job well done.

Presenting candidates randomly and hope they can get away with it

A proper screening process can save time and money for the service provider and the client. Some candidates may look as if they are perfect for the job yet they lack a specific skill or the personality doesn't actually match the position. These are also things that firms should look into before presenting a candidate to a client. Companies that give out exams and perform intense screening processes should have a standardized format so in the end, clients will get only the best.

The freelance and exclusive dilemma

Companies should measure the capability of candidates before signing them off for a project. For example, do you assign a long-term project to an exclusive employee or to a contractual one? Firms should always keep in mind that once a candidate is chosen by the client, they will become a representative of the VAR, so the candidate's failure or success will definitely reflect on the VAR.

Not all IT processes and candidates are the same.

Just because a candidate knows the basics of IT management doesn't mean he/she can resolve IT infrastructure issues. The talent should also be able to ride the tides with the client as they expand, and not get stuck on the basic process which he/she was hired for. Providers and resellers should likewise be flexible enough in measuring and providing evaluating systems for clients.

Procurement as an Essential Business Unit

Fri, 9 Dec 2011 00:00:00 -0800

To acquire vital equipment or to manage consumables in a company, an executive or an employee has to coordinate with the procurement department. As the business unit most responsible in managing company expenditures with respect to operating resources, the procurement department is as essential as the human resources, the finance, and the operations departments.

The following qualities have been identified by outsourcing consultancy firm TPI to make a company's procurement department more responsive in providing services to other business units:

Strength in leadership. Leadership skills should make the procurement manager stand out of the department. The department head will need to rely on experience as a stepping stone in achieving company goals. A strong leader facilitates change in the department, enabling employees towards a service-focused strategy for other business units.

Goal-driven organization. For progress to occur within the organization, a clear direction for the organization must be set. Objectives serve as directions that the procurement department can take. These objectives must be understood well among the employees for the department to take the path towards progress.

Support from the top. Including the procurement department in executive meetings and planning conferences emphasizes their significance to the whole company. This show of support gives the procurement department a sense of pride and importance to the business operation.

Empowerment. Providing the procurement department with autonomy enables them to quickly respond and interact with other business units. Less time bogged down in bureaucracy and more time used in providing services result to an efficient company. Autonomy, however, relies on teamwork, and teamwork is made possible with a clear set of goals and responsibilities among employees.

Maintaining integrity. Consistency in providing quality services is a hallmark in achieving integrity and a good reputation. With a good reputation, a procurement department becomes a valuable partner among business units.

A more responsive and dynamic procurement department brings more than departmental change. This will definitely spread to other business units, as the procurement department's interactions with them rise. Eventually, there will be a need to evaluate this growth and make the procurement department a better business unit.

Top BPO Trends to Watch in 2012

Mon, 5 Dec 2011 00:00:00 -0800

US-based research and solutions firm DATAMARK, Inc. recently released a projected list of upcoming trends for business process outsourcing. The article highlights not only the latest in technology but also the state of global economy. It also sheds some light to the buzz in cloud computing. So without further ado, below are the top trends that may reshape the BPO industry.

What is the �Cloud� exactly?

A lot of service providers and clients will still be clueless as to what the �cloud� and other IT-related terminologies (Caas, PaaS, IaaS) mean. In a nutshell, the �cloud� simply means the internet. So if ever service providers present you a business plan highlighting their proposed �cloud solution�, be sure to ask them these questions: how susceptible is it to security attacks? Is it consistent? What are the key performance indicators? If you think that they have given you a concrete solution, then by all means go for the cloud.

Lack of local talent will stimulate BPO and ITO.

Cutting costs effectively has always been the primary reason for outsourcing, although a report from Duke University contradicts the statement. According to a survey of managers done by the Fuqua School of Business, lack of local talent is the main reason domestic businesses outsource. Majority of the survey participants stated most of the functions that they were outsourcing didn't alter the volume of jobs locally. Also, high-end services are starting to proliferate and if this trend continues, the US will fall behind by 14 million post-secondary educated skilled workers come 2020.

Unstable economy will increase outsourcing demand.

With the second coming of the recession looming over business owners, they are still searching ways to minimize costs. In fact, one fourth of the organizations in the survey by industry expert Horses for Sources stated they are more likely to outsource in case the second recession comes. The experience of buyers from the previous financial crisis will definitely come in handy and they will start to look for major improvements from existing service providers.

Latin America is a gem in the rough.

Latin America, armed with a highly skilled BPO workforce, can provide services which can be done in both English and Spanish languages. Mexico, Colombia, Brazil, and other Latin American countries also have similar cultures with neighbouring countries where time zones are not much of an issue. What buyers should do is to gauge the pros and cons of each country to get a better understanding of the service provider the best suited for the processes that they need to be done.

New BPO technology should undergo rigorous testing.

BPO companies can either find groundbreaking IT solutions and present them to clients or make them into a reality by shelling out their funds and employ the services of third party IT contractors. Other than being innovative, they should also be able to provide clients with the highest level of data security and find the best IT supplier in the market. This will enable them to test each IT solution effectively to find out which will work best for future clients.

The US will focus on bringing jobs home.

Companies that doubt their contracts with service providers will definitely look into finding a service provider locally. Various government bodies will definitely look into what competing countries are doing and ask chambers of commerce and service providers to open those commonly outsourced work positions locally.

Public-private initiatives worldwide will stimulate BPO growth.

Industry analyst Ovum stated that since the BPO market has projected an annual growth rate of 5.4 percent to $93.4 billion by 2015, numerous countries are now vying into getting their hands in on the movement. Since outsourcing to India has become more costly, buyers are now looking into outsourcing to countries such as the Philippines, China, Africa, and Latin America.

Get more social.

Social networking sites have become one of the main avenues of communication - there's no question why it should be one of the most used platforms to communicate concerns and receive proper customer service. A good PR team should be available whenever and wherever because social networking customer support is a 24/7 operation.

Gaming will revive the BPO industry.

The BPO industry is delving into a world that would give life to not just itself, but business process engineers as well. This is what you call game theory application, or gamification. It has gained its silent prominence over the past year, although it has been around practically since time immemorial. It is slowly gaining ground as more business tycoons are using this concept to boost profit and revenue.

Companies which have this underlying theory in place are those which offer frequent-flier miles, and those which give out gifts to reward loyal customers in a point accumulation scheme. In the game world, this is called �levelling up�. Rules applied to games make repetitive processes a whole lot more enjoyable without going off trail, and rewards players based on merit, rather than connections and tenure.

Mobile apps are not only for games.

A lot of you will see executives totting handheld devices, and with that, you will see them tinkering with their mobile apps and you'd think that they're playing but they are actually checking updates and reports from their BPO providers. It will become the direct line of the service provider to reach clients and easily show them what they have achieved and what still needs to be done.

Outsourcing in China to Hit US$10bn, says Everest

Mon, 21 Nov 2011 00:00:00 -0800

It looks like the next few years will be great for the offshoring and outsourcing industry in China. Advisory and global services research firm Everest Group predicts that by 2015, China's global services exports may reach a compound annual growth rate (CAGR) of 20-25 percent, valued at US$9.5 billion. This is a significant increase from US$3.5 billion posted back in 2010.

According to a recent Everest study entitled �Global Locations Compass: China�, the country's global services exports rose to US$3.5 billion in 2010 from US$1.2 billion in 2007. IT outsourcing accounted for 65 percent of the total services export revenues of China. The rest (35 percent) came from business process outsourcing or BPO.

With the country's 2010 market growth, it has been re-classified as a mature offshoring location in the Market Vista Locations Maturity Map of the Everest Group. It also comes close to India and the Philippines in the Offshore Locations Survey, also of the Everest Group.

Vice-president - Global Sourcing Amneet Singh said China may not have an advantage in terms of cost and English communication skills compared to India and the Philippines, but the country can still be seen by the US and European markets as an alternative to reduce risks. The country has a regional language advantage and cost arbitrage is predicted to stay sustainable in the next 13 to 14 years.

The study also shows that in the last 12 months, more than 15 delivery centers were developed or expanded in Tier-1 and Tier-2 cities. The efforts and incentives of the Chinese government also drove the growth of the market.

Vice-president - Global Sourcing H Karthik advised companies that intend to tap or expand in the Chinese market to pay attention to talent, keep track of data protection policies, and assess Tier-2 cities for cost reduction.

What to Look Out for when Reevaluating Contracts

Fri, 18 Nov 2011 00:00:00 -0800

Service terms and contracts in the outsourcing industry continue to change as the landscape of the field evolves. Not a lot of terms change on regulatory requirements or governing transactions in outsourcing, but they can increase in importance as outsourcing risks and challenges continue to emerge. As a case in point, accounting scandals with Satyam and terrorism in Mumbai changed security controls in India.

As client markets pick up from recession, rates are again experiencing an upward movement. The question on who takes on greater risk between provider and client has also shifted, and this resulted to more considerations on liability clauses, especially for outsourcing to cloud service providers.

With the trends and changes in the market, buyers are pushed to reassess their contractual terms. A research from Forrester enumerates guidelines on how to evaluate outsourcing contracts and protect players from risks and threats, as stated in the article published at NetworkWorld.com:

Directly address the need for liability - As the need for a cloud computing strategy increases, clients ought to be more cautious in reviewing terms on liability. Forrester clients discovered that there are cloud service providers who refuse to accept liability and insure clients for exposure of private data. Because of this, a Forrester client was forced to pull out from the deal.

Update change of ownership provisions to safeguard against industry consolidation - The possibility of industry consolidation makes it more important for buyers to ensure that their contract allows for termination in the occurrence of a company changing in ownership and control. In most cases, it is impossible to predict the actions of a provider but clients should expect volatility in SaaS and cloud segments.

Bulletproof your provisions for permissible rate increases - A clause or a statement on allowable rate increases is appropriate for expiring contracts or those with terms that cover a long period of time, but clients should take it upon themselves to compare ongoing increases with current labor costs. Also, consider that services costs typically decrease over time, and in this regard, increases might not be justified. Lastly, contest provisions that will allow your provider to raise prices without your permission.

Transition assistance is important - With the rapid changes the industry is experiencing, it is safest to have provisions in your agreements that cover transition assistance. This normally includes terms on timeframe and costs to compensate for loss of business. The stated requirements should apply for both transitioning work back in-house or onto another provider. It would be ideal to have clearly stipulated roles and responsibilities for the parties during transition.

Key personnel provisions - Direct contact to a supplier's managerial, administrative, and technical support teams can make a big difference in the success of an outsourcing venture. Adding provisions on the ability to access key personnel assures customers that they will be given quality service. In the cases of ramps or issues, it is critical that customers be able to connect to the right people.

Align termination fees with length and type of contract - For contracts that are shorter in term and that will utilize less assets on the supplier's end, termination fees and provisions might be in the form of a penalty rather than a way to compensate for rendered investment. Costs that are for the purpose of a penalty should be avoided. Suppliers will always try to recover costs in the process of winning and executing a contract. In this scenario, it will be smart to research on supplier selling and delivery costs and use this as ammunition to negotiate.

Upsurge in ITO Spending and BPO Trends

Tue, 15 Nov 2011 00:00:00 -0800

The TPI Momentum 2011 Market Trends & Insights Service Line Report has just been released and it includes observable trends across eight outsourcing disciplines. The customer markets of ITO and BPO services are all looking out for the best technologies available - some examples are mobile device support and Cloud Computing. Clients also demand better forms of customization from providers in terms of functionality and features.

Rapid IT developments and changes in the field do not cause resistance but these even fuel the growth of the market. A record on closed contracts in the BPO industry is at record high in 2010, directly correlated to expenditures in ITO and network solutions.

Here are some of the highlights from the report:

Business Process Outsourcing (BPO) is gaining support in new client markets. A total of 759 BPO contracts were closed in 2010. This poses a 20-percent increase from records in the previous year. Most of these deals are inclined towards disciplines such as Contact Center, Finance and Accounting, Human Resources, and Procurement. Majority of the contracts are with small companies exploring outsourcing, and are not necessarily large in volume. Consequently, total spending decreased by 12% from 2009.

Evaluating strategies slow ITO. The ITO market had to take a stop and wait as clients evaluated their IT strategies. This resulted to a decline in contract volumes because clients involved themselves with exploring options and setting guidelines for new technologies, like with mobile devices, applications, information security, Cloud Computing, etc. Contracts in ITO increased by 1.6 percent in the US, and faced a decline in EMEA and Asia. The Managed Network Services service line experienced greatest demand mainly due to telco-to-telco needs.

Clients are bundling up. Clients opted to utilize more bundled contracts, as opposed to standalone, in 2010. Especially with Cloud Computing and finance and accounting, clients build portfolios or separate bundles of outsourcing contracts that consider business and technology perspectives. Portfolio bundling and developing a niche expertise led to multi-provider sourcing.

Mobility is moving the market. The business need for mobility is setting direction in the field of outsourcing. This demand has the greatest effect to the End-User Computing service line because providers need to expand solutions to respond to the growing number of mobile devices. Providers now are asked to create mobile applications, manage network traffic, and allow mobile access to business applications.

Expert help wanted. Clients seek providers with expertise in their particular field. They would rather outsource to companies who can offer customized solutions for a particular industry or business process, instead of generic services. Cost-effective and innovative solutions are also a selling point, like Cloud Computing services that both result to cost savings and greater efficiency. Lastly, there is observed inclination to �business-process-as-a-service� solutions where entire functions like payroll and recruitment are outsourced on a project basis.

The entire TPI Momentum report dedicates one chapter for each service line that tackles their respective trends and developments in greater detail.

Choosing between Being Secure and Being Flexible

Mon, 14 Nov 2011 00:00:00 -0800

As the world becomes smaller due to emerging web technologies, information security has become more important as companies seek to go global. Some have even outsourced captive offshore operations in their bid to become global companies. As with any expansion, plans are needed to ensure that the expansion enables the company to achieve its objectives of being effective and efficient. Among companies that rely on outsourcing, an offshore risk mitigation plan is needed for captive operations.

Most companies already have internal security controls in place before turning to outsourcing. Since captive operations are regarded as offshore business units, a captive operation is expected to adopt its mother company's security policies. Outsourcing consultancy firm TPI points out that captives oftentimes face hurdles in enforcing these policies due to internal customizations made by client companies, especially in policies regarding Internet use, social networking exposure, and the use of storage devices.

TPI suggests the following tips for outsourcing companies and their clients in formulating an offshore risk mitigation plan:

Assess the mother company's internal controls. Can the mother company's internal controls be immediately adopted for the captive operation, or do they need to be modified accordingly? With a comprehensive assessment, risks can be mitigated early on as the outsourcing service provider takes an active stance to quickly address issues as they crop up.

Focus on human resources. The reputation of the outsourcing service provider is at stake in any outsourcing deal, especially those who serve the financial and healthcare sectors where data confidentiality is of top concern. An exhaustive screening process is vital in hiring staff for captive operations.

Include local influences in creating the plan. Study how captive operations and local companies deal with security issues - how do they compare against the mother company's internal controls? Such observations can be used in assessing whether those internal controls can be adapted into the local operation.

Imbibe the importance of security. More security controls do not mean an office is better secured than an office where the employees are security-conscious. Having a culture of security among employees is more effective than enforcing a multitude of security controls and policies among employees who may find ways to circumvent security policies.

Constant training. Train the staff regularly on information security courses. The effectiveness of the training must be measured to evaluate if it supports and complements the company's risk mitigation plan.

An offshore risk mitigation plan ensures that the outsourcing service provider is ready to hurdle the operational challenges in a captive operation that functions as an extension of the client company. Such a plan must include security policies that should be flexible enough to factor in human behavior and local culture.

Avoiding Visa Delays in Transition Phase

Fri, 11 Nov 2011 00:00:00 -0800

Multinational corporations consider their global service delivery networks as vital communication channels among international offices. Internal electronic communication is oftentimes supplanted with personal, face-to-face interactions between managers and staff. Governments, such as the United States and the United Kingdom, issue a variety of visas to facilitate the entry of foreign staff needed by either mother companies or client-companies based in these countries.

However, due to security issues, the issuance of US visas has seen additional restrictions, stretching the timeline for companies relying on outsourcing as they shift to a global service delivery model.

Outsourcing research firm TPI lists five tips that can help companies avoid these visa delays:

Include delays in the transition timeline. Formerly, offshore employees needed to work in the US arrived within a month's time. With the new visa restrictions, foreign workers coming in to the US arrive within two months - an addition of one month. This is a very significant delay for those in transition.

Establish backup plans. Delays in transition are normal, but since they directly affect the profitability of a company, a backup plan is needed in case the needed foreign workers do not arrive in time.

Take advantage of the Internet and new technologies. There are various software programs or applications that enable virtual collaboration and file-sharing among team members spread across the globe. These tools and technologies must be set up early in the transition phase, as time saved in business converts to money saved.

Shift the majority of transition work to the offshore service provider. Many client companies based in the US are now sending their local resources to offshore sites during the transition phase, serving as subject matter experts (SMEs) and trainers. Outsourcing service providers have established client services departments for such situations, taking care of visas and accommodation for the direct employees of their client companies.

Create a risk mitigation plan with the service provider. Client companies will find it easier if they work on transition delays with their outsourcing service provider. Usually, risk mitigation plans are included during the onboarding phase. These plans must be created even before the ink on the outsourcing contract dries up.

There are various details involved during the transition to being a global company, but a well-defined plan will help a company pursue its outsourcing goals. Visa restrictions, part of the transition process, can easily be mitigated with the right strategy.

Everest Group: Global Outsourcing Slowing Down

Tue, 8 Nov 2011 00:00:00 -0800

Activity in the global outsourcing scene is getting slow. From 503 outsourcing contracts posted back in third quarter of 2010, the number went down for the same period this year - only 472 according to market advisory and research firm Everest Group (reported at zeenews.india.com).

Everest Vice President (Global Sourcing) Amneet Singh said the decrease in the number of outsourcing deals and transaction volume indicates the �sluggish� phase the global outsourcing market is currently facing. However, several large deals have been closed during the quarter, and this drove the global transaction volumes to reach US$2.7 billion in annual contract value (ACV).

IT outsourcing and business process outsourcing (BPO) posted a drop in transaction volumes, though the former had seen a 14-percent increase in ACV for the third quarter of this year.

It's good to note, though, that Q3 is not all about outsourcing slowdown. Third quarter had seen an increase in the number of captives that were set up. In 2010, only four new captive centers were established, and nine expansions. For Q3 2011, however, 20 new centers were set up.

This slowdown in the global outsourcing landscape is almost something to be expected, considering the current financial woes in the US and UK, two of the largest markets being tapped by the industry. Of course, various business owners are getting more and more cautious when it comes to spending especially in times of financial uncertainty.

It may be the reason the global outsourcing market is now seeing a decline in deal signings and transaction volumes, but then again, there are other companies that are realizing what outsourcing can do for them. By transferring work to a service provider, they can take advantage of the labor arbitrage, enabling them to reduce their costs and keep the business going.

Like what Singh said, it is still too early to say what will happen in the next few quarters or years. This Q3 decline may or may not be a trend. The key, as always, is to stay updated on the latest developments and have contingent plans to ensure the business will stay afloat no matter what the economy will throw at us.

Shifting Strategies for the ITO and BPO Services

Fri, 4 Nov 2011 00:00:00 -0800

According to the latest TPI Momentum 2011 Market Trends and Insights Service Line Report, clients who rely on BPO and ITO services are interested in service delivery options and emergent technologies, such as support for mobile devices, cloud computing, and X-as-a-Service. Providers also face the clients who demand custom-fit services and features for their business processes.

The same report from the outsourcing consultancy firm said that 2010 saw a record number of BPO contracts being signed, coupled with a tremendous increase in ITO budgets across companies.

From the same report come these highlights:

New clients came over to the BPO fold. Last year saw 759 BPO contracts being signed - a 20% increase from 2009. Majority of these contracts were signed between companies venturing into outsourcing over Contact Center Services, Finance & Accounting, Human Resources and Procurement. Total spending, though, was down by 12% from 2009.

The ITO market slowed due to re-evaluation of company IT strategies. Contract award volumes were reduced from 2009 since clients were evaluating their strategies and policies, especially with the exponential growth in mobile computing, virtualization, and cloud computing. The Americas, nonetheless, witnessed a 1.6% increase in ITO contract awards.

Clients opted for multi-sourcing. As clients renewed outsourcing contracts, companies opted to use portfolio bundling, creating separate bundles of outsourcing contracts in business and technology sectors.

Mobile computing has changed the market. The explosion in mobile device use and mobile computing has directly impacted the outsourcing industry, via new advantages and disadvantages. Service providers needed to create new solutions for clients who wanted mobility with information security.

Experts needed. Clients have shifted to expertise in their respective vertical industries when it came to choosing service providers last year. Custom-fit solutions have become the name of the game, instead of basic, pre-packaged services. Innovation has also taken the front seat among clients, as they saw the advantages of cloud and mobile computing. Preference for business process-as-a-service has also increased among clients.

Advantages of Using Cloud Services

Thu, 20 Oct 2011 00:00:00 -0800

Logan Harbaugh of PCWorld comes up with six compelling advantages to using a cloud-based solution for business needs. Processes like payroll, web or email hosting, and enterprise resource planning have proven more cost-effective when outsourced to a cloud provider.

However, most companies hesitate at the thought of outsourcing complex IT requirements, like data storage, file servers, and software development. Relying on cloud services would expose a company to risks like data losses, outages, and hacking.

Even with the consideration of these risks, there remain benefits and cost savings to utilizing cloud services:

Save on Infrastructure - A monthly payment to a cloud provider is certainly easier and more convenient than purchasing your own servers, licenses, operating systems, and applications. This is most beneficial to services and processes that need to be tested before actual execution.

Save on Setup and Management - Creating in-house solutions requires huge investments on process development and human resource. You would need to hire qualified and talented IT professionals and organize a new function. In contrast, cloud providers have teams of experienced administrators whose sole purpose is to support their services and applications.

Save on Utilities - Cloud providers have new and cutting-edge technology and data centers housed in infrastructure that is shared by multiple companies. This enables them to efficiently manage the use of its resources and its corresponding costs.

Better Performance and Features - Cloud providers naturally purchase high-end equipment and infrastructure of the best possible quality since they provide services to multiple companies. Their systems ought to have higher performance levels. For small to mid-sized firms to employ such a sophisticated setup, it will be unreasonably expensive and even uneconomical. Cloud providers have software licenses that would provide you a wide variety of features. They also have seasoned administrators who know how to make the most of their resources to upscale performance.

Increased Company Agility - Cloud providers can readily add servers and they can make this accessible to all kinds of users - internal in the company, external partners, and customers. The level of flexibility cloud services provide will allow you to more effectively respond to the needs of your customers as well as changes in your company.

Fault Tolerance - Cloud providers have the resources to run a number of data centers, and to create connections and back up data between data centers. They can guarantee data protection, power redundancy to address blackouts, and other contingency plans that will leave your solutions intact in any situation.

Companies can benefit from significant cost savings and the expertise of high-level administrators and engineers by outsourcing to cloud providers. There will always be risks (i.e. losing data, etc.), but ultimately, you must balance the pros and cons of moving to the cloud, find ways to maximize its advantages, and minimize the risks.

How to Manage Common Challenges in Outsourcing Transition

Wed, 19 Oct 2011 00:00:00 -0800

Outsourcing is an effective business tool not only to reduce costs in labor and operations but also to enable companies to focus on their core competencies, gain access to new talent pools, and tap new markets. Businesses all over the world, particularly in Western countries, have long been enjoying the benefits of outsourcing.

It may be a popular business tool primarily for cost reduction, but not all companies are convinced that outsourcing can be beneficial for their operations. One of the factors that keep many businesses from transferring work to a service provider is the transformational change that comes with business process outsourcing (BPO). Change is indeed inevitable, but dealing with change in outsourcing can be very difficult. In a survey done by HfS Research and the London School of Economics Outsourcing Unit, more than three-fourths of companies said they chose not to outsource to avoid any disruption to their business operations.

The outsourcing transition needs some careful planning. Of course, there are challenges involved in the process. In an article by Brad Lillis published at businessfinancemag.com, he enumerates the common difficulties companies may encounter in the outsourcing transition period and ways to manage them:

Process documentation is not in place. Enterprises vary, and not all of them do not have the time and resources to standardize certain processes before they outsource. For a smooth outsourcing transition, it is crucial to document processes - creating standard operating procedures, identifying exceptions, etc. Having proper process documentation will pave the way for a smooth knowledge transfer and performance.

Enterprises failed to create key transition metrics. It is necessary to put transition metrics in place to analyze the operational performance during the outsourcing transition period and before the operations become stable. With transition metrics, enterprises will be able to know the impact right away in case these metrics were not met.

Recruitment capabilities of the service provider are not monitored. Many company owners tend to rely too much on their service providers, particularly when it comes to finding talent and turnover. In the transition period, it is essential to closely monitor how service providers handle staffing and ensure that they will meet the recruitment needs.

Be ready for anything. No matter how much time enterprises spend on planning the transition, certain issues may still arise. It is therefore crucial to prepare for anything and resolve problems immediately. Enterprises can assign a team that will handle any unexpected issues and has the capability to provide solutions as soon as possible.

10 Essential Elements for an Effective Sourcing Strategy

Fri, 14 Oct 2011 00:00:00 -0800

Any activity needs a clear plan, and a clear plan helps to ensure the success of an activity. The same thing happens for companies that consider outsourcing for their business strategies, reports IT research and advisory firm Gartner.

According to the firm, companies that implement a comprehensive plan in shifting to outsourcing fare better in realizing savings and efficiency goals compared to companies which haphazardly shift to outsourcing. Since an outsourcing strategy is, visually speaking, a complicated flowchart of processes and steps, a clear and comprehensive plan needs efficient staff and dedicated tools. This investment in hardware, software, and know-ware will, in the long run, pays off via an effective outsourced operation.

Gartner considers this initial phase - of planning to shift to outsourcing - as the most crucial stage in a company's outsourcing strategy, as this sets the policy for all subsequent outsourcing endeavors.

Here are the ten essential elements:

Lay down the rules and the goals for outsourcing. A company needs to lay down its priorities with respect to outsourcing - its rules and its principles.

Consider existing infrastructure. Is the company ready to outsource some of its processes? The existing infrastructure should be evaluated to know whether it meets customer demands or if it needs upgrading.

Evaluate the ability to manage outsourced providers. Are company executives ready to manage outsourced service providers? Knowledge and skill in managing outsourced processes are vital in making the shift to outsourcing.

Consider barriers, challenges, and advantages for outsourcing. Will outsourcing really help the company? The level of government support for outsourcing also varies among countries - this should also be taken into consideration.

Measure existing processes. Data gathered from measuring existing processes can be evaluated for and against outsourcing.

Know the outsourcing market. Familiarity with outsourcing service providers, their service offerings, and their clients will definitely help when it comes to considering outsourcing service bids.

Plan multiple scenarios. A good plan is composed of multiple plans, making up for potential failures. Never settle on just one scenario.

Do a risk assessment study. For every scenario, study the risks and assess each one. In any business undertaking, there are risks involved - it all boils down to how risks are converted into opportunities.

Write a business plan. Documenting all these steps, a TCS (Total Cost of Sourcing) is created, compiling the sourcing scenarios, financial impact, and other business-related details.

Create the blueprint for action. With a business plan on hand, it is now time to create that blueprint to implement the plan.

Companies can reach their outsourcing goals with a comprehensive sourcing strategy that involves their internal capabilities combined with outsourced services. Without such a strategy, companies are unable to fully take advantage of outsourcing as an effective business tool towards profitability.

Slower Growth Seen in Global IT Market Next Year

Tue, 11 Oct 2011 00:00:00 -0800

In Forrester Research's latest report called Global Tech Market Outlook for 2011 & 2012 (from deccanherald.com), the global IT market research firm predicts that the financial crisis in the US and Europe will affect the global IT spending in 2012. It will still be a positive growth rate, though slower. In 2011, global IT spending reached 11.5 percent, but this will weaken to 5.5 percent next year.

Weak market growth will be seen in the US which will post only 6.4 percent. Europe will likewise see slower IT activity. It is predicted that Eastern Europe, Middle East, Africa, and Latin America will post a growth rate of 12 percent in 2012. This is primarily due to worries brought about by the financial crisis which started in the middle of 2011 and eventually affecting the last quarter of the year.

Forrester said 2011 will have a better global IT market growth rate than 2012, as the first two quarters of the year saw strong IT demand before the economic downturn in the US and Europe.

From 8.1 percent growth in spending on software in 2011, it will drop to 6.2 percent next year. Other aspects of the IT market are also predicted to grow: IT outsourcing (6.3 percent), IT consulting and systems integration (7.6 percent), and computer equipment (6.6 percent).

While it is predicted that global IT spending will weaken next year, the Indian IT industry is not alarmed, at least not yet because according to industry body Nasscom President Som Mittal, companies haven't reduced their IT budgets.

There's no point denying that the outsourcing industry will not feel the impact of the financial crisis. While some may think that this state of the global economy will push US- and Europe-based companies to outsource IT processes and increase or maintain their IT budgets, business owners may do the opposite and be more cautious about their IT spending in the next few years.

Forrester predicted a positive growth but at a slower pace. This forecast should keep IT outsourcing service providers from letting their guard down. In times of economic uncertainty, it pays to be more cautious and monitor recent economic developments to mitigate the risks or lessen the impact of whatever the crisis will bring.

Everest: Pharma Firms' Global Sourcing Spending Likely to Increase

Fri, 7 Oct 2011 00:00:00 -0800

In the "Outsourcing and Offshoring Trends in Pharmaceuticals" report from global services research and advisory firm Everest Group, it is seen that outsourcing spending of pharmaceutical companies will continue to grow as the highest spike of outsourcing deals was posted in 2010 (10-year high). This was an 81-percent increase compared to contract signings in 2009.

The pharmaceutical industry spends US$490-670 billion per year or 3-5 percent outsourcing levels. According to the report, this can become 10-15 percent levels. Amneet Singh, Global Sourcing Vice President, said the growth of outsourcing deals posted in 2010 was driven by the increase in demand during the economic crisis. Other factors such as cost issues, changes in the pharmaceutical landscape, and emerging markets are also considered growth drivers. It is predicted that outsourcing activity will increase in drug development and research, supply chain management, data management, as well as analytics processes.

These are the other highlights of the report:

There was an increase in outsourcing demand from pharmaceutical companies in Europe for the last three years.
More and more companies adopted business process outsourcing (BPO), to outsource not only drug development functions but also processes in finance and accounting, HR, and procurement.
Pharmaceutical firms are starting to set up captives in Asia and Central and Eastern Europe to gain presence in emerging markets.

Also discussed in the report were the changes in the service offerings of providers. Global Sourcing Vice President H. Karthik said the evolving pharmaceutical industry leads to changes in the service provider landscape. From offering traditional services, providers are expanding their offerings which now include specific functions. They are likewise improving their services and capabilities to enable them to offer other pharma-related processes.

IDC Study Presents BPO Contract Figures from 2006 to 2010

Thu, 29 Sep 2011 00:00:00 -0800

�U.S. BPO Contract Analysis 2006-2010 by Vertical� is a report released by global market intelligence firm IDC that summarizes trends of contract values in different industry sectors in the United States. A sample was selected among new and renewed business process outsourcing (BPO) contracts in five primary industries: financial services, manufacturing and resources, infrastructure, services, and public sector. The findings include the following:

BPO contract values were highest in 2008, with concentration in the government, manufacturing, and financial services industries.
Recession caused a decrease in the value of new and renewed contracts in 2009-2010. Also, large deals of over $1 billion dropped during this period.
The financial sector is picking up and contract value is beginning to normalize, the industry's numbers returning to pre-recession ranges. Deals, however, are becoming shorter and smaller in volume.

Trends in the study are presented per vertical in the report. Ruthbea Yesner Clarke, IDC program manager for Vertical Markets Research, says the government, infrastructure, and services industries have been stable at maintaining contract lengths, unlike the financial services and manufacturing sectors that posed a significant decrease.

The analysis identifies the top 5 outsourcing vendors in the 13 industries covered by the report - this is considering contract value during 2006 - 2010.

Banking: TCS
Utilities: Accenture
Transportation: Xerox/ACS
Professional Services: Hewlett-Packard/EDS
Retail Trade: IBM

The study took into account the US contracts signed by BPO services, as well as the total number of deals, agreement length, geographical location, and key vendors. Data was acquired from IDC's BuyerPulse Services Deals Database which has very comprehensive information on market deals. Furthermore, the study includes an analysis of consumer budgets, their buying behavior, and spending trends.

Everest on Healthcare Reform and Benefits Administration Outsourcing

Wed, 28 Sep 2011 00:00:00 -0800

Everest Group, a consultancy and research firm, reported a 12.5 percent growth in the Benefits Administration Outsourcing (BAO) market. The current upsurge in demand for BAO is primarily driven by employers who need direction and advice in complying with healthcare reform measures recently introduced in the US. While the industry has long been sustained by the need to reduce cost and improve employee engagement, news on healthcare reform brings employers to increase enrollment and regulation of insurance plans.

Research director Rajesh Ranjan says it will take years before the said reforms are in its full effect, but a number of provisions are expected to directly affect companies' benefit plans for the year. Buyers look into outsourcing in an effort to understand and navigate through the reforms as well as identify ways to lessen costs.

More highlights in the report concerning the BAO segment:

North America remains the strongest market, while demand potential is seen in the UK, Germany, and the rest of EU.
Large enterprises increased its use of BAO in 2010-2011, 76 percent of participants managed belong to this segment.
The manufacturing sector is the highest proponent of BAO adoption but demand is expected from the government and services industries.

Aon Hewitt and Fidelity are the largest service providers in the BAO market, holding close to half of the market share. Other players included in the report are ACS-Xerox, ADP, Infosys, Secova, and Towers Watson.

The BAO industry is a competitive market and mergers continue to spur progress in the industry. Providers continue to thrive and differentiate themselves by altering technologies, by improving service models and processes, and by specializing based on scope and geographical location.

A webinar will be held on October 11, 2PM GMT to present the rest of the findings. To register, visit research.everestgrp.com/Events/Webinars.

Tips on Working with an IT Service Provider

Fri, 23 Sep 2011 00:00:00 -0800

Small companies generally do not have the resources to undertake massive volume orders or major shifts in technological infrastructure. Outsourcing, whether offshore or nearshore, serves as a strategic tool for small companies to maintain profitability and to ensure efficient customer service.

In any business operation, IT infrastructure is an important aspect. Unfortunately, small companies have limited budgets in hiring IT personnel or purchasing IT equipment. Outsourcing enables small companies to hire world-class IT personnel or to use virtual IT equipment at low cost.

However, compared to large, multinational companies, small and mid-sized businesses (SMBs) generally do not have the skill and know-how in managing outsourcing service providers. Kevin Casey of InformationWeek.com has interviewed TeamLogic IT's vice president for information technology, Vince Plaza, for an insight into how SMBs can fully take advantage of IT outsourcing.

Do not hesitate to ask questions. Asking questions creates an atmosphere of transparency and accountability. A transparent working relationship ensures that all issues are attended to immediately. At the same time, any possible challenges can be foreseen and resolved. A typical question that may be asked in an outsourced IT relationship may be related to general details such as the software and hardware used by the service provider. Software may refer to the applications and technologies employed to deliver the services � it may even help to understand the different levels of service that an outsourcing agreement covers.

Outline a clear job description for the outsourcing service provider. Not all SMBs have their own IT departments. However, tension may occur in an outsourcing relationship that involves two IT managers � the in-house IT executive and the outsourced IT staff. A clearly outlined role and responsibility for the outsourced IT provider helps to reduce this tension. Plaza said an approach like �call on us when you need us� will place the outsourcing service provider in a supporting role.

Regular meetings ensure that the outsourcing relationship is proactive, instead of being reactive. Internal company meetings are done regularly to address issues and avoid problems � why not do the same with an outsourcing service provider? A proactive outsourcing relationship means that problems are anticipated and avoided, resulting to less downtimes and more operational hours.

Do not sacrifice security. Being an SMB does not equate to having less secure IT resources. Awareness of data security is very important, especially for SMBs that capitalize on a specific product or service. Security policies and procedures that do not require additional equipment and staff can be developed and used.

Be fast in solving problems. Even if an outsourcing relationship is proactive in dealing with challenges, inevitably a problem arises. How many times have you dealt with a project that did not proceed as planned? Speed is critical in solving problems, especially problems that may hamper service delivery.

Best Practices in Supply Chain Outsourcing

Wed, 14 Sep 2011 00:00:00 -0800

Outsourcing as a business strategy has gained prominence even in the supply chain industry, where outsourcing fills in the inherent inadequacies of small companies and leverages the comprehensive capabilities of multinational companies. Research firm Gartner, Inc. has culled eight best practices that can help supply chain executives in identifying, evaluating, and choosing the right outsourcing service providers for their operations.

Best Practice No. 1. Create an outsourcing strategy that will integrate into your existing supply chain strategy.

Since the outsourcing service provider will be essentially integrated into the supply chain, strategically, any decision with regards to the scope and magnitude of outsourcing must support the overall operation of the company. At the onset, the outsourcing service provider must be willing to work hand-in-hand with the client-company in improving profitability.

Best Practice No. 2. Ensure that the company is ready to manage an outsourced service provider.

Before setting out to engage the services of an outsourcing service provider, ensure that there will be someone in the corporate hierarchy who is sufficiently equipped to manage outsourcing partners. Supervising an outsourcing service provider is different compared to managing an in-house department. Besides, there are different types of outsourcing services, and a company keen on contracting outsourcing services must be familiar in getting the right outsourcing deal for its requirements.

Best Practice No. 3. Be clear on what you need to outsource.

Decide on what processes to shift to an outsourcing service provider. Essential operations that involve sensitive company data, such as intellectual property (IP) and confidential customer data, may or may not involve an outsourcing service provider. Among providers, competition is so fierce that outsourcing companies are combining and expanding service offerings in an effort to attract more companies into the outsourcing fold.

Best Practice No. 4. Outsourcing is more than cost reduction.

An outsourcing deal that is primarily pegged on reducing cost may be sacrificing other important factors, such as quality assurance and customer service. Some companies have tripped on the mistaken notion that outsourcing deals will solve their problems and return them to profitability. Aside from cost-service analysis, companies considering outsourcing must also factor into their risk assessment the following: quality control, customer feedback, and past performance.

Best Practice No. 5. Carefully consider the variety of risks involved in outsourcing locations.

Consider the location - outsourcing deals are, more often that not, offshore, too, in nature. In Asia alone, IP legislation and enforcement differ widely between India, China, and the Philippines. Corruption in the public and private sectors in the three countries mentioned also varies.

Best Practice No. 6. Open communication channels are vital to an outsourcing relationship.

Communication and transparency, especially involving personnel movement, processes, and capabilities, are important in maintaining an efficient supply chain outsourcing deal. Surprises are not needed in an outsourcing deal that places a premium on predictability and reliability.

Best Practice No. 7. Be clear on managing service level agreements and performance indicators.

Documentation is an important part of any partnership. With clear documentation, qualitative and quantitative assessments can be quickly made and brought up in regular meetings. The impact of the supply chain outsourcing can be safely measured against the performance of the company.

Best Practice No. 8. Take advantage of the outsourcing service provider's skill and experience.

In any outsourcing deal, sharing is as important as having a clear service level agreement (SLA). A partnership between companies is meant to guide both companies to profitability - a mutual relationship that aims to assure mutual growth. A client-company will gain from a specialized outsourcing service provider who has the tools and the immediate know-how that the client-company can take advantage of, instead of having to invest time and resources to have those same skills and knowledge within the company.

Recommendations on Mitigating Outsourcing Risks

Mon, 12 Sep 2011 00:00:00 -0800

In many cases of outsourcing business functions offshore, it is inevitable to give service providers some sort of access to certain systems and information on processes to get the job done. Depending on the outsourced work, the clients are somewhat exposing the way they do business to an external provider, and that makes them at risk.

Today's global outsourcing market continuous to flourish and as more and more companies realize what outsourcing can do, it is highly important to evaluate business relationships with service providers to mitigate the risks involved in transferring processes to vendors.

In a CIO.com article by Stephanie Moore, Vice President and Principal Analyst at Forrester Research, she enumerates several recommendations on risk mitigation:

Make sure the vendor has the right certification. Vendors adhere to delivery standards to ensure the highest quality. For instance, CMMI Level 5 is the highest rating today. This indicates lower risks when it comes to executing programs. Keep in mind, though, that not all service providers have the certifications you may need. Smaller or new vendors may not have the right certifications required for your business.

Assess the qualifications and certifications of employees. Software development work requires employees who have undergone training and have the right qualifications and certifications. Make sure to get proof of certification from the service provider.

Analyze the HR and recruitment capabilities of the vendor. Finding talent is one of the most crucial steps when it comes to outsourcing, but after hiring the right employees, the vendor should be able to retain them and keep attrition rates to a minimum.

Look at the vendor's vertical expertise. Clients must look at the vertical capabilities of service providers. It is important to know how they incorporate innovation and technology with their expertise in certain verticals and the industry.

Evaluate rates and productivity in terms of quality of work. Outsourcing enables clients to save on operational and labor costs, but this does not mean getting deliverables of low quality. Clients need to assess the pricing of projects and ensure that the employees meet their requirements.

Beware of managed services agreements. As with all other business contracts, service level agreements in outsourcing must be crystal clear, making sure that the vendor is not employing, for example, shortcuts in the software development life cycle (SDLC). Evaluate managed services engagements carefully to prevent problems later on.

Why Mid-sized Firms Get More from IT Outsourcing

Mon, 5 Sep 2011 00:00:00 -0800

A study done by outsourcing analyst firm HfS Research and the London School of Economics shows that mid-sized companies get more out of their IT outsourcing deals compared to large organizations.

In the article �IT Outsourcing: What Big Companies Can Learn from Midsize Companies � by Stephanie Overby at CIO.com, with the 277 outsourcing buyers who participated in the survey, 63 percent of mid-sized firms said outsourcing had been successful for them in terms of cost reduction. The report also shows that 42 percent of mid-market clients indicated that their deals have met their compliance and regulatory requirements, compared to only 30 percent of large companies.

According to HfS Research founder Phil Fersht, "Quite simply, mid-market organizations have to bundle more processes together into one broader deal to make it large enough to warrant the attention of the leading services vendors. [They] rarely will have the luxury of outsourcing step-by-step." Larger companies usually outsource services part by part over a long period of time and because of their size, they can tell the service providers how they would like to outsource.

Fersht says this type of strategy is weighing large companies down and the cut up process hinders further developments in contracts. "By and large, organizations outsource processes that probably aren't very well run in the first place. [Their] 'softly, softly' approach to outsourcing is prolonging the disruptive change a buyer needs to go through to reach its desired global operations end-state," said Fersht.

When it comes to outsourcing vendors, Fersht said they should focus not only on big clients but also those in the mid-market where contracts are more flexible.

Making Your Help Desk Smarter

Fri, 2 Sep 2011 00:00:00 -0800

Majority of efficient IT Help Desks are measured by their high basic performance metrics, which cover high resolution rates and fast average handle times (AHTs). However, as outsourcing consultancy firm TPI points out, these basic metrics only measure how quickly agents can manage contacts � they do not reflect how operations can be made more efficient and effective.

TPI says in its report that problems may actually get unresolved in the efforts of agents to score high metrics rates. The consultancy firm cites the example of multiple contacts about a relatively easy problem, which agents resolve by themselves. Instead of elevating the problem to the production team, the agents opt to increase their resolution rates.

Issues are supposed to be resolved and eliminated, instead of being managed with short-term solutions. A smarter Help Desk is integrated with other groups in the IT organization for proper problem analysis and resolution. TPI suggests five strategies that top Help Desks use in improving overall operations:

Knowledge Management Incentives. Targets for agents should be made, with a focus on publishing a certain number of articles per period. This assumes that the publication process filters good writing from bad writing.

Demand Management Incentives. The Help Desk team should get rewarded in reducing the volume of contacts for specific problems.

Incident Management Integration. Reward agents who connect incidents to existing problems. A tool should be in place to enable an agent to quickly report the incident and evaluate it as a consequence of a known issue. This is considered as a critical ITIL asset.

Problem Management Integration. Agents who can characterize a problem, and thus, assist in resolving it should also be rewarded. A problem can become critical especially if it involves a database, yet with a forward-looking agent, the problem can be resolved immediately.

ITIL Process Integration. ITIL, formerly known as IT Infrastructure Library, is a set of best-practice measures for the IT industry. TPI says interconnecting your ITIL processes will highlight the top incident types, record the progress in resolving the incidents, and reduce contacts related to the incident type.

With a more intelligent Help Desk, gains in operational efficiency are made and customers receive better services and products.

Addressing Talent Concerns in the Outsourcing Industry

Wed, 24 Aug 2011 00:00:00 -0800

The Philippines produces about half a million graduates on a yearly basis. One may think that with this figure, the outsourcing industry will not have a hard time looking for workers to meet the demand. While there are a lot of graduates who are readily available for work, the challenge here is finding individuals who have the knowledge and skill sets needed for outsourced business functions. It is a well-known fact that what drives the outsourcing industry is talent. Quantity is not enough. What's more important is to have a huge pool of workers whose skills meet the demands of the industry.

Seeing how important it is to have high quality talent and to keep the outsourcing industry a main economic growth driver, industry body Business Processing Association of the Philippines (BPAP) is working with various government agencies particularly in the field of education. There is a need to improve the curriculum and make students more proficient in the English language - one of the crucial factors needed to enter the business process outsourcing (BPO) workforce. Likewise, trainings programs are being implemented for the same purpose of honing the skills of workers.

It was reported recently that the Philippine government is teaming up with BPAP as part of the efforts to address talent concerns and eventually help the industry in reaching its revenue goal of $25 billion by 2016. The initiative is called Training-for-Work Scholarship Program and it will be launched this year and in 2012. This aims to train 58,000 scholars, and 37,000 are guaranteed to get jobs. This program will need P350 million in investments. According to Department of Budget and Management Florencio Abad, this is something that the government should take into account, considering the revenues that the industry can bring.

The Philippines is now considered the top call center destination and it is inching its way up when it comes to non-voice services. Through these initiatives, the outsourcing industry is with high hopes that the country will meet the ever increasing demand for highly skilled workers and remain globally competitive.

Six Guide Questions in an Outsourcing Deal

Mon, 22 Aug 2011 00:00:00 -0800

A company may find itself in a bind if it shortlists two outsourcing service providers that have equal skill, knowledge and experience in the outsourcing industry. Outsourcing advisory firm Alsbridge has drawn a set of six guide questions that can help a company decide and select a provider that will help them move forward into a successful outsourcing partnership.

Alsbridge has formulated the six guide questions from a recent interaction with a client:

Has the service provider created a comprehensive transition plan? Transition from the present operation to the outsourcing service provider's delivery group should be as smooth as possible, taking into account the issues and challenges that can hinder an efficient transfer. Seek advice from those experienced with transition processes � the information gained can provide an insight into the time involved in managing the transfer. A service provider's transition plan must include a timeline of six to eight weeks of knowledge transfer.

This transfer may involve staffing and recruitment, hierarchy, workflow, metrics, service level agreements, and finally, a certification for an �all systems go� from the provider. Be wary of plans that are either too exacting or too vague � ambiguity may be a sign of inadequate information on the part of the provider.

Did the provider behave well before and during contract discussions? Profit is undeniably a motivation in any outsourcing deal, but there should be a more valuable motivation in pursuing an outsourcing relationship rather than focusing on cost efficiency. First impressions last, and these may also define the outsourcing relationship. Long-term outsourcing deals are based on equitable arrangements - a win-win situation between client-company and service provider.

Is the provider experienced enough to reliably deliver? In making reference calls, it will be helpful to write a common script. Through a common set of questions, answers can be quantified and compared, profiling the service provider's relationships with other clients. Visual aids, such as tables and graphs, can be used in evaluating the reference calls.

Are the right people assigned to your account? Issues and challenges in the outsourcing relationship must be resolved in a timely manner. The Client Manager and Delivery Manager are the people to focus on � are they capable enough to ensure that the outsourced operation runs efficiently? Interactions with the provider's management team and its operations staff during due diligence and site visits are invaluable, since these situations provide an insight into the service provider's internal management processes.

Is the contract price too competitive to resist? A service provider with a lower contract price may spring surprises during transition. They may claim additional charges for items not covered by the agreement, and may even offer additional services for additional fees. Some service providers still use this bait and switch approach in signing up clients.

Is the service provider a cultural match for your company? An honest relationship will drive more than cost efficiency in an outsourcing relationship. If the service provider ensures a sincere atmosphere in your communications, chances are, they will be able to pull through a difficult situation and help beyond what is expected. As much as possible, ensure that the service provider's corporate values and culture are parallel to your own.

Variable Trends in the TPI Momentum 2011 Outsourcing Review

Fri, 12 Aug 2011 00:00:00 -0800

Outsourcing advisory firm TPI has released its Momentum Market Trends & Insights 2011 Verticals Report, which surveyed outsourcing trends in 27 vertical and 68 sub-vertical industries last year. The study found spending for outsourcing across the surveyed industries rose by 5%, but spending per industry was highly variable.

The following are the report's highlights:

Outsourcing spending among Forbes Global 2000 (G2000) companies has increased. Over $72.1 billion was spent by G2000 companies last year for outsourcing services, amounting to a 5% increase. Manufacturing and Financial Services accounted for the most spending, but the Retail sector had the highest growth rate at 37%. The growth was attributed to increased IT spending as new retail business models emerged.

Increased outsourcing deals among G2000 companies. Overall outsourcing penetration among G2000 companies rose by 3% as more companies signed their first outsourcing deals last year. Twelve out of 27 vertical sectors had at least 20% penetration.

Outsourcing momentum led by sub-verticals. Outsourcing activity shifted to sub-verticals as spending on outsourcing declined on the main verticals. Outsourcing spending in the Chemicals industry flat lined, but the sub-vertical Life Sciences increased outsourcing spending by 30%. The Business Service & Supplies industry plateaued, but its Finance Services sub-vertical increased by 15%.

Increased outsourcing activity in specific verticals has shifted the Hunting-Farming dynamics. Opportunities across the 27 industries being tracked by TPI are measured through the TPI Hunting-Farming Index. In the 2010 Farming Index, the Utilities and Retailing industries boosted their ratings from medium to high as outsourcing spending among these companies increased.

Vertical trends have been positively affected by the market's fast growth. Outsourcing penetration has increased significantly among larger firms compared to small companies in majority of the industries surveyed. Most of the new outsourcing growth happened in companies ranked 501-1,000 in the G2000.

As markets recovered last year, the survey revealed which among the vertical industries surveyed offered the healthiest opportunities for investments. Outsourcing spending was indeed not constant across sectors, but the data will help in choosing the correct strategies for outsourcing.

US Credit Rating Downgrade and the Philippine Economy

Wed, 10 Aug 2011 00:00:00 -0800

For the first time, Standard & Poor's had lowered the US credit rating from AAA to AA+. Credit ratings indicate the opinion of the agency about the �ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full and on time,� according to www.standardandpoors.com.

What does this mean? In these uncertain times, it could bring about serious effects to financial markets and businesses not only in the US but also in other parts of the world.

In stock markets, investors may panic over their shares, resulting to rapid selling of stocks. Some individual investors already did. As the US economy slows down, experts and business owners see some sort of a domino effect on various industries and aspects of the Philippine economy, though it may be too early to say what this situation may bring. Of course, one of the first to feel the impact would be the OFWs. According to Department of Labor and Employment Secretary Rosalinda Baldoz, they are now looking at the recent US situation and how it will affect the deployment of Filipino workers to the US. OFW remittances would be greatly affected as well if this gets worse.

How does this affect the outsourcing industry of the country? For an industry where the peso-dollar exchange rate plays a huge role, business process outsourcing (BPO) players will definitely see the effect of the US downgrade. Western companies may be a little bit more cautious when it comes to spending due to the current global economic situation. Since the US is the largest market of the Philippine outsourcing industry, this downgrade will surely be felt in one way or the other. However, the industry remains confident and optimistic and growth is still projected in the next few years. The game development segment, for instance, aims for a faster growth rate of 60-70 percent next year.

It may take time before the economy can really feel the effects of this situation, but the psychological impact is probably the worst right now. In times of uncertainty, company owners obviously become very cautious. Some even panic as they try to keep their investments safe and their business going.

Companies have yet to fully see the impact of this downgrade, but it is important to put the game face on and stay resilient. Now more than ever, it is crucial to stay abreast about what's happening and be ready for anything.

Considering multi-sourcing? Ask the right questions.

Mon, 1 Aug 2011 00:00:00 -0800

A company may rely on an outsourcing strategy that combines the infrastructure and talents of multiple service providers across different countries. This strategy helps them avoid the disadvantages of relying on one outsourcing service provider.

However, a multi-provider sourcing strategy needs efficient coordination among business units, such as the finance, legal, and operations departments. According to outsourcing consultancy firm TPI, the success of such a strategy relies on an apt structure, best practices on multiple-provider service delivery, flawless invoicing and allocation systems, and high levels of service.

TPI advises companies to consider the following questions:

How is a suitable commercial structure created? Among the key factors in considering the right commercial structure are cross-border taxes and cross-subsidization. Either a central agreement covering all countries or a Master Services Agreement (MSA) with country-specific agreements may be used in service deals, but keep in mind that any deal must include clauses covering service delivery, legal and financial that favor your company.

Can the service provider deliver across multiple countries? Choose service providers that can deliver services in flexible agreements, with billing in local currencies. Ensure, too, that providers have the managerial and legal skills to craft agreements in multiple countries.

How best do we manage multi-providers? The best managerial approach in handling multi-providers is based on your company's organizational culture, its internal capabilities, and the skill of its staff. There is no one �formula� that serves all. Even if providers are to be managed either through an outsourced service integrator (SI) or through a third party Governance-as-a-Service, ensure that your company strategy is included.

What is the best way to invoice across multiple countries? Issuing invoices across borders depends on your company structure. Several ways to issue invoices include a centralized system; by country to a single legal entity; by country to multiple legal entities; or a combination. Compare the cost of local invoicing and allocations against the impact of cross-border taxes and cross subsidization. It may be more advantageous to centrally issue invoices depending on the amount to be invoiced and the services delivered in-country.

How do we keep high levels of service? The best way to ensure high levels of service across multiple providers is to define service levels end-to-end across multiple providers. Domestic service levels is best managed locally, while service levels across borders can be globally managed, taking into account in-country service defaults and service credits. This combination may be the most flexible strategy in ensuring high levels of service across multiple service providers.

Managing multiple service providers does not need magic, but rather a disciplined approach in coordinating multiple providers across multiple countries and varying contexts. The key lies in having an efficient interaction among business units to ensure a smooth operation.

Shifting to the Cloud

Wed, 20 Jul 2011 00:00:00 -0800

Cloud services are being touted as an economical option in deploying assets and services. Cloud service providers present multiple choices for clients that can be further customized for specific needs. However, Cloud service providers have varying pricing structures, due in part to the nature of their companies and their services.

Interested in shifting to the Cloud? Take note of these tips from outsourcing consultancy firm TPI:

1. Existing contracts must contain clauses for penalty-free migration to the Cloud. Update the agreement to contain exit clauses that require your contractor to help facilitate the migration of data and applications to the Cloud.

2. Cloud hosting deals are different in terms and structure from outsourcing deals. According to TPI, there are three types of Cloud service providers:

�   Traditional service providers offering Cloud services, i.e. IBM, HPES, CSC, etc.
�   Newcomers who provide infrastructure as a service, i.e. Rackspace, Navisite, Terramark, SFDC, Workday, etc.
�   Traditional consumer companies entering the enterprise space such as Microsoft, Google and Amazon. Each has its own terms and subscription models due to their backgrounds.

3. Cloud migration also means shifting from capital expenses (CAPEX) to operating expense (OPEX). Assets will not depreciate anymore, since there are no assets to maintain. However, a company must plan well and forecast its budget to make sure that they operate within allocated costs.

4. Cloud services are more transparent, but pricing structures among cloud service providers tend to be inconsistent. Some Cloud services are public, others are private, and some offer hybrid options. One provider may offer fees by processors used, or costs by CPU hours used.

5. Pricing terms, such as total cost of ownership (TCO) and base services fees, must be clarified before any Cloud service deal is closed. Cloud computing models are usually difficult to contextualize in a formal business case analysis, since no standard pricing exists among service providers. Initial cost estimates do not cover expenses that may be incurred along the way. These costs may include:

Service and technical resources
Migration costs
Additional network bandwidth
Book value of stranded assets and software
Amortization of applications
Additional staff for new contracts
Minimum volume commitments
Cost of partial termination

Make sure to cover all your bases in shifting business processes to the Cloud. Terms and pricing schemes vary among service providers due to the differing nature of their businesses.

Outsourcing Opportunities in China

Tue, 21 Jun 2011 00:00:00 -0800

India-based outsourcing service providers only had a 1 percent share of the global sourcing market about ten years ago. At present, they command almost 20 percent of the sourcing market. China is also on the move to seize their fair share of the outsourcing market, as government bodies hasten development of the Chinese sourcing markets and service providers.

Outsourcing advisory firm TPI Inc. cites five trends in the outsourcing environment which may help and spur the growth of the Chinese market:

Global service is the new norm. According to TPI, two-thirds of all transactions involve delivery from offshore service centers.

Multisourcing arrangements are increasing among client-companies and service providers. The playing field is getting leveled by companies turning to multisourcing instead of relying on one outsourcing service provider.

A spotlight on risk management has driven companies to prefer multi-country service delivery options. TPI says more locations are developing specialized skills that are cost-effective for client-companies.

Outsourcing deals are increasingly becoming more cost-effective. TPI says clients are saving 33 percent more money compared to seven years ago.

Opportunities in China are too attractive to pass up. The rising importance of the burgeoning Chinese domestic market, coupled with the strong support of the Chinese government, is enough to convince global service providers, large captive centers, and organizations interested in penetrating the Chinese market that China will yield profitable results in the long run.

As with other countries, China presents challenges such as data privacy, intellectual property rights, language and cultural barriers, and labor relations. Nevertheless, the outsourcing industry has overcome these challenges through practical solutions that reflect the resourcefulness of the industry.

Study Shows Captive Operations Overcoming Challenges

Mon, 30 May 2011 00:00:00 -0800

A recent benchmarking study using the captive outsourcing model was recently completed among outsourcing service providers in India by outsourcing advisory firm TPI. Aside from including cost factors, the TPI study also added operations and processes into the mix in identifying and evaluating current industry trends. They have identified the following trends occurring among the captive operations of outsourcing service providers:

Increased use of global service delivery centers. Captive operations have crossed geographical boundaries, with outsourcing service providers opening service delivery centers in Tier 1 and Tier 2 cities. Usually, operations are based on the specific human resource offerings of a city. The number of large companies pursuing the multicountry/multiregion captive model is also on the rise.

Increased use of combined delivery models. Outsourcing service providers are also �outsourcing� services themselves by hiring third party service providers for their non-core processes. Captive models have shifted to using third-party service providers in delivery services to clients, maintaining supervisory control and project responsibility.

Meeting cost efficiency issues through innovative solutions. Attrition among entry-level BPO employees has evolved from being a problem to becoming a solution to meet costing challenges. Companies have turned to cloud computing and virtualization technologies to augment manpower, optimize costs, and streamline delivery operations.

Focus of core business on emerging local markets. Clients are leveraging their captive models to gain entry into emerging markets, such as the developing economies of India, the Philippines, and China. Captive operations are also used for domestic markets via localized services.

Talent pool for global operations. Captive operations have become a source of world-class workers for client companies. Personnel and staff are often shifted to other delivery centers to either start up pioneer centers or lead scaling-up operations.

Ways to Maximize Your Benchmark Statistics

Mon, 23 May 2011 00:00:00 -0800

In the world of outsourcing, the word benchmark basically means comparing data with those of the other players in the industry. This is done to regulate pricing schemes and methods, according to the market's criteria. Benchmarks don't only serve as points of reference, these are also used to study cost reduction practices, and in some cases, point out areas for improvement in operational structures.

TPI, an outsourcing consultancy firm, shared five ways on how an outsourcing company can maximize information from benchmarking practices, based on the article by Max Staines, President of Compass North America:

1. Plan. For example, results from benchmarking show that you are spending more than the usual on data storage. You learn that the factors that are causing the heightened expenditure are instigated by defunct and costly processes. It is highly suggested that rather than going for quick resolution, one should opt for a long-term solution that can fix the current situation, and then become an unceasing beneficial system.

2. Use it as leverage. Benchmarking can either make or break a company if not used properly. You can incorporate findings from benchmarking into your strategy and improve your company's weak areas. Also, findings from benchmarking do not always mean you have to adjust your prices, it means improving your core processes so that you are able to satisfy clients and improve practices.
3. Establish universal standards. All companies involved in data gathering should decide which factors should be considered in benchmarking.

4. Avoid misunderstandings by being transparent. Once the results have been collected, there will be times when data will be perceived by other parties as weak and unreliable. All questions should be entertained and doubts should be addressed immediately. Practice being open with one another, not only in the benchmarking process but also the data collected. Show that you are willing to participate instead of opposing other members.

5. Schedule your benchmark analysis properly. The study should be conducted before sourcing changes are applied to the participating companies. Data gathering done way after the contract term may result to unwanted conflicts.

Outsourcing Service Providers Competing for Key Trends

Fri, 29 Apr 2011 00:00:00 -0800

Cloud computing, multisourcing, restructuring � these are the key trends that are driving growth in the outsourcing industry, spurning service providers to be more competitive, as concluded by a new research report released by an outsourcing advisory firm.

Sourcing advisory firm TPI has just released TPI Momentum(SM) Market Trends & Insights 2010 Annual Report, which showed that last year, the outsourcing industry was hugely affected by the emergence of cloud computing, the surge of multisourcing contracts among clients, and the high volume of expiring service contracts.

"2010 was not a growth year for many segments of the industry," commented Paul Reynolds, TPI Momentum chief research officer. "For service providers to increase pipelines and improve profitability in 2011, they will need an accurate reading of current client preferences and market trends, an appropriate strategy to respond and disciplined execution in the face of strong competition. This report provides the information they need to understand the size and scope of opportunity in the global outsourcing market."

The TPI Momentum report sourced data from the TPI Index, reports and analyses of TPI advisors spread across the globe. The report said clients would adopt Cloud Computing in the near future, with provisions for the Cloud indicated in outsourcing agreements. Service providers would be adjusting their Cloud-based services in tune with the demands of the market, the report added.

Using Outsourcing as a Tool

Wed, 20 Apr 2011 00:00:00 -0800

Many companies have the mistaken notion that outsourcing is a solution - a panacea that will be able to shore up their savings, minimize inefficiencies, and maximize profits. If the outsourcing deal does not deliver its �magic�, they blame the whole outsourcing idea, conveniently forgetting that they form half of the outsourcing partnership.

Software entrepreneur Martin Zwilling says outsourcing is �a tool, not the problem or the solution.� He then goes on to draw up criteria for outsourcing - useful not only for software entrepreneurs like himself, but also for anyone who plans to rely on outsourcing for their products and services.

Keep your core services in-house. Restaurants do not give away their secret recipes - you should do the same for your company. Outsource services or processes that you don't consider as essential.

Secure your intellectual assets. Software piracy is rampant among developing nations. Zwilling says that 90% of computer users in China and Vietnam rely on pirated software. Secure your outsourcing contracts and have your outsourcing service provider sign off non-disclosure agreements.

Match technology with capacity. Zwilling says that outsourcing cannot deal with the �absolute latest in software technologies�, scalability to millions of users, and multi-system failover and recovery. He suggests relying on outsourcing for non-core software testing and maintenance.

Compute costs. Indeed, remote work reduces costs, explains Zwilling, but you also have to factor in indirect expenses such as increased costs in project management, travelling, and communications.

Products are easier to deliver than services. Software as a product is much easier to deliver compared to software as a service (SaaS). Zwilling says within the context of SaaS, software is customized for specific situations, making it more difficult to manage and deliver.

Creativity versus mundane tasks. According to Zwilling, mundane tasks, such as process automation or reservation systems, is easier to outsource compared to creative tasks such as chip design or consumer games. However, he points out that every outsourcing deal must have detailed specifications.

According to Zwilling, the best way to develop an outsourcing partnership is to initially build a strong relationship, carefully managing the project along the way. He warns potential outsourcing clients about staff training, turnover rates, production processes, and project management. Clients are also being chided for vague specifications, lack of an acceptance criteria, and �scope creep�.

Hurdling Corporate Barriers for Cloud Services

Wed, 6 Apr 2011 00:00:00 -0800

Cloud computing entered mainstream business last year, and industry experts are predicting that the technology will mature and become more pervasive this year. From small, family-owned companies to large, multinational corporations, the �cloud� is disrupting traditional models of conducting business.

Small companies have successfully migrated some of their processes, such as email, virtual servers, customer relationship management (CRM) systems, and customer support to cloud service providers. On the other hand, large corporations, by their very nature, have been lagging behind in tapping cloud computing for their operations.

Corporate barriers are challenges that can easily be hurdled through coordination, cooperation, and communication. David England, a managing consultant with outsourcing consultancy firm Alsbridge, Inc., tells the story of sales divisions delving into cloud-based services without consulting their own IT colleagues.

In the long run, England says, cloud initiatives taken without strong collaboration, coordination, and communication among business and IT executives can lead to an inefficient use of scarce company resources. Business processes shifted to the cloud need to be integrated into the company's IT infrastructure, and if this is not possible, then the shift to the cloud will have been in vain.

England recommends the use of a systemic methodology inspired by a company's specific business case. Relying on a process-based shift to the cloud enables collaboration, coordination, and communication among business and IT stakeholders and ensures that the preferred cloud service is specifically tailored for their company.

Before deciding to shift services to the cloud, a company should ensure that involved personnel all have a say in creating the cloud computing plan. At the minimum, all stakeholders must have a basic understanding of the advantages and disadvantages of using cloud computing. As much as possible, too, all executives must travel the same learning curve at the same pace, since a delay can cause unneeded frustration among participants.

As with any plan, a company shifting to cloud computing needs a clear vision of itself after being cloud-enabled. Do they plan to run entirely from the cloud? Do they shift legacy applications and services to the cloud? A paradigm shift can be strenuous and stressful for an individual - more so for a corporation involving several individuals. Focusing on building the fundamental blocks of a company's cloud computing plan facilitates a strong and smooth transition into the cloud.

Five Ways to Know a True SaaS

Mon, 21 Mar 2011 00:00:00 -0800

From a mere buzzword, cloud computing has been slowly maturing into a viable business tool in the global marketplace. Last year, cloud computing became mainstream as an increasing number of companies engaged with various cloud computing service providers to study how they can benefit from the �cloud�.

Consultancy firm TPI warns companies that in their rush to get to the �cloud�, more problems can crop up rather than solutions. Some companies are easily confused with the �Cloud� and Software-as-a-Service (SaaS). �These terms have become so pervasive that they are almost indistinguishable from the software itself,� comment TPI's Stanton Jones and Bobby Neil.

The duo says there are many applications that are being introduced into the market as SaaS. In truth, though, Jones and Neil opine that these are merely repackaged versions of old applications that have been morphed into hosted or �on-demand� software.

How do you know whether the app offered to your company is a true SaaS? They offer the following rules of thumb:

The service includes new features, and updates are delivered often. A true SaaS has one single code base designed to service multiple clients. The �multi-tenant� architecture means �you share the application software and hardware with other customers.� With one code base to manage, updates are rolled out in a span of weeks and months, compared to years for �traditional� software.

�Cloud� service means mobility. SaaS applications benefit from the newest Internet technologies, which have focused on easy and fast access, especially while on the move. A true SaaS application is ready to take on the hypergrowth in mobile computing and the consequent surge of a global, virtual workforce.

Pay only for what you use. Most SaaS applications are priced by usage - terms are negotiated as to the number of users and the amount of bandwidth and storage used. If you were to host your own server or deploy highly-customized software, you would be saddled by software, hardware, and maintenance costs - not to mention the technical staff that you'd need to employ. A true SaaS enables you to either ramp up your storage or rapidly scale down your use.

Standardized dashboard allows for configurations, not customizations. Most SaaS applications are controlled via a dashboard accessible through a Web browser. This dashboard is the same for all customers. Jones and Neil say that �it's important to make sure your requirements can be met via available configuration options rather than deep customization.� Some SaaS will definitely be unable to provide you the specific services you need.

Flexible price terms make for different service level agreements. Since majority of SaaS suppliers operate on the economies of scale, customizations are usually not part of sales packages. Subscription plans are anchored on different price terms that offer different benefits per price point. More expensive subscription plans usually offer more benefits and advantages over lower-priced subscription plans.

Detailed RFPs Set the Stage for the Best Negotiation

Tue, 8 Mar 2011 00:00:00 -0800

A multi-million RFP will definitely get service providers scrambling with their best offers, but companies looking to outsource some or most of their operations need to keep in mind that clear-cut, well-defined RFPs can set the stage for professional and detailed negotiations.

One of the world's leading outsourcing consultancy firms, TPI Inc., says a good RFP enables companies and service providers to �align their interests.� �When you issue an RFP, you're signaling that you are willing to pay for certain services. Lots of service providers will be interested, especially in the payment part. You're interested in the services part.�

TPI lists five guideposts that can help companies in getting the best RFP:

1. Outline exactly what you need in the RFP. A detailed RFP will go a long way in preparing an organized negotiation. Involve the departments in drafting the RFP. If the RFP will affect the marketing department, then they should have a say in it. Also, a vague RFP can be used as an excuse by a service provider in jacking up their bid.

2. Stick to a schedule in issuing an RFP. Asking for RFPs signals the onset of negotiations between a company and service providers. A well-defined schedule helps the company in controlling the whole RFP process. Keeping to the schedule in earnest shows that the company is �serious and organized� about the RFP.

3. Gather data as comprehensively as possible - and provide this with the RFP. TPI says, �you get what you pay for.� A high quality RFP can also expect high quality bids from service providers. Having clear, reliable data also helps to prevent service providers from making assumptions in their bids.

4. Enforce your rules: steer clear of service providers who do not toe the line. There are service providers that play mind games with company executives, spreading fear, uncertainty, and doubt to get another chance at bidding after being rejected. Executives must be able to deal professionally with such providers, walking away if they must.

5. Establish a structured decision process. TPI recommends creating a trustworthy team that will decide at pre-defined checkpoints in the process, such as downselecting bidders, negotiations, due diligence, etc. At the onset, involve the business, procurement, and legal departments. Stop other executives from being �tourists�, walking into meetings to offer their counsel. There's a difference between involvement and commitment.

Cost efficiency remains top factor in shifting IT work offshore

Wed, 2 Mar 2011 00:00:00 -0800

Cost efficiency remains the strongest factor in the decisions of most CIOs looking to shift IT work offshore, says leading outsourcing research firm Gartner in their list of top 30 countries for IT offshore outsourcing.

The 2011 list contains eight new entrants � developing countries that offer low-cost IT services and whose governments are improving their support for the industry � Mauritius off Africa; Bangladesh, Sri Lanka, and Turkey in Asia; Bulgaria in Europe; and Colombia, Panama, and Peru in South America.

"It's a reflection that most organizations are looking for countries that offer some cost advantage," explains Ian Marriott, Gartner vice president for research.

Among the developed countries not in the list include Australia, Canada, Ireland, Israel, New Zealand, Singapore, and Spain. "They will have benefits that they can leverage, but they won't be saying, we're cheaper than India, China, Brazil and so on," he comments.

Although these new entrants are definitely cheaper, these locations scored poorly against Gartner's criteria for data and intellectual property security. "It does take time to put protections into legislation and to get that legislation through the courts, so privacy and security protections remain a challenge," Marriott says.

Multinational companies that have chosen to establish operations in these locations "tend to wrap their own corporate standards around the location," he explains. �They manage security the same in the Ukraine as they do in the U.S."

Managing 'Overnight' Outsourcing Transition

Thu, 24 Feb 2011 00:00:00 -0800

The outsourcing industry is finding itself under intense pressure. Companies that have traditionally viewed outsourcing as something of a novelty are now scrambling to get their core processes shifted to outsourcing service providers that offer support for information systems, transaction processing, finance & accounting, and human resources.

These companies are also finding themselves under severe pressure to manage their 'overnight' involvement with outsourcing as a vital business tool. Some of them assume that roadmaps toward successful outsourcing management are very mature, that these roadmaps can be taken and followed in an hour or written in one page, figuratively speaking.

Leading outsourcing advisory firm TPI lists their Top 5 tips for companies which need to manage their �overnight' outsourcing agreements.

1. Guarantee that clear accountability can be determined at all levels of the outsourcing relationship. A matrix reporting structure creates confusion rather than clear accountability. Make sure that the service provider delivers, and that your company receives the service.

2. As early as possible, outline the roles and responsibilities in the outsourcing relationship. Corporate roles such as Procurement, Risk, Security, Legal, and Audit will be significantly impacted by an outsourcing deal. Define their roles and tasks immediately before beginning the outsourcing operation.

3. Automate management data and workflow. Traditional office processing software packages are not designed to manage outsourcing relationships. Software suites for management data and workflow systems are already in the market, and these can free your outsourcing management team from hours lost to designing macros for spreadsheets.

4. Seek advice from other companies which have successful outsourcing deals. TPI says, paraphrasing a quote, �Once upon a time I had five theories about outsourcing, but no outsourcing. Now I have five service providers and no theories.� Outsourcing is a major move, and you can learn a lot from others who have experienced it.

5. Implement an organizational change management that involves everyone. Outsourcing remains unpopular for some, so the need for transparency and an effective information drive is basic. Rapid transformation can be too rapid for an organization, leaving some employees lagging behind in the move towards change. Always check back, look back, evaluate and assess, then move forward.

Six Keys for Outsourcing Success

Fri, 18 Feb 2011 00:00:00 -0800

The global economic crisis has definitely affected last year's performance of BPO companies, but 2011 comes with a wave of change for the IT outsourcing industry as multinational companies re-consider their IT budgets and efficiencies.

The IT marketplace is a booming one, with the arrival of new services and technologies, such as software-as-a-service (SAAS) offerings, virtualization, and cloud and mobile computing. In a white paper published by IT Business Edge, they survey the market and found six factors that ensure outsourcing success despite the challenges posed by outsourcing itself.

Setting clear goals is evidently important for both outsourcing parties. Clear goals set the list of expectations of the company and the outsourcing service provider. Companies seeking to outsource some of their operations must create some criteria to rank and rate their own priorities and goals - the criteria can be used in evaluating an outsourcing service provider.

Knowing your strengths and weaknesses enables outsourcing parties to come to negotiation prepared with detailed reports of their companies - the IT assets involved, the dynamic relationships, and policies in place.

Evangelizing the change among stakeholders is very vital, especially since outsourcing can directly affect the livelihood of employees. Companies venturing into outsourcing deals are more likely to succeed when they make transparent decisions and effectively market these decisions to their employees down the line.

Considering the intangible benefits aside from cost savings brings value to the outsourcing contract more than anything else. Outsourcing service providers have the expertise and the tools that client-companies can not just buy off the shelf.

Managing an outsourcing relationship requires a totally new perspective in managing resources, especially to managers who have to deal with outsourced experts and staff. Operations are more than just filing and evaluating SLA compliance reports. Large outsourcing advisory firms have developed industy-specific techniques in helping C-level executives manage outsourcing hierarchies.

Applying a structured transition is highly significant, since this is the most sensitive stage in an outsourcing deal that can spell success for the venture or doom it altogether to failure. Fifty-six recipients of the 2009 Outsourcing Excellence Awards said in the paper �Best Practices for Risk Mitigation in Outsourcing Transitions� (Outsourcing Center 2009) that �their transition phase was the point that either threatened to derail their relationship or that allowed for long-term success.�

These are the best practices that have been appearing in surveys among companies relying on outsourcing. The playing field has been leveled for both outsourcing start-ups and veterans, who can now offer better services to companies who see the competitive advantage of effectively deploying outsourcing in their global operations.

Facing Cloud Computing Challenges in 2011

Tue, 8 Feb 2011 00:00:00 -0800

Cloud computing is set to develop into a more mature business strategy this year, but as with any emergent technology, cloud computing has its share of challenges that stakeholders must face together and solve.

One of the world's leading outsourcing firms, Alsbridge, Inc., is currently sponsoring CIO Roundtable Summits this year to gather inputs from industry experts and participants and identify outsourcing challenges. The recent roundtable summit held in Dallas focused on cloud computing - the types of businesses that can thrive on the �cloud�; risk mitigation with respect to regulatory compliance and data security; and strategies that IT organizations can take to take advantage of cloud computing.

Challenge #1 � Tighter coordination among IT and business organizations

Business organizations still see IT executives as barriers to development, and take to �The Cloud� as the cure-all, be-all for their IT woes. Roundtable discussions began to focus on how to adjust this perception by creating better, more open communication channels between IT executives and their business counterparts in order to engage practical decisions on cloud computing.

IT executives can better help their respective organizations by writing position papers contextualizing cloud computing within their companies. A participant suggested employing the Keep It Short and Simple (KISS) principle in explaining the cloud to business leaders.

Some participants suggested that involving external resources, such as consulting firms, analyst research, organizations, and conferences, can help in clarifying the cloud to business leaders, and even IT executives, who find cloud computing unappealing.

Challenge #2 � Data Privacy and Security, plus Regulatory Compliance

For over a year now, Alsbridge has been busy compiling research data on cloud computing. Data privacy, security, and regulatory compliance are top concerns for more than 70 percent of IT executives surveyed. Roundtable participants say that conducting due diligence about IT requirements and mapping them accordingly can minimize the risks. On regulatory compliance, the group suggested that companies operating in multiple jurisdictions should design and develop their strategies around the requirements of the most strict locale in which they operate. On data privacy and security, a participant broached the idea of isolating sensitive data rather than securing the whole enterprise. There was definitely a need for thorough due diligence on cloud service providers, say the participants, in order for business to truly take advantage of cloud computing and related services.

Creating Better Deals out of Ending Contracts

Tue, 1 Feb 2011 00:00:00 -0800

Most outsourcing service providers see the upcoming end of a contract as the perfect time to adjust and improve existing rates and service offerings. More often than not, renegotiations become difficult meetings due to lack of preparation on the part of both parties. A vital meeting can become a waste of time and resources, and problems that are supposed to be solved are waylaid. Instead of reinforcing the client-service provider relationship, the ensuing confusion leads to a strained negotiation.

Leading consultancy firm TPI offers five tips that can help client-companies and outsourcing service providers get the most out of end-of-contract reviews.

Measure existing operations. Quantify all the data that can be gathered from existing operations to measure the impact of the outsourcing deal. Compare the operation's existing expenses and service levels to market standards - this will help in identifying problems and improve operations.

Focus on the specifics. Armed with the important numbers, you can now safely formulate objectives and expectations that can be derived from improving operations. A framework upon which both parties can work is much better than having a client-company dictate how the service provider works.

Rally support from the upper management. The support of senior management is vital in any outsourcing endeavor. Convince your colleagues that the strategy addresses the problems and delivers on the requirements.

Practice what you preach. Make sure that when you create the RFP, the playing field is level enough for all service providers to bid. Focus on your business strategy, not on how much you can save with a cheaper service provider.

Look inside. Evaluate your internal processes - this enables you to leverage what you already have against services from your outsourcing provider. An internal evaluation can help you identify the services that are truly needed, instead of having customized services from your incumbent provider.

Seeking Creativity in Outsourcing Deals

Wed, 19 Jan 2011 00:00:00 -0800

Outsourcing service providers may be able to deliver on time, work within reasonable rates, and maintain open, communicative, and flexible relationships, yet these positive factors may be insufficient to keep clients satisfied and willing to extend outsourcing agreements.

According to leading outsourcing consultancy firm Alsbridge, Inc., clients look for innovation from their service providers in the form of �fresh ideas which would have a radical impact on either the delivery of service and/or the client's general business performance.�

Innovation will lead to cutting-edge skills and services, and with that advantage, the value of the outsourcing relationship increases. Both the outsourcing service provider and the client-company benefit from the new techniques, new knowledge, and new insights gained from the outsourcing deal. The client-provider relationship thus goes beyond cost savings - creativity adds another vital dimension to value-added services.

Although Alsbridge explains that many outsourcing deals are more focused on cost reduction, client-companies can seek innovation from their service providers by simply requiring it at the onset of outsourcing negotiations. If a client-company is seeking for a specific transfer of knowledge, skills, or technologies, the request should be clearly stipulated and documented in the service level agreement. At the same time, if the inputs are clearly outlined, the expected outputs should also be as clearly indicated, too, as possible.

After documenting the required �innovation�, the client-company and the preferred outsourcing service provider must work together to enable the process of innovation, to ensure that the necessary inputs are met, and that expected outputs are documented and delivered.

Creativity can be �required� from the service provider, as long as �innovations� are included in the contract and both parties work together to produce those �innovations�.

Five Outsourcing Trends to Watch in 2011

Mon, 10 Jan 2011 00:00:00 -0800

As 2011 unfolds, outsourcing analysts are forecasting trends in the market that will shape the industry through the coming year. One of the outsourcing industry's leading outsourcing advisors, Technology Partners International (TPI), shares some insight with their Top 5 market trends for 2011.

Harvey Gluckman, TPI Partner and Managing Director, says he's �confident that we've weathered the 2010 global economic challenges that influenced many CIOs' IT operational and capital investment decisions.� Here are the five market trends that TPI believes will influence company sourcing agenda this year:

Cloud Computing - Still unproven. Cloud commercialization still lacks standards, and this lack prevents big businesses from fully integrating Cloud technologies and solutions into their processes. Gluckman says, �With the exception of a few Cloud point solutions, Service Providers will have to prove its business relevance or the Cloud theme will evaporate in a slow death.�

Service Integration. As companies widen their use of multi-sourcing delivery strategies within themselves, the �air traffic controller� will become more and more important, says Gluckman. He explains that as companies seek the best practices in integrating and managing services, they will have more time and the corresponding resources to create and achieve goals of innovation.

Social Platforms. Gluckman says companies will most likely set aside a fourth of their operating capital for social networking, investing in business intelligence and analytics to mix traditional data sources with data generated by social networks.

Increase of Rural Sourcing from Weak Dollar. Business requirements will drive companies to look for nearshore and onshore locations in rural settings. The reduced difference between the U.S. dollar and foreign currencies in offshore destinations will make nearshoring and onshoring attractive.

Management Widens in Scope. Gluckman predicts that the number of companies relying on outsourced management services will increase, driven by expert assistance and to maximize outsourcing deals. As technology improves, companies will be able to manage service provider relationships at the macro level.

Six Issues to Resolve in Creating an Effective Outsourcing Strategy

Mon, 3 Jan 2011 00:00:00 -0800

Outsourcing strategies are difficult to encase in an all-encompassing template since outsourcing providers offer varied business functions, says SearchCIO.com. To create an effective outsourcing strategy, the website, which caters to the needs of technology managers and executives, offers six questions that can be asked during deliberations in choosing an outsourcing provider.

Choosing an outsourcing provider is critical, says SearchCIO.com, since companies re-negotiate outsourcing deals with their current provider 70% of the time. The website based their figures on a research done by advisory firm Gartner, Inc.

SearchCIO.com created the six questions with the help of Gartner, outsourcing advisory firm Pace Harmon LLC, and IT consulting firm TPI, Inc.

1. Can IT services be delivered following set rules and procedures?
IT processes that are transactional, routine, and simple can be outsourced, says TPI. The advisory firm compares IT processes to the left-brain and right-brain functions - those that deal with simple, process-driven functions can be effectively outsourced, while complex, concept-driven processes should be retained in-house.

2. Will the application be retired or is it being shifted to a Software-as-a-Service (SaaS) provider?
Service providers profit on optimizing applications, from which they benefit during the contract's duration. Outsourcing legacy applications that are near retirement will require premium prices, says SearchCIO.com. These legacy applications are either phased out, or shifted to being an SaaS application.

3. Is the application or IT infrastructure functioning normally?
Unstable applications or IT infrastructure are prone to being outsourced to experts. Pace Harmon LLC advises firms not to. �If it is something that can be fixed internally, you should do that first. The reason is that you don't want to outsource an operation that is hugely sub-optimized. While you are getting the benefit of wage arbitrage, you are not getting the benefit of the optimization, which will inure to the outsourcer,� the firm says.

4. Is the application properly documented?
A properly documented application does not need to be reverse-engineered, so the outsourcing provider can maintain the application and do further development. Proper documentation reduces the overall costs of the outsourcing deal, advises Pace Harmon LLC.

5. Will the team evaluating the application be affected if the application is outsourced?
Most outsourcing deals result to job losses or loss of managerial control, says Pace Harmon LLC, so there needs to be a lot of due diligence about the application. TPI recommends that Chief Information Officers (CIO) be as frank as possible.

6. Can your company efficiently manage an outsourcing service provider?
Managing outsourcing service providers must not be outsourced, explains Gartner. Companies can either immediately learn how to manage service providers on their own or hire another provider to manage outsourced services, the firm advises.

Keeping Clear of Four Common Outsourcing Pitfalls

Tue, 28 Dec 2010 00:00:00 -0800

The continuing economic downturn is seeing an increasing reliance on outsourcing, yet companies are still making mistakes in their outsourcing deals, reports SearchCIO.com, a website for technology managers and executives.

SearchCIO.com senior news writer Linda Tucci reports that for 2010, companies that outsourced IT work spent 7.1% of their total budgets for outsourced IT services. From 3.8% in 2008 to 6.1% in 2009, the data from advisory firm Computer Economics, Inc., on which she based her figures, are simply impressive.

In her report, Tucci interviews Steve Martin, a partner at outsourcing advisory firm Pace Harmon LLC. Martin was a former partner with Deloitte Consulting, where he closed $7 billion worth of outsourcing deals. He lends his experience to provide an insight into the four common mistakes committed in outsourcing deals.

Mistake no. 1: Relying on a single outsourcing provider.
Martin says �it takes two outsourcing vendors to tango to a competitive deal, even if one of them has only a 10% chance of winning.� Never forego the bidding � there are benefits to having two competing outsourcing providers bidding for a deal. Sole-sourced deals, meaning deals that didn't go through bidding, are usually priced at 30% to 40% above market rates, says Martin.

Mistake no. 2: Too much focus on cost.
A deal that works for both the client-company and the provider needs a thorough understanding of the real costs for a successful operation. Martin says budgets that are too tight cannot be expected to perform well.

Mistake no. 3: Imbalance in sharing information.
Martin says that in any IT outsourcing deal, all IT assets, i.e. PCs, servers, routers, printers, and facilities, must be brought to the table. However, current performance levels must not be disclosed at all, advises Martin. An outsourcing provider is supposed to offer a cost-efficient deal for your operations, not to cancel some of your current costs.

Mistake no. 4: Hasty deals.
Martin advises companies to keep the �losing� bidder around, since early low odds are founded on unfamiliarity, and usually not on anything else. The tables can turn around, says Martin � a bidder with a 10% chance can suddenly have a 40% chance, or higher, as talks go on.

Keeping Watch for 11 Trends in 2011

Wed, 22 Dec 2010 00:00:00 -0800

This year, we saw the global economy greatly affected by the effects of the U.S. recession. Outsourcing, though, continued to mature and develop, with the Philippines getting the top spot as the preferred global destination for outsourcing.

For 2011, Network World reports that the outsourcing industry will witness massive changes, from undervalued contracts to cloud computing woes. The publication, a member of the International Data Group (IDG), supplies �information, intelligence and insight� for network and IT executives.

Stephanie Overby, Network World's chief information officer (CIO), cites 11 outsourcing trends to watch out for in 2011:

1. Outsourcing goes micro. New buyers, who sat on fences watching the 2010 downturn, will now sign small IT services deals with service providers. In these �small� deals, providers will use the classic �penetrate-and-radiate� strategy to �enlarge� these deals.

2. Search for savings. With the economic downturn, network and IT executives will seek savings from their current outsourcing deals. Existing contracts will undergo scrutiny for under-deliveries and over-payments.

3. Cloudsourcing surge. Outsourcing consultancy Alsbridge says the outsourcing market will merge with the developing cloud sourcing market to �drive the rebirth of outsourcing.� The company notes the effect of Amazon, Google, and Rackspace, reducing the profits of industry giants HP and IBM. Legacy providers may react to this fusion either by merging with other providers or by acquiring younger companies.

4. CIOs face risks with back-door deals. Business unit heads will leave out IT executives in discussing and deciding about cloud computing and its services, secure in the fact that CIOs can solve issues later on. This scenario can create problems, especially if the CIO is unequipped to solve them.

5. Rise of �vanilla� packages. Customized packages will slowly be phased out, as clients start to accept standard, � vanilla� services, and providers being standardizing their offerings. Outsourcing consultancy EquaTerra says standardization may also permeate processes, technologies, and even locations.

6. Stable prices. Outsourcing service providers will no longer market themselves with lower prices, but will instead sell the quality of their service and their varied offerings. Customers will choose their providers based on delivery models, agreements, and other advantages to maximize cost savings.

7. East-West mergers. We may witness an Indian acquisition of an American company this year, industry experts say. Indian service providers are ascending the value chain to differentiate from other providers. As India focuses on consulting and integration service deals, their labor force is adding more skills to their offerings.

8. Shift to emerging economies. Brazil, China, and Egypt � countries with improving economies � are becoming choice destinations for service providers. Aside from cheap, skilled labor, their citizens have strong purchasing power, something service providers can also profit from.

9. Growth despite protectionism. The unemployment rate in the U.S. stays high in spite of government efforts to curb the worsening downturn. U.S. legislators are proposing protectionist policies to stem the overseas shift of American jobs. Indian service providers may react by acquiring an American company to improve their onshore presence.

10. Enhanced mass automation. To maintain cost savings and profitability, service providers will turn to automation. Technology can enable optical character recognition to replace human data processors, and even lights-out, employee-free delivery centers can be established instead of facilities teeming with human operators.

11. Offshore work migration en masse. As more and more work are shifted offshore, the technologies and methodologies supporting such gargantuan shifts are improving by the minute. Large numbers of skilled employees can be activated almost immediately for offshore delivery centers.

Managing a Successful Transition to Outsourcing

Tue, 14 Dec 2010 00:00:00 -0800

Outsourcing, as a business process, has been recognized by industry experts as a viable and strategic tool for companies aiming to be globally competitive. However, governments have varying degrees of support for the outsourcing industry and public opinion is still divided on the merits of outsourcing. Due to the relative inexperience of client-companies and their outsourcing providers in ironing out an outsourcing agreement, many partnerships fall flat on their promises of cost savings.

Dr. Stephan Meixner, director at Technology Partners International, Inc. (TPI), shares five (5) critical factors in building a strong foundation for a successful outsourcing transition. US-based TPI is one of the world's leading outsourcing advisory firms.

He shares the following tips:

1. Draw support for a �burning platform�. When there is a financial crisis brewing within the company, the industry, or the economy, people are easier to rally towards change.

2. Lead the leaders in an alliance for change. When people are rallied towards change, the alliance must be organized and led. Those who need to be particularly convinced of the initiative for change are senior managers and, most importantly, the chief executive officer.

3. Accordingly adjust the rewards system for senior managers with the initiative. Shifting to an outsourcing system can be accelerated when the rewards system for the company leaders are integrated with the objectives of the transition.

4. Make senior management aware of the intricacies of outsourcing and its realities. Awareness of outsourcing's pros and cons among senior managers is important in having a successful transition. Sharing of notes and best practices among new and existing outsourcing initiatives can help in spreading outsourcing know-how. This contributes to better management of outsourcing challenges such as recruitment, methodologies, cultural barriers, etc.

5. Create a robust project plan. A plan must be robust enough to cover project status reports, timeline of deliverables and milestones, budget requirements, and the projected risks and benefits. As early as possible, all company operations must be engaged with the transition. A plan professionally implemented communicates to all stakeholders that all their combined efforts are needed for a successful transition.

In summary, Dr. Meixner writes that �a change programme is only as robust as the skills of the team managing the process.� It is thus important that both outsourcing parties - the client-company and the service provider - are fully aware of the risks and challenges of outsourcing.

The Benefits of having a Sourcing Advisor

Mon, 6 Dec 2010 00:00:00 -0800

Exploring the BPO market in search for a service provider can be a long and tedious process. Your end choice has too great an impact to your operational capacity to be taken lightly. This is precisely the reason why relying on the services of a sourcing advisor can be highly advantageous. They bring you years and years of experience in negotiating with providers in the BPO industry. Alsbridge Inc. came up with a list of ways a sourcing advisor can bring you leverage:

1. Level Playing Field

Your exposure on the intricacies of the outsourcing industry is very limited. All the more, negotiating with service providers is not something you do on a regular basis and chances are, coming out of the negotiation phase successful is highly unlikely if you're not fully equipped with information. Sourcing Advisors are heavily involved in the field of outsourcing and they are up-to-date when it comes to the latest trends. In order to really get the best deal, it would be nifty to make use of somebody else's knowledge and expertise.

2. Improved Cost Savings

Cost savings is usually the primary motivation for outsourcing work to a third party provider. Surprisingly, you can further lower down your costs by seeking help from a sourcing advisor because he/she allows you to land the most optimal and cost-effective deal.

3. Shorter Negotiations

As you observe caution and engage in time-consuming research before signing any official agreement with a service provider, you expend time and money in this lengthy negotiation. While you can reduce costs by outsourcing IT services, you continue to finance your in-house operations and lose on opportunity cost. Sourcing advisors have an extensive knowledge on the industry and standard market prices; research has shown that sourcing professionals can speed up negotiation by up to 70%.

4. Sustainable Outsourcing Relationships

Apart from service definition and price level, there are other high-value advantages to hiring a sourcing advisor. In particular, they can help you end up with a sustainable outsourcing set-up. What happens for most outsourcing agreements is that internal circumstances change for your company after a year or two, and the agreement turns out to be irrelevant and out-of-date. Sourcing advisors ensure that there is flexibility to the agreement which can keep the arrangement updated and valuable even from a long-term perspective.

While there are a lot more reasons behind working with outsourcing advisors, all you really need to remember is that they negotiate to achieve the best terms for a living. Their unparalleled expertise and knowledge of the industry will indubitably help you through sourcing, negotiation, and on-boarding.

The 7 Commandments of Sourcing Negotiations

Thu, 25 Nov 2010 00:00:00 -0800

The two categories that need to be dutifully reviewed in any negotiation are business terms and legal terms. Business terms cover the terms of service, including payment and the set deliverables agreed upon. Legal terms discuss regulations like liabilities, warranties, termination of the agreement and service definitions. More often than not, both business and legal terms are stipulated in the Services Agreement.

Patrick Garrett and John Kitchen of Alsbridge Inc. shared 7 commandments that will be very helpful in any negotiation. Keeping these commandments will help in speeding up the process and coming out of it with pleasing results. Now, the 7 commandments:

1. DO maintain open communication at every step of the process - It is highly probable that you will be dealing with your provider for quite a long period of time after the agreement is signed and made official. It will be helpful to remain transparent about your issues and concerns during the negotiation process. You will find that most providers will be willing to go the extra mile to accommodate your needs.

2. DO relay your budget - The initial bid is essential when shopping around for a provider. It is precisely for this reason that you should relay your budget before anything else. That way, providers will be able to offer the most suitable set-up for your requirements, given your resources.

3. DO NOT share deadlines - Providers can stall and manipulate the situation to their advantage if you share your deadline. You can set target dates and on the occasion that you really have a tight deadline to meet, communicate an earlier date to your provider. Alsbridge advises on allocating a 4-6 week allowance.

4. DO share expectations - You should have expectations on service levels that you picked up from your research. Also communicate expectations with pricing because these terms are settled during the negotiation process.

5. DO share the Market Services Agreement - Legal firms provide a standard Market Services Agreement and providers should be able to agree on working with this document. Adjust terms to make the services agreement specific to your requirements and send a copy to your provider for their review. You can then negotiate on terms that should be aligned and arrive at a compromise.

6. DO seek third party counsel - Outside help from parties with strong sourcing credentials can be helpful; though this has remained to be a widely debated opinion. The answer varies on a case-to-case basis, depending on the industry you're working on and the current situation. It's good to note that sourcing advisors have a good scope of the market and their knowledge can offer you some leverage.

7. DO avoid gaming - Gaming is defined as controlling the situation to benefit your position through deceit. It can also mean suddenly changing your preferred terms after the agreement has been finalized. It is always best to keep communication lines open. Be transparent and honest to the service provider that you are working with because they are technically considered your partners in delivering your core competencies.

Risk Factors in Outsourcing Today

Wed, 17 Nov 2010 00:00:00 -0800

The risks and disadvantages of an offshoring platform are critical factors that must be accounted for during the development and implementation of the operation. A wide range of delivery models, varying in terms of risk, control, and cost, have been developed by service providers all over the globe. The different outsourcing strategies in the industry landscape today, alongside different kinds of data security needs, increase a company's exposure to risk when it comes to operational failure. As such, organizations must exercise due diligence in evaluating the downside of multiple delivery channels.

Indy Banerjee, Partner, TPI Cloud Computing Business Solutions, lists the top 5 risks that organizations should prepare for in order to ensure the success of an offshore operation:

Organizational. It is important to look into a company's internal processes because it may be the case that these are not flexible enough to adapt efficiently in the business climate in other geographical locations. This can pose a threat since conflicts and procedural issues may arise if a company's internal processes are not customized for global operations.

Programmatic. Can you maintain current enterprise and customer servicing requirements in a dynamic and global environment? Services, people, supplies, and other requirements that allow any business to run smoothly can be sourced from different channels. In this environment, it is essential to the financial viability of the firm that programmatic details are ironed out.

Domain. This area of concern deals with a firm's dependence on outsourcing and its detrimental effects on technological capabilities, operations knowledge, and intellectual property.

Delivery model. Is the delivery model utilized for business processes strictly in place? Is it well-faceted and reliable to endure the risk of outsourcing to a single geographical area? Over reliance on a single service provider and delivery model can potentially burden you with 100% of the business risk.

Operational. Are contingency plans and business continuity plans in place to make sure operations run smoothly in the event that unexpected pandemics or destructive natural phenomena occur? Operational plans have to include the occurrence of unplanned events because of the current ever-changing environment.

Preparation to safeguard your business against these risks entails a constant and consistent effort to adapt. A complete model that takes different global sourcing options into consideration including a risk management program can make a difference in securing the success of a globally operating offshoring model.

Industry Issues Tackled at International Outsourcing Summit 2010

Wed, 3 Nov 2010 00:00:00 -0800

Global Market Leaders Addressing Global Issues: Last October 26-27, CEOs and business leaders of the outsourcing industry gathered at Sofitel Philippine Plaza for the International Outsourcing Summit 2010. This was organized by the Business Processing Association of the Philippines or BPAP, the umbrella organization for the industry that the Philippines considers as the "sunshine industry".

In this two-day summit, senior executives were able to tackle the issues concerning the global outsourcing industry, and the challenges they have to overcome. As the industry faces more complex challenges, the time has come to converge and talk about the things that need to be done so the industry will continue to succeed and flourish.

Challenges in the Global Outsourcing Industry
Major global issues in different areas such as health services, business development, banking and finance, marketing, and talent acquisition were discussed in the summit.

On the first day of the summit, I was able to attend the CEO panel on addressing the challenges of growth and I got these insights from the CEOs and senior executives from major outsourcing firms Genpact, Infosys, JP Morgan Chase & Co., and McTranz:

    * Growing complexity of work needs innovation.
    * Be more nimble, global, and agile to meet the global challenges.
    * A major cause of stress? Expecting results out of people not rightly skilled
    * Key areas of strategic focus include: talent management and development, improvement of the regulatory environment, united focus industry-side to remove challenges and roadblocks, and break stereotypes.

Another noteworthy session is the academe panel on specialized talent and language acquisition. Based from the presentations of notable speakers, it all comes down to one thing: having a huge pool of available talent will not suffice. What is more important is to make sure that the workers have the knowledge/expertise and skills which are suitable for BPO work.

As BPAP's Executive Director for Talent Development Atty. Jamea Garcia said, talent is what drives the global outsourcing industry, but there are many things to be done to ensure that the available talent can meet the demands of the industry.

7 Trends to Watch in F&A Outsourcing

Fri, 29 Oct 2010 00:00:00 -0800

Along with the advent of BPO came the popularity of Finance and Accounting (F&A) Outsourcing. This is usually the first choice of offshore service for people seeking to reduce cost in back office functions. However, word on the street is that most business owners who have outsourced F&A tasks are not pleased with the services they have received. Alsbridge Inc. argues against this as they foresee trends that will increase F&A Outsourcing activity.

Increasing penetration. F&A Outsourcing has not reached all industries and there are a lot of avenues where it can still prove to be useful. Untapped fields like retail and investment banks and SMEs have yet to be included in the targeted market segments of outsourcing providers.

Up the value chain. Finance activities that can be outsourced are becoming more and more complex. Gone are the days when only simple bookkeeping and data entry tasks can be accommodated. Strategic audits, reports, and analysis are now being outsourced and the list of services under F&A Outsourcing is continuously growing.

Harsher competition. There is an increasing number of high quality service providers that choose to specialize in F&A Outsourcing. New entrants in India are changing the landscape and a lot of companies follow suit in employing innovation in their service offerings. Alsbridge predicts alliances to be formed as the industry reaches maturity.

Offshore acceleration. The industry has been totally redefined by outsourcing. It has been found out that 60% of global players outsource to India. It is safe to assume that in today's business environment, it is the norm to outsource finance and accounting functions.

Buy-side sophistication. A big percentage of firms that outsource finance and accounting activities are on to their second F&A deal. This implies that they are more knowledgeable about the market and they have preferences when it comes to service delivery models. A more informed market in a very competitive landscape increases the bargaining power of consumers, further resulting to lowering prices. Flow of deals in finance and accounting outsourcing is generally slow, except for some providers who take advantage of the situation and offer below market rates to attract revenue growth.

More F&A captive sales. More and more companies choose to establish an entire F&A team offshore. Divestments, however, are becoming more common as companies take advantage of the flexibility offered by outsourcing.

SAAS. Software-as-a-Service and cloud-based solutions are gaining influence in the industry. Software programs for finance and accounting used to be unaffected by technological advancement. This is currently changing because a number of suppliers offer standardized platforms for F&A services.

It is clear that the face of Finance and Accounting Outsourcing is developing to a more competitive segment. These trends show that the industry has not become stagnant and a lot of opportunities will keep growth and advancement at a steady pace.

Every Company Needs a Cloud Computing Strategy

Tue, 19 Oct 2010 00:00:00 -0800

Cloud Computing is regarded as an innovation in the field of information technology. However, according to a survey conducted by TPI, only 5% of companies invested on and created a Cloud Computing strategy when 20% of companies have resources to develop one. The population surveyed consists of 140 global IT decision-makers.

Preparing for the foreseen technologies that can affect business should be prioritized. Cloud Computing is expected to have a great impact on business practices and TPI urges companies to come up with a strategic plan to maximize its advantages. What follows are the top five reasons companies should develop a strategy in dealing with the cloud.

1.    iPad Effect on Business - The iPad has become a popular gadget that infiltrated the world of business today. While this phenomenon reaped revenues for Apple, it also showed the multiple avenues wherein Cloud Computing can be used. To avoid confusion or improvised management systems on Cloud Computing, strategic steps have to be formed and implemented so as to facilitate its proper usage.

2.    Cost Control - While the recession has passed, companies do not see this as a reason to keep decreasing expenditures to a low minimum. The survey showed that the primary reason behind the massive support on Cloud Computing is cost savings in IT.

3.    Pricing Confusion - The pricing structure for Cloud Computing is seen as a pay-as-you-go setup. While this is the case theoretically, it doesn't occur strictly in practice. The truth is, pricing and terms of service are different for various cases and needs. As such, it is of prime importance that companies take time in selecting the most optimal solution, while involving and preparing the entire organization for the process.

4.    Changing Landscape - Service offerings have altered and increased in variety with mergers and acquisitions in the works. New innovations in cloud-based services are causing clutter in the current landscape. A set strategy will help an organization filter options and providers in order to arrive at the best vendor and service model.

5.    Only the Beginning - Cloud Computing will be successful if it is managed with a centralized IT system that coordinates demand, capacity, and other essential factors. What helps in creating this system is planning in advance and strategizing even before implementation.

Striking a Balance between the Risks and Rewards of Outsourcing

Fri, 15 Oct 2010 00:00:00 -0800

Majority of business owners think that the best outsourcing setup is one that covers the least amount of cost. Alsbridge cites that this is not exactly the case. Outsourcing should be focused on the long-term value of the contract and how it meets overall business objectives instead of solely on operational expenses. For this, Alsbridge shares five points that companies should keep in check in evaluating the coherence of an outsourcing setup with organizational goals and strategies.

1.    Contract Terms - An agreement in form of a contract is binding and enforceable. Thus, one should take the time to review and understand the terms of an agreement. The service definition, terms for payment and termination, and governance are some of the most essential areas in a contract. Due diligence in evaluating these details can go a long way.

2.    Statement of Work (SOW) - This is expected to provide a precise and transparent definition of service that can be expected from the service provider. As far as responsibilities and roles are concerned, SOW also applies to the client performing his end of the bargain. Specified market-based �towers� to organize the SOW was proposed by Alsbridge. For instance, these towers are Server Management, Contact Center Management, Applications Development, etc. This classification of services or SOWs allow for easier comparison of providers. Also, you will be able to easily determine the actual cost of services per contract term.

3.    Service Levels - The Service Level Agreement outlines the terms of service of your provider. The terms and clauses in this contract are directed to protect your interests by ensuring a commitment from your provider. This commitment covers the promised deliverables and the quality of output agreed upon.

4.    Transition and Transformation - A description of the transformation across goals and milestones should be clearly articulated in documents at the onset of the agreement. This should address concerns such as turnover, objectives, roles and responsibilities, change management, status reporting, contingency plans, and staff policies.

5.    Pricing - As you get accustomed to an outsourcing setup and as you reap its profitable benefits, the cost of outsourcing will generally decrease over time. When starting out with this business solution, it is best to contract a provider with quotations that are based on market prices. This conveys the idea that your deal with your provider is one that is safe and reliable.

On Legislations Set to Limit Outsourcing

Thu, 7 Oct 2010 00:00:00 -0800

There have been proposals raised within the US Congress that are aimed at controlling the advancement of offshoring because of its purported negative effects on the local economy. As the midterm election campaigns are coming up, it has been revealed that action plans on offshore outsourcing is an important issue to voters. According to the NBC News and Wall Street Journal Poll, 68% of the population think that most US companies outsource business to lower-wage countries.

Even with the public view on outsourcing and its vast influence as a disputed business trend, the bills that seek to limit offshoring are hardly ever successful in changing the way the industry stands. Patrick Thibodeau of Computerworld enumerates the primary reasons:

1.    Offshore teams can work their way around new laws. A bill that caused a $2,000 increase in the application fees of H-1B visas was recently approved. This increase applies for companies with visa holders comprising half of the total manpower pool. An Indian company denounced the bill and said that this mandate will not change their strategic plans, despite the additional expenses. The higher visa fees will cost the said company approximately $15-20 million and its management said that this expense is �manageable�.

2.    Congress is not expected to enforce the �50-50 rule�. The bill that offshoring companies fear the most is the bipartisan proposal from US Senators Grassley and Durbin. This legislation proposes that the H-1B or L-1 visa holders in a company should make up half the total number of employees in that company. Outsourcing firms take different sides on this issue - while some think that this will not affect offshoring activities, some companies expect to hire less employees from offshore locations. A number of firms see this mandate as an opportunity to increase the scale of hiring locally because of the cost savings on visa application, allowance, and transportation costs.

3.    Exports and trade matter. Ohio Governor Ted Strickland recently signed an agreement that would encourage the influx of offshoring firms and employment opportunities for non-locals. This agreement with an Indian firm is valued at $108,000 and promotes Ohio as a prime destination for foreign direct investment, according to the source of Computerworld. Strickland seems to be continuously shifting sides when it comes to his stand on offshoring, but when asked about his position on the matter, he said, �We are very well aware of the importance of trade and we highly value our trading partners. Ohio firms sold $381 million in goods, principally machinery, aircraft, and medical equipment, to Indian markets last year."

4.    The outsourcing trend is not likely to be changed by any legislation. A lot of offshoring companies are rapidly expanding in operational scale, boasting of double digit growth rates and continuous employment activities. It is safe to say that the trend on offshoring will not dwindle any time soon because the industry will always find a way to strategically adapt to legislations that causes a rise in its costs.

5.    Trade agreements are being worked out by the federal government. US and Indian negotiators are conceptualizing a totalization agreement that would exempt Indian firms from paying Social Security and Medicare taxes for temporary visa workers. This would reduce the expenses of H-1B workers by 14%. Any increase in the application fees of H-1B visas can be neutralized by this law that brings down the total cost of hiring offshore.

Offshore Outsourcing: A Popular Choice as Business Strategy

Thu, 30 Sep 2010 00:00:00 -0800

The recession that hit the global economy is increasingly putting pressure on companies to reduce costs without compromising high standards of quality and operational efficiency. This is the primary reason for the fast rise of offshore outsourcing as a solution to business needs. Among the advantages of outsourcing is the possibility of acquiring staff with technical skill levels and specializations for a lower cost compared to hiring someone domestically.

Harvey Nash, a UK-based staffing and managed services firm, conducted a global survey of Chief Information Officers (CIOs) that confirmed the growing demand for outsourcing. Close to 3,000 executives were surveyed and the findings are summarized below:

The vast majority of the CIOs surveyed, a whopping 90%, revealed that they are increasing their budget for outsourcing in 2010 and 2011. Thirty-six percent (36%) of CIOs explicitly stated that they are increasing their budgets for offshore outsourcing for year 2011.

On IT Outsourcing, 62% of the executives surveyed outsource software application development. The other services that are experiencing high demand are software maintenance and IT infrastructure services, both at 53%. Systems Integration services followed with 22% in demand, and the last two are BPO and HR BPO. What's interesting is that six percent of the population surveyed outsource their entire IT Department offshore.

Close to half of the CIOs surveyed, 48% to be exact, reported to be spending 10% of their total IT budget on outsourcing. This suggests the significant role of IT and its dominance in outsourcing.

While everyone thinks India is the top outsourcing destination in the world, their hold of the market is waning and Eastern Europe is making its way in hogging the spotlight. It has been revealed that more than one out of 10 CIOs outsource services to Eastern Europe. Vietnam, China, and the Philippines are also destinations that have made a well-regarded name for offshore outsourcing.

The top three issues that concern CIOs and IT executives are the following: operational efficiencies, cost savings, and improving business practices. Seventy percent (70%) of the surveyed executives ranked these factors as high priority.

Skills that observe the highest demand are closely tied between 35% to 44%. These are: business analysis, project management, business relationship management, and architecture. Between 21% to 28% are IT strategy, development, testing, and services management skills.

Service models are also growing in variety as companies seek to improve the dynamics between onshore and offshore operations. As this trend continuously takes over business practices around the globe, a very important undertaking is maintaining open communication lines and a healthy relationship between service provider and client company. Despite the benefits of offshore outsourcing, a shortcoming on this end can lead to higher costs incurred or even monetary loss due to ineffective efforts.

Top 5 Tips to Have a Healthy Relationship with your Service Provider

Tue, 21 Sep 2010 00:00:00 -0800

Outsourcing can only be an effective business solution if you select the right service provider who can offer the appropriate service delivery models for your needs. Contracts and services agreements between you and your provider cannot take the place of a healthy relationship where you see eye-to-eye and understand each other's concerns. Here are Top 5 tips from TPI Senior Advisor Rainer Bl�tling that can help you achieve a profitable partnership with your service provider:

Communication should be consistent. Ease of communication is one of the most important criteria that will help make a healthy relationship. This will allow your provider to have a clear understanding of your needs. It might be useful to appoint someone who will be constantly in touch with your provider and who will remain updated throughout the entire outsourcing process.

Effectiveness in maintaining relationships should be supported with training and organizational development. Business practices and processes are constantly changing. Companies should keep on their toes in terms of staying up-to-date in order to understand and positively relate with their service providers. Learning how to be effective in relationship management can lead to significant change in your interaction with your third party partners.

Build a trust-based framework for addressing future challenges and opportunities. A relationship typically goes through road bumps and in maintaining a buyer-supplier relationship; thus, it will be good to set a framework that will allow you to handle challenges that can cause inefficiencies and losses.

Develop effective measurements to establish a balance between mutual behaviours and benefits. It is far easier and more efficient to manage a relationship based on objective standards, rather than going by feel or perception. Status updates and service reports should be timely delivered so expectations are set straight. Also, a �balanced scorecard� approach should be implemented to support a healthy exchange.

Assess, plan, and manage risks. Anticipating and evaluating risks will be beneficial to you and your service provider. Bringing this to the table early on will allow both parties to address the concern to avoid risk and threats, as well as prepare for �damage control� in case it ensues.

Top 10 Forces that will Impact the Future of BPO and IT Outsourcing

Tue, 14 Sep 2010 00:00:00 -0800

Gartner Inc., one of the most prestigious IT research and consulting firms in the world, recently came out with their analysis on the factors that set the course of the IT services and outsourcing industry. Gartner Research Vice President Benjaming Pring says that there exists one common set of technological forces and market principles that all players and parties in the IT services market deal with. These technological forces have been said to continuously change the industry landscape:

1. Hyperdigitization - This can be seen as the growing influence of digitization in the global economy. Digitization is the representation of products and services that are digital in form. This has made information easily transferable regardless of geographical location; thus, it is expected to develop rapidly and in 10 years, constitute 25 percent of the global gross domestic product.

2. Globalization - Globalization has changed the business practices and service delivery models within the IT industry. This force has changed the lives of the global business sector and everything else they interact with. Anyone who does not want to stagnate and get left behind should acknowledge, embrace, and take part in globalization. IT ought to see the world from this perspective so technologies can be used for greater efficiency and the global workforce can be tapped into for innovation in products, services, and processes.

3. Consumerization - �Consumerization will dictate IT access standards.� Consumer-oriented technologies have altered the lifestyle and behaviour of consumers. The effects of consumer behaviour can heavily impact and ultimately reshape the development of enterprise IT. As such, enterprise IT strategies should be aligned with the buying behaviour of consumers in order to create technologies, products, and services that address their needs and adapt to their lifestyle.

4. The Cloud - Cloud computing, according to Gartner, is "a style of computing where scalable and elastic IT-enabled capabilities are provided 'as a service' to external customers using Internet technologies." Specialized needs in IT can now be supplied by third party providers in a manner that is standardized and less costly in terms of capital investments. The main advantage here is that buyers can focus on the services that are provided to them, instead of the support and management of physical infrastructure.

5. Intelligence Technology - IT should be developed and utilized to advance business operations, to acquire opportunities for growth, and to improve the service and procedures within an enterprise. The current focus of IT is in �business intelligence, analytics, pattern recognition, and smart solutions.�

6. Security and Privacy - The availability of information and rapid digitization has led to increasing cases of privacy infringement and likewise, the need for security against hacking activities and identity theft. Levels of security within Internet activity should be improved in order to further maximize the advantages of IT and to ensure the development of its use.

7. Compentization - IT has allowed for the conception of �reusable objects�, also termed as �prebuilt IT components�, that people can access and use instead of starting from a clean slate.

8. Hypercompetition - Hypercompetition occurs because technology has allowed vast information access and a lot of other factors that influence buyer decision-making. While competition drives better quality at lower costs, the downside for suppliers is that the differentiating factor they create can be easily outperformed. This creates a fast-changing buyer market and an ongoing challenge for suppliers.

9. Value Chain - The delivery of IT services is directly impacted by service value chains. Gartner recommends business owners (and the rest of the IT outsourcing consumer market) to evaluate their service provider's value chain. Providers themselves should examine the value chain of other industries to come up with innovation.

10. Hyperverticalization - Movement towards further specialization of vertical service processes is said to be inevitable in the IT industry. While this may cause market fragmentation, this is also likely to lead to �vendor-led innovation� and improved services for consumers.

Allie Young, vice president and analyst at Gartner, says business owners should take advantage of the opportunities for innovation and service line growth that can be brought about by these forces.

Six BPO Lessons from IT Outsourcing

Thu, 9 Sep 2010 08:30:00 -0800

IT outsourcing has developed into a comprehensive field, offering a wide array of services to cater to the different needs of today's business world. With the growth experienced by this field, Gartner says BPO can learn a thing or two from IT outsourcing. Ian Mariott of Gartner cites six things IT outsourcing can pass on to BPO:

1. Look at BPO from a long-term perspective. Outsourcing has become a worldwide phenomenon that most business owners resort to because of the supposed cost savings that outsourcing provides. While reductions in operational costs are attractive, you should take account of more important factors such as client-provider match and the long-term effects of outsourcing. Before you dive into the waters, Gartner suggests that you take time to assess your outsourcing objectives and consider drafting a long-term plan. This will maximize the advantages you can get out of outsourcing as your offshore team grows with your organization.

2. Communicate requirements clearly. You should always make sure that goals and expectations are crystal clear because miscommunication with your provider in this regard can cause irreversible problems and lost investments. To facilitate better understanding, it will also be helpful to communicate all your concerns including the objectives of your company on a whole.

3. Consider different providers and delivery models. Do not limit your options to the service delivery models that you know or to the local service providers that you think will be more convenient. Take time to research on delivery models, and explore your options with different providers from different parts of the globe. Know that you have plenty of possible routes to take in reaching your desired outcome.

4. Choose deals that are flexible and can respond to the market's changing demands. The world business environment is rapidly changing and your needs are likely to shift with it. When securing a deal with your provider, check on the duration of the contract and ensure that it allows for flexibility. The article proposes an action plan that can help in this issue: assess your requirements regularly (on a specified time interval) and craft the next steps while accounting for pricing flexibility.

5. Business Process Sourcing Management - Sourcing Management Techniques always reference to the current needs of your existing team, and the factors considered for IT outsourcing should be identified from those of BPO. Identifying these factors will make sure that the sourcing process results to a spot-on solution for your needs. Sourcing management should be made in light of the needs of BPO and Gartner deems it would be helpful to involve all interested parties in the sourcing strategies through the duration of the project to keep interests and goals intact.

6. Build a partnership based on trust. You should consider your service provider not only as a means to cut costs but as a partner in your efforts to maintain and develop your business. A high degree of trust is required in this partnership and keeping your relationship strictly formal can cause problems that will make outsourcing difficult and eventually unmanageable. When seeking to venture into BPO, Gartner says that determining the importance of trust and control factors with all the parties involved - your company, your service provider - would greatly contribute to the success of outsourcing to service providers.

IT Offshoring Losing Pace

Sun, 15 Aug 2010 00:00:00 -0800

A new survey by Everest Research indicates that global IT outsourcing and offshoring may not quite be at full recovery yet. The study showed that after a growth spike in the fourth quarter, the pace of global outsourcing has been slipping.

The quarterly survey by Everest Research uncovered a contraction in the value of new IT outsourcing and offshoring contracts, having returned to their normal pace in June after experiencing a growth peak in the previous quarter. The total value of new IT outsourcing deals is down from $2.8 billion in the March quarter to $1.5 billion in June.

Despite performing weaker than expected, analysts believe that the signing of new deals is perceived as a positive forecast to revenue growth in the remaining quarters. Last quarter's performance saw some of the highest rates in terms of new contract addition which was followed by a healthy performance in June.

The survey reveals a declining value for purely IT contracts having gone down 46%. A 25% decline can be seen even when comparing this year's performance to the same quarter last year in which the recession was reaching its heights. At the time, the value of global IT outsourcing and offshoring contracts was at $2 billion and dipped to just $1.3 billion in the December quarter.

Although India accounts for 60-65% of the global IT outsourcing market share, the study indicates that the decline was owed to a large extent to the depreciation of European IT and BPO (business process outsourcing) deals. The total value fell 41% during the June quarter compared to the same period last year. Rounding the top 8 firms with the most number of deals signed last quarter are Infosys, TCS, and Wipro.

�IT outsourcing is more dependent on discretionary spending by companies; for example, to expand their operations; but BPO tends to be more basic,� commented Everest Group vice president Amneet Singh. He further explained that the growth in BPO outsourcing has become directly affected by the need for recession-impacted companies to cut costs throughout the last two years.

�If you want to show an immediate reduction in costs, in two quarters or so, it is easier to do it by outsourcing business processes,� Singh said.

Global outsourcing and offshoring in June saw a third consecutive decline in the size of new contracts. BPO contracts slipped to an average of $3 billion between April and June compared to about $4 billion in new IT contracts in December.

10 Steps for Successful Web Development Offshoring

Sat, 14 Aug 2010 16:00:00 -0800

Don't have an in-house web development team that you can count on to build that perfect website? Whether you're looking to improve an existing online endeavor or build a new one, prices can be high and skills hard to find. Offshoring web development is an ideal solution to gain access to experienced web development experts at low costs. Here are some tips to get you started:

1.)    Research beforehand � It is always a good idea to first evaluate your options. This will allow you to accurately define your requirements. Take the time to learn about what works and what doesn't and the technology available that will help you achieve your goals.

2.)    Be specific � The more details you outline regarding what you want and what your expectations are, the more time and money you will save in your offshoring venture. Take time to figure aspects regarding design, functionality, marketing, and maintenance.

3.)    Look around � The web development offshoring industry is littered with providers and freelancers offering their services. Gather a comprehensive list of quotes that offer both affordability and service quality.

4.)    Evaluate their work � It's always a good idea to look through the portfolios of your prospective offshoring providers. Be on the lookout for the quality of the backend functionalities of some of their websites.

5.)    Clearly define the goals and costs � It is important that your offshoring project runs on a clearly defined schedule from the start of operations to project sign-off.

6.)    Inquire about customer support � Many are quick to overlook the importance of the ability of an offshore web development firm to provide customer support. This involves training you to update web content on your own and providing a point person that you can contact if problems occur.

7.)    Plan your marketing approach � A good site is not very useful if it doesn't draw any traffic. You need to make sure that your site is created with search engines in mind which, in most cases, can cost you more than you thought.

8.)    Establish the owner � A common mistake is not securing the intellectual property rights of your project before offshoring. It is important that you outline who owns the domain name and your control over the backend.

9.)    Document the project � Every step of the project that is taken towards completing the set goals under the set timeline should be documented for monitoring.

10.)    Be prepared for obstacles and delays � Always be ready for the unexpected as complex development projects will always come across technical problems or bugs.

RP BPO Execs Share Optimistic Outlook

Fri, 6 Aug 2010 08:00:00 -0800

A recent study by BPAP (Business Processing Association of the Philippines) and Outsource2Philippines reveals that companies in the Philippines' offshoring industry are optimistic regarding growth patterns for the coming months. The companies surveyed indicated that they believe their business will grow substantially. The study also indicates that the industry's suppliers are continuously shifting from voice-based offshoring to more knowledge-intensive services. The survey conjured by BPAP and O2P showed that among the only concerns from the otherwise bright outlook is the shortage of qualified resources in the nation's labor pool. The issue has proven as the main concern for companies in previous surveys that BPAP has conducted as well.

According to the study, the Philippine outsourcing industry's top decision-makers are upbeat regarding its political environment. This comes on the back of successfully held national elections in May which respondents claimed had a positive impact on the confidence of clients and investors (more than 80% of respondents indicated that the smooth transition had a positive effect on investor perception). Following the successes of the former president in developing the local BPO (business process outsourcing) industry, the majority of respondents are anticipating an even more successful working relationship under the helm of President Benigno Aquino III.

Among the offshoring companies surveyed, 65% of them stated that they expect their company will grow by six to 50% during the next 12 months. Meanwhile, another 15% indicated that they expect their companies will grow across a range of different sectors - likely a sign of the continued growth of the offshoring industry outside of contact center services.

The Philippines faces a growing list of competing offshore outsourcing destinations. Forty percent of respondents of BPAP's survey believe that increasing competition is a major concern. Among the nations posing an increased threat to the Philippines' market share is Central and South America, Egypt, China, as well as eastern European entities such as Poland.

Despite developments in competing locations, the majority of the industry's representatives feel that the Philippines' main threat lies within its own borders. Close to half of the total respondents listed the shortage of knowledge workers as their biggest concern.� Currently, only 5-10% of applicants of open positions in the industry are considered for hiring - a trend that executives hope will change.

The next concern for offshoring companies is the ability to retain middle managers with over half of survey respondents listing it on their top three biggest issues affecting their growth.� Resolving both the middle managers and labor pool issues will prove critical as the industry wants to grow in providing more complex services.

Asia-Pacific Outsourcing Lagging Behind on Mega Deals

Thu, 5 Aug 2010 08:00:00 -0800

It seems that Asia-Pacific will need to acquire contracts that are worth at least USD 8.7 billion in outsourcing deals in the second half of this year in order to eclipse last year's performance. Asia-Pacific recorded just USD 2.3 billion at the end of the first half according to a recent report. The lack of outsourcing and offshoring deals known as mega deals that are worth over USD 200 million has resulted in a reduced TCV (total contract value) for the region for 2010.

TPI Index Asia-Pacific reports that the $2.3 billion worth of contracts in 2010 thus far is down from the $3.1 billion reported at the same point in 2008, and the $5.5 billion reported in 2009. The total is also below the average of $3.79 billion during the last 10 years.

According to the report, the cause of the decline can be traced to the unusually sluggish performances of vertical markets in financial services, manufacturing, telecom, and media. Only one deal valued over $200 million was signed in the region during the period.

TPI predicts that the region faces a steep climb in order to make it to $11 billion and be at par with last year's performance. This will require attaining contracts worth more than $200 million. According to partner and director of TPI North Asia, Michael Rehkopf, its offshoring industry needs to produce a record US$8.7 billion TCV in the second half of 2010.

The report indicates that 83% of the contracts awarded during the period were valued at less than $100 million - up sharply from the 71% in 2009, 72% in 2008, and just 64% in 2007. IT outsourcing saw the biggest decline with a $6.6 billion deficit in TCV compared to levels in 2009.

TPI reports that 18 business process outsourcing (BPO) deals were inked throughout the first half of this year, which represents close to 80% of last year's total. Despite the number of small contracts, the region is ten deals away from a record number of BPO contracts.

Telecommunications contracts have continued to contribute to the rapidly growing outsourcing and offshoring market in China and India.

�Australia and India were reported as the top two in terms of TCV market share with India accounting for 32% of the overall TCV (excluding mega deals). Australia topped India having recorded a 42% market share. TPI's study shows that businesses are looking to solutions such as cloud computing with 140 IT executives globally claiming they had plans to implement it in the future.

Study Suggests Outsourcing is still in its Infancy

Fri, 23 Jul 2010 08:00:00 -0800

In a recent global study by ESI International on the effectiveness and best practices in risk management by companies involved in outsourcing and offshoring, the results reveal that most companies in the industry are unaware of how to effectively manage the risks involved in outsourcing/offshoring projects. Of the 95% of the organizations found to be engaged in outsourcing activities, less than half utilize effective risk management practices.

According to a survey in the report, 70% of respondents indicated that product management or service quality is the top risk to organizations involved in outsourcing and offshoring. The survey gathered responses from decision makers in the outsourcing industry and governments in major outsourcing locations (South America, UK/Europe, Asia/Pacific, the Middle East, and India).

�The ubiquity of project outsourcing creates opportunities for, and demands on, organizations to better develop and refine their outsourcing competencies,� commented ESI International's vice president of product strategy and management, J. LeRoy Ward. �The results of ESI's global survey indicate areas for greater performance, productivity, and competitive advantages through better risk management.�

The results reveal a need in the industry for organizations to rethink risk management approaches in order to capitalize more effectively on the profit margins to be had by outsourcing projects. With close to two-thirds of organizations spending almost half of their budgets on outsourcing, it is clearly something that merits closer scrutiny.

Of the organizations surveyed, 19% claimed that their organization is not very effective at assessing the risks of outsourced projects and another 36% said that they were only somewhat effective. Of the respondents, only 39% of the respondents were confident that their organization had a strong risk management culture.

Managing outsourcing risks is a critical part of ensuring successful outsourcing partnerships - especially in locations where IT infrastructure is not up to par and with service providers that are not 100% transparent about prices and contract agreements. As such, shortfalls in effective requirements management and development must be addressed.

According to the study, 75% of organizations don't always clearly define requirements of outsourced projects. Clearly defining your requirements is always the first step of the outsourcing process and thus serves as the foundation for successful project management. Despite this, only a third stated that their organization clearly articulates and defines financial goals to their outsourcing partners.

With over half of the organizations acknowledging a need for improvement in their outsourcing capabilities, there is clearly much more growth to be had in the industry should these pitfalls be addressed.

IT Offshoring: the Risks and the Alternatives

Thu, 22 Jul 2010 08:00:00 -0800

The offshoring of IT operations has become a trend among companies worldwide in both the public and private sector. Offshoring is a process that, if done right, can yield maximum returns on investment for both the client and service provider. As with any corporate endeavor, however, there are pitfalls that companies need to be aware of and avoid in the process of establishing a successful outsourcing operation.

IT outsourcing has long been a way to cut costs - especially so given the financial limitations in struggling economies undergoing a downturn. Businesses of all scales worldwide are searching for a means to cut costs. Offshoring has become a means to not just reduce costs, but maintain a high level of service - if not higher - than was established beforehand.

�In-house IT management is complicated, time-consuming and requires the finance, resource, and capacity that businesses, especially following the recession, simply don't have - something which is not set to change any time soon,� commented Onyx Group CEO, Neil Stephenson.

A company that removes a process that unnecessarily consumes such an amount of time and resources can stand to steer the course of the company towards core goals. However, before such a direction can be taken, all risks and the alternatives need to be analyzed.

Assessing the risks and considering the alternatives are, according to outsourcing expert, Iain Monaghan, inevitably linked together: �Some organizations looking to outsource give their existing in-house departments the opportunity to put forward a competing bid, while others conclude that the benefits available from outsourcing could be obtained more economically by changes in internal processes; for example, increased standardization.�

IT outsourcing is still a rapidly growing trend in major offshoring countries such as the UK despite the many traps that companies tend to fall into during the process. Analysts predict that outsourcing has yet to experience its �golden age�. With figures indicating that approximately �80 billion of public sector services in the UK are currently outsourced - a figure that could well exceed �140 billion by 2015 - the prediction holds much weight.

According to Monaghan, the success of an IT outsourcing partnership can be measured by business value and customer satisfaction. He further adds that customers expect improvements in both the quality of services and its costs.

The popularity of IT management outsourcing has far-reaching implications and presents small-to-medium businesses an opportunity to purchase high-end services at minimum costs.

Offshoring Companies Expand as Economies Recover

Thu, 15 Jul 2010 00:00:00 -0800

As the global economy recovers from last year's recession, the outsourcing and offshoring market has witnessed increased activity as indicated by the latest report from the Everest Research Institute.� According to Everest research director Anand Ramesh, where once the growth of offshoring slowed down due to financial reasons or a lack of management focus, it is showing signs of total recovery.

Throughout the course of the recession, offshoring clients in the U.S and other major locations became much more focused on cutting costs.� According to Ramesh, this remains true in today's context as more companies look to offshore work that was once being outsourced to local suppliers.

However, according to Ramesh, more companies that were once alien to the industry are looking at offshoring as a viable option in locations such as the Philippines and India. This has coincided with what Ramesh perceives as an increase in the credibility and scale of offshore suppliers in major offshoring destinations such as India.�

The report by Everest group reveals that many of the Business Process Outsourcing (BPO) industry's current buyers have plans of expanding aggressively. This claim was backed by data showing that 75% of small and medium-sized companies engaged in offshoring plan to expand their offshore outsourcing operations by over 500 full-time employees in a span of two years. This trend is also seen in large offshoring companies with 90% of the population claiming they had plans of expanding operations by over 500 FTEs as well over the next two years.

Everest defines small adopters in the offshoring industry as organizations that have less than 500 FTEs working offshore. Medium adopters refer to organizations that have 500 to 2,500 FTEs offshore whereas large adopters are organizations with offshore FTEs that already number at over 2,500.

According to the report, India remains the number one offshore location for outsourcing with over 70 percent of buyers in the industry revealing plans to expand in the country. The report also indicates that while India is the top choice, companies are showing a tendency to spread risks by not sending all their work to a single location. The Philippines and China are two alternate locations with a good portion of companies showing interests in expanding to them as well. However, according to Ramesh, China mainly offers BPO services to neighbors such as South Korea and Japan. Meanwhile, Malaysia, Brazil, and Mexico are three other locations that have invited a significant amount of interest from companies looking to expand offshore.

BPO Sectors Suffering from Stressful Working Conditions

Wed, 14 Jul 2010 15:00:00 -0800

Offshoring in the Business Process Outsourcing (BPO) industry has been the focal point of economies of many Third World countries. India alone employs one million people in its BPO sector. While they may be able to pay a reasonably good amount to locals in such economies, the industry has much to do in order to improve stressful working conditions. Such was the verdict of a study which was recently released by the International Labor Organization (ILO).

Among the advantages of offshoring work, particularly to cost-effective locations such as India and the Philippines, is the ability to set up a 24/7 operation due to the time zone differences. Companies from the US and the UK have outsourced services that have allowed for much higher paying jobs for these locations. Indian BPO workers, for instance, receive a salary that is close to double the amount in other sectors of their economy. Meanwhile, the BPO employees in the Philippines have salaries that are higher than that of other sectors by 53%. However, the survey by ILO has given truth to concerns over stressful working conditions from trade unions and social workers in India.

According to the study, workers in the offshoring industry are faced with heavy workloads, strict procedures enforced through electronic monitoring, and for customer service agents, difficult clients. According to Anna Fos, head researcher at the Trade Union Congress of the Philippines, efforts by trade unions in both the Philippines and India to introduce collective bargaining have proved fruitless.

"We have not had any success in introducing collective bargaining in call centers and other BPO companies in the Philippines," Fos said. She added that one of the main reasons for this is the ease of which BPO workers are able to switch from one employer to the next should problems with their current employer occur: "They will not come to us, if there is a problem, as there are lots of jobs available", she commented.

Despite the working conditions of such offshoring outfits, analysts believe that employers have generally shown a lack of interest with regards to joining trade unions due, among other things, to fear of reprisals from their employers.

ILO's study, which has shown high rates of staff turnover in the BPO industry, suggests that the working conditions endured by BPO employees represent a �tailor-made recipe� for hazards related to stress. Turnover rates have peaked at 100% annually in certain offshoring companies - representing one of the industry's major concerns.

NFFAA Speaks Out Against Schumer Bill

Thu, 8 Jul 2010 00:00:00 -0800

A recently proposed anti-offshoring bill by US Senator Charles Schumer has recently come under criticism by the Filipino-American community. The Schumer Bill, which enforces taxes on businesses that practice offshoring, could hinder what's been known in the Philippines as its sunshine industry. Filipino-American community members recently visited the capital in an effort to voice their opinions regarding the bill.

The Schumer Bill, which puts a 25-cent tax on every call made to a contact center based outside the US, was proposed with hopes that offshoring customer calls to offshore agents will ultimately cease to become the most cost-effective option. Should a call be answered offshore, the bill mandates that the agent state the location from which the call is serviced. India and the Philippines, which enjoy the majority of the global contact center outsourcing pie, have players in their respective economies that will stand to lose most should the bill be enacted.

NaFFAA (National Federation of Filipino American Associations) member Loida Lewis reportedly told the Asian Journal that Sen. Gillibrand has agreed to speak to Sen. Schumer in an effort to convince him of the negative impact of such an act. The NaFFAA reportedly sent a letter to the senator claiming that the bill was not in the best interests of the long-standing mutual relationship between the US and its former colony.

Philippine Trade Commissioner and California resident Josephine Romero was quoted as saying that American citizens are �fighting the highest unemployment rate in California�. The decision regarding the anti-offshoring petition, she added, should be left to the companies themselves because they are accountable for their shareholders. The companies, she continued, have a duty to examine the effect of a tariff on customer service and its effects on a company's ability to provide quality customer care services.

Outsourcing companies based in the US have also opposed the bill, claiming it is an act of protectionism. Hit Rate Solutions operations director Adam Shore commented that the bill showed �no clear understanding of outsourcing or business operations�. He further added that it can potentially hurt global firms not just in the US but around the globe as more and more outsourcing locations have developed following the rapid growth of the contact center outsourcing and offshoring industry.

According to Shore, Schumer may not be aware of just how dependent companies small and large have become on offshore service providers that can now offer a seamless customer service experience at significantly lower costs.

Trends Shaping the Offshoring Industry Today

Wed, 7 Jul 2010 15:00:00 -0800

A continuously maturing global sourcing arena has caused the creation of a dynamic marketplace with changes in buyers' needs and demands. These changes can have a severe impact on the need for next generation characteristics in today's global service delivery models. These are furthermore marked by globalized approaches, industrialized delivery, and a growing global talent pool, reported Everest Group, a major global outsourcing and offshoring research firm.

Companies that have invested in offshoring have, over the years, realized that actual savings were not as high as initially projected. Costs can come great from cultural gaps and communication issues that directly impact the turnaround time as well as the quality of the end products. Furthermore, the synergy between the offshore team and the company can be lost due to management deficiencies.

Following the evolution of the offshoring industry into a more complex and sophisticated space, its service providers are required to look for a means of servicing the progressively higher professional needs of buyers that have gone far beyond mere labor arbitrage. Emerging as key factors on offshoring delivery redesigns worldwide are things such as operating model, talent management, and a good location portfolio.

These are the topics of a new global outsourcing and offshoring study conducted by research giant Everest, entitled Global Sourcing 2.0 - Evolving Global Delivery Imperatives for Outsourcing Service Providers.

The research group's report on global sourcing gathers analyses on global delivery trends of all leading global service providers involved in offshoring. This is further supplemented with discussions with India's buyers, services providers, and the group's experience in serving the global sourcing industry.

�The evolution of the supplier delivery models is evident; more so with the industry dynamics to remain high on growth requirements, even when faced with an extreme competitive environment. As the buyers' sourcing strategies and engagements mature, service providers are re-thinking their global delivery models to meet evolving buyer requirements related to location risk diversification, location-agnostic & consistent delivery experience, faster and lower cost transitions and deep domain expertise,� commented Everest Group Vice President of Research Amneet Signh.

Meanwhile, Guarav Gupta, Principal & Country Head of Everst Group, believes that understanding such trends �holds importance for service providers and buyers alike�.

�While it is critical for service providers to be aware of these imperatives and prepare to compete with the changing market paradigm, buyers need to incorporate and leverage these next-generation global delivery characteristics in their decision making to drive improved value from their sourcing programs�, said Gupta.

The Benefits of Bookkeeping Offshoring

Sun, 4 Jul 2010 08:00:00 -0800

Bookkeeping can sometimes be hectic and can be very demanding mentally. The level of expertise is always high when it comes to putting in timely and accurate work in various types of account books for an organization. It is therefore an ideal solution to seek the assistance of experienced professionals who know how to consistently deliver the right results. However, the procurement of reliable specialized services is not only hard to find, it's not kind to your bank account.

Technological advancements have made it possible to offshore bookkeeping work. Advancements in the service delivery capabilities of service providers have made it possible to do so without compromising the quality of work. Bookkeeping offshoring now yields many benefits to businesses across the globe.

The main benefit for bookkeeping offshoring, as with any service in the offshoring industry, is still related to cost. On top of that, a marginal amount of time is saved. Today, services such as employer tax expense, worker's compensation, insurance, liability, and health insurance can be rendered in offshore locations where labor arbitrage is favorable to the client.

Client companies that are looking at offshoring as an option would do well to be reminded that because bookkeeping service providers are already adept at the craft, no interviews, recruitment or training process will need to be conducted in-house. In addition to that, there is no investment needed in operating infrastructure such as software, hardware, and office space as the service provider will have already secured the necessary workstations - allowing for a fast ramp-up time.

Bookkeeping offshoring opens client companies up to a host of options for updating their books. This, in turn, creates flexibility in which they are able to acquire services according to their requirements and corporate context. There are just as many choices in offshore locations as the actual processes to be transferred offshore.

The delegation of a task as burdensome as bookkeeping will allow the company to streamline existing processes. In effect, the company can return to activities that are crucial to its strategic direction and competitive edge. These can include services that can directly impact the revenue generation of a company such as customer relationship management and after sale services.

The benefits of outsourcing bookkeeping has been a proven strategy for large corporations as well as SMEs and start-ups - allowing significant cost savings, process optimization, and flexibility to divert time and energy where it counts: the core of the company.

Evolution of the Knowledge Process Outsourcing Industry

Sat, 3 Jul 2010 08:00:00 -0800

A look into the history of knowledge process outsourcing indicates that the first outsourcing activities focused on acquiring support for technology implementation. This involved offshoring application development to cheap labor countries such as India. Following this move were other processes mostly in ITO (Information Technology outsourcing), making offshoring a means for 24/7 support. During the late 80's to early 90's, offshoring companies began to realize that this not only yielded significant cost savings, but also helped to mitigate risks, avoid capital outlays, and expand skill sets.

What naturally followed was the application of offshoring and its benefits to other areas besides IT. From IT, business processes were outsourced, now known as BPO (business process outsourcing). This initially involved tasks such as accounts payable or customer care. This later developed to include more knowledge-intensive processes such as treasury or industry-specific such as underwriting support for life insurance companies. Companies engaged in offshoring realized that utilizing third party services was a good strategy for cost, quality, and flexibility.

Outsourcing is now adopted as a business model for even the largest companies. Firms can now look to offshoring to not only deliver cost savings, but as having the potential to even handle processes that were once considered �core� to the company. Today's providers are not only equipped to provide complex problem-solving skill sets, but can offer the necessary privacy, security and IP standards to effectively and safely handle sensitive data.

These developments have laid a foundation for the strategic partnership that can be created in what is known as KPO (knowledge process outsourcing). The size of the industry is estimated to range from $10 to $17 billion this year. The KPO market is expected to grow 50% to 70% annually. This is a stark comparison to the traditional BPO industry which has shown compounded annual growth rates of 34% over the last five years with a 24% growth rate expected for the next five years.

KPO service providers today are fully capable of supporting offshoring clients in the process of becoming complete knowledge competitors. They would, in the past, only provide horizontal services such as research and analytics (and at a discrete level). Today, KPO service providers offer highly publicized, comprehensive, domain-targeted knowledge services in a wide range of industries. These are services that cannot easily be found in-house or in the client's domestic labor pool. Given these developments, the future looks bright for a KPO industry that is vertically specialized.

8 Rules for a Quick and Successful Offshore Transition

Tue, 29 Jun 2010 00:00:00 -0800

The process of offshoring a business takes a lot of careful planning and can sometimes take a year or more to move into the implementation phase. Global business process outsourcing company WNS lists 8 simple rules in order to make offshoring a success:

1.)    Ensure that BPO is the CEO priority - Sponsorship of an initiative that is as critical as BPO must come from the very top. If there is no other option to keep the business afloat, the CEO must be the one to deliver such a message in order for it to be taken as seriously as it should.

2.)    Approach outsourcing with an open mind - There are a lot of myths and generalizations that are made regarding the outsourcing industry. Businesses should be open-minded to the possibilities that outsourcing holds and that it extends way beyond just call center work.

3.)    Keep it simple - Do not make the transition of sending work offshore a time for making radical changes to your business processes. Offshoring should instead be simply about cost reduction without compromising quality.

4.)    Move fast - BPO will not achieve the results desired if it is not seen by the company as critical. Companies can encourage timely results by implementing aggressive timelines across the board.

5.)    Empower an internal outsourcing czar, and put top talent on the case - The czar here is referred to someone at the center of the organization who is fully committed and accountable to the success of the transition. WNS states that �survival programs are always led from the top and the center�.

6.)    Develop a realistic deployment plan - As crude as it sounds, sometimes being slow and steady wins the race. The offshoring deal must be well-measured and meet objectives without being disruptive to the business. Companies need to be wary of buying into unrealistic transitions in the midst of hurrying to cut costs.

7.)    Insist on alignment - It is critical to partner with an offshoring provider that is willing to align its strategies with the client rather than impose its way of working. This means understanding the provider's values, customizing deliverables to meet its needs, and understanding the scope of work.

8.)    Debit budgets in advance - When offshoring and outsourcing companies implement a BPO budget into the savings in advance, it leaves managers with no choice but to commit themselves to the cause, or find a new way to cut costs fast.

7 Tips for Peace, Profit, and Productivity in Outsourcing

Mon, 28 Jun 2010 00:00:00 -0800

Dr. Oliver Williamson, Professor Emeritus of business, economics, and law at the University of California-Berkeley, outlines �7 Tips for Peace, Profit and Productivity�. Although it does not look dissimilar to a lot of lists that we have encountered regarding the outsourcing and offshoring industry in the past, Dr. Williamson did win the Nobel Prize in Economics in 2009. Here is the gist on the seven tips:

1.)    Build cooperation into the contract -Williamson believes that the partnership can be much more rewarding if both customer and supplier implement measures to preserve cooperation throughout the deal. Williamson writes that "efficiency gains from trade go back to when our ancestors traded nuts for berries on the edge of the forest, [in] which exchanges were both transparent and simple."

2.)    Factor in hidden transaction costs - This is due to the well-known fact that many offshoring projects never cost the same as initially written in the contract. It is therefore essential to figure out the long-term cost beforehand, as difficult as that may be.

3.)    Use the contract as a framework, not a weapon - Outsourcing customers who may have been victimized have a tendency to create overly detailed contracts to prevent any possibility of contingency, which is a mistake.

4.)    Make end-of-life arrangements early - Many forget that outsourcing and offshoring deals don't last forever. The proactive approach would be to plan for defection early on and figure out how to mitigate its effects. After all, changes in a business relationship are most assuredly subject to change as the market changes. Contracts, therefore, need an exit management plan that is well-thought out and fair for both sides.

5.)    Create a shared vision statement - Having strategic points that align with your outsourcer will always minimize additional transaction costs throughout the deal.

6.)    Play nice (but not too nice) - You can gain the upper hand on your supplier, or let the supplier gain the upper hand on you. Either way, you are in for what Williamson refers to as �one-sided muscular contracting� which will only yield short-term gains.

7.)    Always leave money on the table - Many are quick to dismiss this strategy as foolish. However, working towards getting the cheapest price can, according to Williamson, cost both parties in the long-run. Leaving money on the table can instead be a �signal of constructive intent to work cooperatively�, which in turn minimizes �concerns over relentlessly calculative strategic behavior�.

Top CIOs Shifting Focus on Value and Innovation

Thu, 24 Jun 2010 14:00:00 -0800

A new survey has revealed that today's CIOs are looking at outsourcing and offshoring to pack a bigger punch with money spent down to the last penny. However, the survey also indicates they also want to focus on using IT to transform the business through innovation and productivity.

The report, entitled �From cost to value: 2010 Global Survey on the CIO Agenda�, was published by advisory firm KMPG as part of the 2010 World Congress on IT in the Netherlands. The survey was based on KPMG's technology data and was distributed to 4500 CIOs around the world.

As well as probing into possible offshoring approaches of high-profile CIOs, the survey categorized eight priorities for them to rate: IT value, the CIO profile, the value of people, process improvement, risk and compliance, sourcing, collaboration, and optimism.

The survey announced that �organizations wishing to create sustainable value need to get a grip on the way all information is produced, collected, and used, and they need to use IT to respond rapidly to the changing market and society.�

The survey also deduced that: �To a large extent, the daily focus of any CIO depends on the sector in which he or she operates. CIOs in the financial sector are comparatively more involved with daily operations, while CIOs in the manufacturing sector are looking more at ways to innovate and transform with the help of IT.�

The survey showed that 56% of respondents said cost optimization should always be a part of the organization's IT strategy as it is a competitive weapon.

Given the strong growth of online services in the offshoring landscape, CIOs expect use of collaboration tooling to increase significantly over the next five years. Cloud computing is receiving a marginal 72% of CIOs, claiming this practice was a good way of outsourcing IT functionality.

The concepts raised in the survey could prove substantial in the global offshoring industry as Ian Hancock, KPMG's national IT advisory in Australia, claims. After all, about 16 CIOs who took the survey represent the top 200 companies in the world.

According to Hancock, staffing, sourcing, compliance, and cloud computing are the top priorities of CIOs locally.

�Retaining people is a challenge for everyone and my view is to retain good people you need to be able to give them ways to develop new capabilities,� Hancock stated. �The message in the report is about innovation and the challenge for CIOs is to enable a career path.�

�The real challenge of previous outsourcing was predicated on cost, but CIOs lost control of the environment they need to create value in. How do I continue to create value in environment that I've outsourced to a third party?�

UK Outsourcing Facing Budget Issues

Wed, 23 Jun 2010 08:00:00 -0800

Following the demand for more effective use of resources, increased talk is being seen in the UK about the efficiencies and cost savings that can be achieved through offshoring and outsourcing.

While there was already a lot of tension over jobs being lost among employees in the public sector in the UK, media sources have published reports that millions of private sector jobs are also at risk to offshoring. However, such predictions are likely formed from a lack of substantiation and from inflated figures. The emergency budget's direct impact on the UK's unemployment rate remains to be seen.

Outsourcing has been in practice in the country's government for about 20 years. Although it is effective in many areas with the legal process offshoring industry experiencing increased growth, it has been troubled in terms of managing offshoring relationships.

�The bad press that surrounds the cost-effectiveness of some past public outsourcing projects notwithstanding, I would expect a well thought through outsourcing contract to provide effective and cost-effective delivery of services,� said Danny Jones, partner in charge of UK public sector at advisory firm TPI.

This may be due to the increase in outsourcing contracts that have been given, causing a host of new jobs in the outsourcing community. However, according to Jones, the outsourcing industry could also be negatively impacted: �Suppliers are already feeling the squeeze particularly when it comes to negotiating contract extensions; and they expect this to continue.�

The recent report by KPMG confirms this as it discovered that outsourcing is not as high on the CIO agenda as some may have anticipated.

Although this may look bleak to proponents of offshoring and outsourcing, industry players will maintain that there are still more opportunities than there are drawbacks to be had regarding the announcement. Although the government is in need of cost-saving solutions, it also needs solutions that produce results fast. This is something that offshoring industry is proven capable of doing.

It now comes down to just how fast outsourcing will deliver such solutions while still paying regard to semantics. After all, it will typically take 18 months and sometimes two years for an outsourcing project to being producing significant earnings from the time of signing. This could prove to be a significant issue unless the government changes its outsourcing model to resemble that of the private sector.

�Typically, the government has awarded large contracts to a single supplier, but we will see a shift to a model where government breaks large projects into manageable blocks which are then awarded to suppliers according to expertise/service required. This will increase the effectiveness of delivery if it is well managed,� says Jones.

Outsourcing Market Trends Signalling Global Recovery

Sat, 12 Jun 2010 08:00:00 -0800

A recent report by global consulting and research firm, Everest, proves an ongoing theory that the growth of the global sourcing market is indicative of a recovering global economy. The IT outsourcing and offshoring industry has experienced particularly high growth � climbing 43 percent from the last quarter of 2009 to the first quarter of this year. In addition to that, transaction volumes are valued at US $3.9 billion, maintaining its stride for its third straight quarter.

According to Everest's quarterly report on the outsourcing and offshoring industry, activity in North America for Q1 of 2010 is up 18% while the ACV increased 36% in the fourth quarter of last year. Also reported was a 6% climb in transaction volumes in Q1 2010 from Q4 2009. The quarter featured four more mega deals of contract values over US $1 billion compared to last quarter.

With 35 new captive centers officially announced in Q1, the captive market remained on a steady growth path - a quarter of the 35 located in Asia and the remaining 11 in India. Outsourcing and offshoring suppliers in India revealed plans of aggressive hiring in order to meet the rise in demand, with leading IT providers Infosys, Cognizant, and TCS already annoucing a 50-60 thousand increase in staff throughout this year. Similar plans were announced by global-centric providers Capgemini, IBM, and CSC. The trend has begun affecting attrition rates as well as wage inflation in India, the leading offshore services location.

Compared to the fourth quarter of 2009, Business Process Outsourcing (BPO) accounted for 32% of deals signed with transaction volume increases of as much as 30%. Transaction activity in Europe experienced a marginal volume largely owed to a 33% growth in transaction volumes in the United Kingdom.

The Philippines joins Brazil, China, and India as locations that saw a notable increase in offshore activity, with 44 new delivery centers having been created. A significant amount of activity was recorded in Asia in Q1 2010 with its Tier 1 cities reporting more activity than its Tier 2 cities. Supplier transaction activity volumes remained steady overall.

�Outsourcing market activity during the last quarter was largely led by renewals and restructuring of existing contracts�, stated Everest Group Principal and Country Head India, Gaurav Gupta. Amneet Singh, Vice-President-Global Sourcing, Everest Group commented, �It is encouraging to see demand side momentum translate into 44 new supplier delivery centers in Q1 with activity continuing to be concentrated in Asia.�

Web Design Offshoring

Fri, 11 Jun 2010 14:00:00 -0800

Whether it's a large or a small business, offshoring web designing work has been a long-standing practice that has proven to hold many benefits � particularly among Internet-based enterprises. Outsourcing web design work in general is particularly effective for smaller business owners who now realize the importance of an online identity for success.

An online corporate identity needs to reflect the core values of the organization as well as project standards of excellence and professionalism. These are typically the characteristics of websites that are produced by experts in the field. Users often judge a website based on the quality of its design and a good balance between eye-candy and effectiveness. By effectiveness, this means navigability and its ability to draw traffic and achieve its purpose. Outsourcing web design work offshore requires choosing a service provider that is experienced in delivering such results.

The field of website creation and design is a challenging one that is constantly changing and developing new technologies. Creating your own website requires that you know the skills necessary to create them. Often, hiring your own staff will prove not only costly, but difficult in terms of finding experienced and skilled professionals who are up-to-date on the latest web design trends. Outsourcing website creation to professional web design providers will allow you to gain access to a high degree of expertise at much lower costs. This would have been much more costly and time-consuming to achieve in-house.

Offshoring your website needs means acquiring the assistance of a web design organizaion that has the resources and expertise necessary to deliver outsanding results. It is for this main reason that offshoring web design work has become common among small companies as well as start-ups that otherwise would not have been able to create such a powerful online presence domestically. Many small firms and start-ups that create corporate websites online feel the need to communicate to their customers that they are not as small as they seem � even though in many cases, there are only a handful of employees involved in the enterprise. A professional and cutting-edge website will serve this purpose perfectly.

Statistics show that web-based commerce moves seven times faster than the rest of the business world. As such, it is always something that one should consider investing in as the returns are well worth it. Outsourcing to an offshore service provider that will give you maximum returns on investment has proven for many businesses as the ideal move to capitalize on this trend.

Offshoring's New Threat: The Schumer Bill

Fri, 4 Jun 2010 16:00:00 -0800

For all the cost savings that it still promises, the offshore outsourcing industry has braved much opposition this year - beginning with the cease in tax breaks to offshoring companies promised by President Obama in his State of the Union Address. The threat has recently been embodied in the form of a new legislative attack proposed by Sen. Charles Schumer on the offshore call center industry.

Schumer announced that the plans are to introduce legislation that will require firms to publicly disclose available reports of their offshore call center operations. In addition to that, said firms will be required to pay a tax on every call sent offshore. A closer look reveals that this new legislation has three main clauses:

Firstly, a 25-cent excise tax will be imposed on any customer service call that orignates in the US and is transferred to a customer service personnel in a foreign location (commonly known as contact center outsourcing).

Secondly, companies will have to inform their customers of where their call is answered.

Finally, the bill requires companies to publicly disclose quarterly and annually the amount of customer calls received and how many of which were sent offshore - submitted to the Securities and Exchange Commission.

Schumer said that he plans to introduce legislation requiring that firms disclose in publicly available reports their offshore call center practices, and to pay a tax on every call sent offshore.

�If we want to put a stop to the outsourcing of American jobs, then we need to provide incentives for American companies to keep American jobs here,� stated Schumer. �This bill will not only serve to maintain call center jobs currently in the United States, but also provide a reason for companies that have already outsourced jobs to bring them back.�

It is certain that large outsourcing organizations that utilize offshore call centers will oppose the bill � as was the case with a bill that threatened to keep multinationals from keeping profits offshore in low-tax jurisdictions and delay paying taxes on overseas earnings. It was clear then that elimination of tax breaks for outsourcing companies was not enough to halt the offshore outsourcing freight train. Should Schumer's bill come into law, it may just mark a significant step in the direction of ceasing the transfer of jobs to offshore locations � at least in the contact center sector. Where other bills have failed in the past, this one may just succeed and speed up the growth of a recovering US economy.

Designing Flexible Outsourcing Contracts

Fri, 4 Jun 2010 16:00:00 -0800

There are many outsourcing and offshoring buyers that will lock a deal with a service provider and fail to account for the changes that are bound to occur throughout the partnership. Throughout its development, the outsourcing industry has gone through a variety of different phases. The first phase was typified by long-term IT outsourcing. As the industry aged, however, these �mega deals� are now replaced by best-of-breed, multi-sourcing, and offshoring. Throughout its life span, however, the factors that can create changes in an outsourcing partnership remain the same: economic, social, technological, environmental, and legal.

Whereas the scope of contracts once reached as much as 10 years, business decision cycles nowadays are much shorter. There are budget cycles subject to mid-year revisions, and strategic plans are revised for quarterly reporting. Tactical plans can change monthly, weekly, and even daily. As such, it is critical, now more than ever, that an outsourcing/offshoring contract is flexible enough to adhere to such changes.

So how do we identify a non-flexible contract? The main reason for the inflexibility of an outsourcing contract today is the discomfort that surrounds an ambiguous business partnership on both sides. The customer wants to receive a specified outcome, while the supplier wants to set in stone exactly what is to be delivered and it will generate profit. It is therefore not enough that a contract be flexible, but it must also be able to guarantee that the partnership is mutually beneficial.

So how is a flexible outsourcing contract designed? There are many things that service providers can do to incorporate flexibilty in their contracts. If, for instance, a large contract is involved, it can be split into multiple elements, allowing each to be addressed and modified separately. With the proliferation of global-centric offshoring providers, it is also possible to use more than one supplier - creating an opportunity to benchmark. You could also shorten contract terms, or provide break clauses, enabling services to be retendered more frequently.

Among the key elements of successful outsourcing and offshoring contracts are effective governance, gain-sharing, market testing and benchmarking, and break-clauses. Another area that may be overlooked at times is the contract's ability to factor in publicity. There are many publicly held views that hold outsourcing and offshoring in a cynical light. This can adversely harm a buyer's reputation with its customers. At the same time, the service provider's ability to prove itself capable of delivering maximum return on investment to other prospective customers requires such disclosure of the buyer-supplier relationship.

The Philippines as Emerging KPO Hub

Thu, 25 Mar 2010 00:00:00 -0800

The Philippines has long been established as an ideal destination for voice outsourcing, due to the country's large pool of English-speaking workers, affinity with Western culture, IT infrastructure, government support, and lower operational costs. The call center sector is rapidly growing - call centers are being established not only in greater Manila area but also in other cities and provinces considered as emerging locations which are suitable for voice-based BPO work. Also, it was reported that the call center sector posted US$5 billion in revenues in 2009.

After securing a place in the world of voice outsourcing, the Philippines is poised to tap the knowledge process outsourcing (KPO) sector and become an excellent alternative for KPO tasks. As recent trends suggest, the country is now emerging as an ideal destination for business processes that require specialized skills. In a research report published by outsourceportfolio.com, it is expected that revenues of the Philippine BPO sector would reach US$9 billion this year - from US$7.3 billion posted in 2009.

The report also shows that 52 percent of survey respondents think that it is safer to outsource to the Philippines compared to India. Eighty-one percent (81%) said KPO is a �high growth prospect�, although 54 percent feel that the lack of enough workers suitable for higher-value outsourcing tasks is a major problem.

It is a known fact that the outsourcing industry is one of the key drivers of the Philippine economy, especially during the recession, which is why the government is taking steps to make the country suitable for outsourcing work - both BPO and KPO. For instance, BPAP, the umbrella organization for outsourcing players in the country, recently launched a competency test designed for college students and applicants who wish to enter the outsourcing workforce, streamlining the recruitment process in the industry. Various locations outside Metro Manila are also being considered ideal outsourcing destinations due to better IT infrastructure, lower costs, and availability of skilled workers.

While the country produces a lot of graduates annually, many individuals usually do not have the skills needed in higher-value business processes. This will be a major stumbling block for the Philippines if it aims to be an ideal KPO hub. The results of the May elections may also have an impact on the state of the outsourcing industry.

There may be obstacles, but with the current growth rate and initiatives from the government, it is likely that the Philippines will be able to establish a strong hold in the global KPO sector.

BPO vs. Captive Center: Five Decision Factors

Tue, 23 Mar 2010 00:00:00 -0800

Business process outsourcing (BPO) refers to the process of transferring the management and/or execution of a specific business process to a service provider. On the other hand, captive center refers to the extension of business operations on a low-cost offshore location, with the parent company maintaining full control over the business processes.

As with all other things, both BPO and captive center have their own share of advantages and disadvantages. These solutions will enable companies to reduce costs and focus on core competencies, but what are the things to take into account to ensure that you have chosen the right outsourcing solution?

Steve Kopp, Partner and Managing Director, CFO Services - Americas of TPI, the world's largest sourcing data and advisory firm, enumerated five key decision factors when it comes to choosing between business process outsourcing and captive center.

1.    Internal bias - According to the report, highly customized processes, type of industry, and cultural aversion are factors that make companies avoid outsourcing business processes. TPI said that it is necessary to determine the level of internal bias by conducting an internal change readiness assessment.

2.    Scale to build a global service delivery model that rivals outsourcing providers' cost and delivery structure

3.    Availability of capital - A company which is considering to put up a captive center needs capital for buying or renting office space, infrastructure, consulting fees, tax fees, and human resources. On the other hand, there's a transition fee involved when the company chooses to outsource. This is about 10 to 20 percent of the outsourcing fees for the first year.

4.    Time and patience - Establishing a captive center obviously takes a longer time than BPO. Financial payback will take about 24-30 months in setting up a captive center, unlike in BPO where you can expect payback in 15-18 months.

5.    Talent retention - In BPO, employees work for the service provider, whereas employees in a captive center are your own personnel. Employee retention is a business concern and must be taken into account to ensure that the company can still meet its goals and adapt to changes in the economy.

These five decision factors can be really helpful for companies that are looking at two different processes - BPO and setting up a captive center. Keep these in mind and seek help from people who have captive centers or outsourced processes.

Procurement Outsourcing Market to Grow this Year

Fri, 19 Mar 2010 00:00:00 -0800

Procurement outsourcing (PO), in simple terms, means transferring procurement (acquisition of goods and services) tasks to a service provider or third party to cut costs and/or enable the buyer to focus on its core competencies.

This year, it looks like IT outsourcing is not the only one that is likely to see improvement in outsourcing market activity. According to the Procurement Outsourcing Annual Report 2010 by global consulting and research firm Everest, PO activity will increase by more than 20 percent this year. The annual contract value (ACV) is expected to reach almost US$1.3 billion. This can be attributed to the increase in new contract signings and extensions this year, as well as the improvement in global economic conditions.

Here are Everest's projections on the PO market:

�    End-of-term activity will pick up over the next three years involving a book of business valued at US$2.2 billion.

�    The small/medium-sized business (SMB) segment will see higher adoption levels of single-process PO contracts but will be targeted by suppliers offering new platform-based offerings, including Software as a Service (SaaS) as a delivery model.

�    Buyers will favor PO contracts that are either transaction-focused or sourcing-focused engagements, and most buyers will follow a phased approach with an end vision of source-to-pay (S2P).

�Buyers are now poised to expand sourcing-focused contracts into transactional services. Contracts that exploit the synergies between Finance and Accounting Outsourcing (FAO) and PO, especially in the procure-to-pay areas, will see increased market traction,� said Katrina Menzigian, Vice President, BPO Research.

As the economy recovers from the crisis, 2010 is likely to be a better year for the global outsourcing industry. Let's just hope that recovery will continue and significant results will be seen throughout the year.

Outsourcing Spending to Increase as Economy Recovers

Wed, 17 Mar 2010 00:00:00 -0800

Results from the recent Gartner survey show that 85 percent of organizations expect that their outsourcing spending, specifically on IT services, will increase or stay the same this year as the economy bounces back from the crisis. Of the 1073 survey participants from different companies and organizations across the US, Europe, and Asia-Pacific, 76 percent are confident that the economic conditions will improve in 2010.

Gartner added that the overall mean outsourcing spending is estimated to increase by 7.13 percent, though it may differ in other countries. For instance, India expects a 17.4 percent increase, while Japan predicts a 1.5 percent decrease.

According to Gartner vice-president Allie Young, the economic crisis had an effect on the decision-making process of companies. "The impact of the global economic recession in 2008 through 2009 has been significant, in some cases radically changing a vertical market or a company's competitive position. Buyers of services have been impacted in many areas, making them more cautious regarding IT spending," Young said. While the economic uptick will result to an increase in outsourcing spending, Young noted that service providers must remain flexible in adapting to economic changes and focus on cost-effectiveness.

This is definitely good news for service providers. In the Philippines, the business process outsourcing industry expects rapid growth in the first six months of 2010 as companies plan to expand their operations. BPO firm StarTek, for instance, is planning to hire 1000 workers as part of their expansion plans in the country.

Moreover, this growth is seen not only on voice-based work but also back-office functions and higher-value outsourcing services. It is reported that the Philippine outsourcing industry is now tapping services that require managerial skills, analysis, and decision-making functions. With the way things are going, companies are confident that the impact of recession will eventually be a thing of the past and continuous growth will be seen in the global outsourcing market.

CSR Becoming more Important in Outsourcing Contracts

Mon, 15 Mar 2010 00:00:00 -0800

Wikipedia defines corporate social responsibility (CSR) as "a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its adherence to law, ethical standards, and international norms". In other words, it refers to how companies manage business processes to maximize positive impact and reduce risks to society and the environment.

In a recent electronic survey by the International Association of Outsourcing Professionals (IAOP), 71 percent of respondents think that CSR is becoming more important in outsourcing contracts. The study further shows that small and medium-sized service providers aim to increase CSR activity, and 70 percent of outsourcing buyers and providers said they will increase their CSR efforts in the next three years. According to IAOP Chairman Michael Corbett, "If companies want to win in outsourcing deals, they have to be focusing on CSR practices that are good for people, the community, and the environment."

Here are other key findings of the IAOP survey:

Many service providers focus on corporate social responsibility encompassing activities in HR, community involvement, and environment.
A significant number of buyers may take the CSR capability of a service provider into account when it comes to making an outsourcing decision.
For buyers, employee practices, specifically fair operating practices and human rights, are more important CSR criteria than consumer, environmental, and community involvement.
India was considered as the world's most popular developing region that buyers outsource to as a social responsibility.

Much has already been said about CSR. Some may say that part of it is philanthropy, while others may see it as something done to make a better impression. While businesses from different parts of the world have varying perceptions of CSR, it all comes down to implementing work and employee practices that are not only good for business but also lead to positive effects to humankind and the environment.

Virtual Captives: an Emerging Sourcing Strategy

Fri, 12 Mar 2010 18:00:00 -0800

A lot of buzz has been created about virtual captives sourcing model (also known as �hybrid captive and �synthetic captive�). For those unfamiliar, a �captive� operation is generally known as a subsidiary company, typically set up offshore to reduce risks and minimize operational costs. The virtual captive model seeks to bridge the world of third party outsourcing with the benefits of a captive operation � but does it succeed?

Among the main benefits, and yet, what is strangely argued by some as the main pitfall of virtual captives, is the sharing of responsibility between the client and the third party provider:

�In the virtual captive space, which is one of the hybrid models---one clear issue which has not been resolved in the market, is the division of accountability between a buyer and the supplier. If it is a pure third party contract, supplier will have the mandate not just to deliver the process, but to also make improvements in the process,� comments Everest Group Research Director, H. Karthik.

Karthik may have a point, but this also means that all that must be done in order to remedy this pitfall is to simply establish a clear foundation on the division of accountability prior to the deal � as is done in any outsourcing contract. Among the most popular examples of the model is the seven-year deal Wachovia made with Genpact in 2005. By personally training its staff and ensuring that their offshore employees had a solid grasp of company culture and its standards for excellence, Wachovia was able to minimize retention and help ensure production efficiency. This was possible because of another main selling point of virtual captive models - the level of control that a client company is given in a addition to the responsibility that the third party has over process improvement. Hence, the name �hybrid captive� - because it seeks to combine the best of both worlds. Karthik's argument is valid insofar as the initiative on both sides to define accountability is not taken. Is not the point of wanting to set up a captive operation negated if the added level of control a virtual captive offers goes unutilized?

Ensuring Successful Sole Sourcing

Thu, 11 Mar 2010 17:45:00 -0800

Sole sourcing gives outsourcing buyers the opportunity to negotiate, define, and purchase services from a single provider � thereby making it easier to keep track of performance metrics and mitigate risks. This has become more than a viable option as outsourcing providers expand their service capabilities across multiple platforms and, in many cases multiple offshore outsourcing locations � eliminating the need for multi-vendor approaches.

While sole sourcing can potentially decrease costs and enable a more efficient decision-making process, like any sourcing model, it comes with its own challenges. Outsourcing giant, Everest Group, outlines 3 steps that a buyer can take in order to ensure a successful sole sourcing partnership.

The first is to carefully define the buyer's objectives and the services required. This is also a critical step in ensuring outsourcing creates value and that strategies are aligned to help the client business grow.

Second on the list is establishing a framework that helps both parties know when the proposed solution is acceptable. Although process improvement and innovation are big factors that can potentially be the difference between a good contract and a highly successful one, cost-efficiency still rules the industry. As such, the framework will almost always come down to financial feasibility and profit margins.

Lastly, a foundation must be laid for the two organizations to productively govern the implementation and ongoing execution of the solution. This will help ensure that both the buyer and supplier not only possess the drive to produce increased performance, but know exactly how to forge a productive working relationship.

F&A Outsourcing Poised to Regain Traction after Recession

Tue, 9 Mar 2010 00:00:00 -0800

According to the Finance & Accounting Outsourcing Annual Report 2010 by global consulting and research firm Everest Group, 2010 will be a stronger year for F&A outsourcing (FAO) compared to the previous year.

It is predicted that the annual contract value (ACV) this year will reach about US$3.7 billion - a 20 percent increase from US$3.1 billion posted in 2009. This increase in global expenses is taken as a sign that the low activity in FAO, which involves outsourcing capital budget and internal audit, processing of payroll, and general accounting, is now over.

Compared to 20 percent annual increase from 2006 to 2008, FAO had seen a slow growth rate of only 11 percent in total value of contracts in 2009. However, Katrina Menzigian, Vice President, Research, said FAO is expected to regain traction this year as the economy bounces back from the crisis, with new contracts and scope expansions. �We foresee increased adoption across industries and geographies to continue. Beyond the United States, we expect contract signings in the domestic Asia-Pacific market as well as Rest of Europe to rise.�

Here are other key findings in the report:

FAO market growth continues to see strong adoption across manufacturing, consumer packaged goods, retail and high-tech sectors. Telecom and pharma are emerging sectors with the highest growth rates.
The financial services sector saw stronger activity than expected last year, and pent up demand will contribute to growth in 2010.
Asia Pacific started to emerge last year, capturing 35 percent of new contracts.
Adoption by the mid-market was unable to sustain momentum garnered from 2006 to 2007 primarily due to the economic climate and lack of proven, successful FAO solutions.

New deals, contract renewals, and scope expansion show that 2010 is bound to be a much better year for the FAO market than 2009. As the economy continues to recover from the economic turmoil, it is with high hopes that FAO will register a growth rate which is similar to the rate seen before companies felt the impact of recession.

Common Mistakes of New IT Outsourcing Buyers

Thu, 4 Mar 2010 00:00:00 -0800

Contract negotiator Julian Millstein enumerates the five most common reasons why novices in IT outsourcing fail to get it right in the article �The pitfalls of outsourcing� published at computing.co.uk:

Outsourcing is an easy endeavor. There is more to it than just paying a service provider to take on some of your IT processes. Time and effort are needed in order to have a better understanding of how the entire outsourcing process works, what to do in case security concerns come up, and how it affects your overall operations.

The outsourcing provider will fix everything. It's wrong to say that the service provider will fix your �mess� without affecting or having to change how you do business. As Millstein points out, �... although they [IT outsourcing providers] are generally better at the given function than you are, the way they solve your particular problem, the solution they bring to the table, will by its very nature change the way you do business.�

The buyer fails to provide a baseline. Performance metrics must be established during the contract negotiation. Providing a baseline will enable you to accurately measure or review performance.

The only reason to outsource is to save money. While cost reduction remains to be the top reason why companies opt to outsource, problems may still arise even if you're satisfied with cost savings. What you think you have saved now may mean nothing after several years as salaries increase and turnover takes a toll on the outsourcing process.

It's easy to manage the outsourcing relationship. Outsourcing means, in its simplest form, transferring business processes to a service provider. However, this does not mean that it is a one-way street - the buyer transfers tasks to another company to reduce costs as the latter does the work. It is important to establish a good and efficient relationship so both parties will reap the benefits of outsourcing.

To increase your chances of achieving a successful IT outsourcing deal, avoid these pitfalls and seek advice from those who have extensive knowledge and experience about the process.

Warning Signs that Mean Trouble in your Outsourcing Deal

Tue, 2 Mar 2010 00:00:00 -0800

During the global financial crisis, many companies put outsourcing contracts on hold to focus primarily on ways to keep the business going, while some opted for contract renegotiations. With all the factors to take into account when it comes to closing or renegotiating outsourcing deals, how would you know that you are on the right track?

In the article �A dozen danger signs that your outsourcing contract is on the rocks�, Linda Tucci brings together some insights of different experts on the mistakes commonly committed as well as misconceptions in outsourcing deals.

Lack of innovation and productivity gains - According to Thomas Young, partner and managing director with the CIO Services-Infrastructure at IT consulting firm TPI, documentation is the key to a successful outsourcing contract. When it comes to continuous improvement, Young said that productivity gains which are greater than 3-4 percent need investment from both buyer and vendor, and it should be explicitly stated in the outsourcing contract.

Cultural differences - Culture clashes may not result to a good, long-lasting relationship between buyer and vendor.

Optimizing price but failing to focus on quantity - When a company aims to reduce costs, it usually tends to ignore the quantity / consumption of services. According to Young, "when I tell clients to take costs out, I tell them to focus on the Qs [quantity]."

Neglecting governance and contract �maintenance� - Young said that failing to create a good contract that is flexible enough to adapt to changes in business and technology is a big mistake committed by companies. In a constantly evolving industry such as outsourcing, it is crucial to have a well-written contract that provides room for any changes.

The Shift Towards Outcome-Based Outsourcing

Thu, 25 Feb 2010 09:00:00 -0800

The global outsourcing industry has been typified by outsourcing deals based on quick-fix cost-cutting solutions that don't always consider long-term process improvement. As the economies of major outsourcing players recover, buyers and vendors are presented with an opportunity to divert focus on ways to create value instead; writes Kathleen Goolsby of the Outsourcing Journal.

The key factor towards maintaining a successful relationship, both personal and professional, is trust. Attaining that trust depends on a healthy system of communication. For the outsourcing industry, this means increasing the level of transparency and information-sharing are key catalysts in attaining an outcome-based approach. The shift towards outcome-based outsourcing is described by Genpact's Mohammed Haque as �a journey that can take at least 18-24 months to implement� due to the requirement of a complete data assessment of the buyer's landscape.

Advancements toward value-creating platforms require attaining a more in-depth understanding of a customer's industry. Haque explains that it is "extremely important that the buyer understand the level of risk the provider must take to help the customer achieve the desired business outcome. This will only work if it is a complete partnership type of relationship and if there is strong governance and relationship management. And senior leaders on both sides must work together."

Upon getting a good grasp on the needs of a buyer's business context, it then remains to align service level agreements (SLAs) to meet desired strategic goals. To further solidify the commitment of both parties to a value-adding partnership, industry experts advocate employing a model in which the responsibilities for risk mitigation and maximizing returns on investment are shared.

According to Haque, only 5 to 10 percent of outsourcing arrangements today utilize outcome-based pricing � the other 90 to 95 percent of outsourcing arrangements are based on time, materials, or a fixed fee. However, he predicts that within the next five years, outcome-based outsourcing contracts will grow to 40 to 50 percent.

RP's Game Development Sector and the Lack of Enough Manpower

Wed, 24 Feb 2010 00:00:00 -0800

The Philippines has long been known as a location of choice for voice-based work. Call centers abound not only in Greater Manila area but also in nearby cities and towns. The outsourcing industry soon expanded, including non-voice BPO work in its service offerings. Even during the tough financial crisis, the Philippine outsourcing industry had showed resiliency and it was one of the few industries which raked in revenues that greatly helped the economy.

There's no doubt that outsourcing has become a major income generator for the country, and it doesn't stop at call center functions, IT services, and medical transcription. Another promising field is game development, the youngest branch of the industry.

The different factors that make the Philippines an ideal BPO location still apply when it comes to the game development sector. There is no question about talent. Filipino game developers are creative, highly skilled, and innovative. Aside from English proficiency and low operational costs, the immersion with the Western culture is advantageous for game developers in the sense that cultural compatibility makes it easier for them to appreciate and comprehend the games from the West.

What keeps the country from tapping a large part of the game development outsourcing market is the lack of enough trained game developers to meet the demand. In an article entitled "Philippine game developers ready for big players?" by Nestor Arellano, Ranulf Goss, President of the Game Developers Association of the Philippines, said there were about 50 employees in the sector back in 2004. Five years later, more than 600 comprised the game development workforce. "We're the fastest growing industry in outsourcing right now, but definitely we need more manpower."

While there are game development courses being offered in the Philippines, there is no formal training available. For the country to become a game development outsourcing hub, it is crucial to provide the necessary training for those who want to work as game developers.

The country must find ways to beef up the workforce for the game development sector and make BPO players aware that Filipino game developers have the right skills and talent. If the country has enough manpower to meet the demand, this young sector may soon put the Philippines on the map of global game development outsourcing industry.

Factors towards a Successful Sole Sourcing Approach

Mon, 22 Feb 2010 00:00:00 -0800

In a nutshell, sole sourcing refers to the process or practice of working with only one supplier or service provider. This is an option for buyers wishing to achieve their goals faster without having to deal with a multi-supplier process.

In an Everest Group Whitepaper entitled �Sole Source Outsourcing: Ensuring a Successful One�, the global research firm cites these seven factors that will lead to successful sole-source approach to outsourcing.

1.    Develop the relationship. This is important even in multi-supplier approaches. Since both parties will be investing a lot of time and money in the outsourcing deal, it is crucial to establish a healthy and effective relationship in which both the supplier and buyer know each other's goals and are committed to make the relationship work.

2.    Engage senior leadership. A sole sourcing approach relies on the trust and goodwill at senior executives of the company. People at the highest levels of the organization should be the ones to carry out the decision-making process, specifically when it comes to service delivery and terms of the agreement.

3.    Involve the board. For many board members who are used to a multi-supplier approach, presenting a sole-source situation may raise some concerns such as whether it is the best and most cost-effective solution for the company or not. Do not leave the board of directors in the shadows. Present the sole-source approach early in the process to give the board some time to evaluate it.

4.    Don't boil the ocean. Before signing any outsourcing deal, make sure you have an accurate and robust business case, reasonable pricing and achievable scope, and a Masters Services Agreement (MSA) that focuses negotiations on terms which are most relevant to outsourcing.

5.    Develop a robust business case. Have a well-structured business case that can be easily explained and understood. Aside from stating the base case model, the business case must be clear and comprehensive. It must also take direct cost and business impacts, as well as strategic risks into account.

6.    Compare to ensure value. To have a successful sole sourcing approach, �parties must adopt a sophisticated external comparative analysis process to ensure fairness of value sharing.� The buyer must make sure that the supplier has the capabilities to match the scope of services to be delivered.

7.    Focus the contract and negotiations on truly important factors. The buyer must set specific milestones and end goals. The contract will also include scope targets and metrics in measuring the success of the proposed solution and the outsourcing relationship.

While a sole-source approach may not be suitable for every organization, Everest notes that if it is well-designed and executed carefully, the sole-source approach can be the most cost-effective and time-saving solution for many companies.

Global Outsourcing Shows Signs of Recovery

Tue, 16 Feb 2010 00:00:00 -0800

Results from the Market Vista: Q4 2009 report by global consulting and research firm Everest indicate that the global outsourcing market is seeing signs of recovery.

Everest's study findings include the following (compared to the Q3 market report):

Twenty-six percent of deals signed in fourth quarter were held by business process outsourcing (BPO).
IT outsourcing (ITO) comprised 71 percent of transaction activity.
The annual contract value (ACV) increased 72 percent to about US$4 billion, mainly due to mega-deals with ITO and BPO components.
About one-third of deals signed in fourth quarter came from BFSI (banking, financial services, insurance) and MDR (manufacturing, distribution, retail) verticals.
The BFSI vertical comprised one-sixth of the overall market ACV, while ACV from the MDR vertical increased 44 percent.
Buyers in the United States and Europe increased global transaction activity, making up 75 percent of total transaction deals signed in fourth quarter.
Significant increase in ACV was seen in the United Kingdom.
Captive activity sets two-year high mark, with deals from MDR and BFSI verticals, and 40 new announcements, led by India (14) and remaining parts of Asia (18).
Tier-I and Tier-II locations contributed equally towards overall offshore delivery.
Ten acquisitions and 39 new alliances were reported in M&A.

While several mega-deals resulted to significant increase in ACV, Eric Simonson, Managing Principal of Research, said there are still companies that enter small deals.

These evidences show that things are looking up for the global outsourcing market. It may be a slow start, but what's important is that we are seeing steady growth across the world - from US and European buyers to emerging trends and outsourcing locations.

Top 5 Tips for Effective Renewal of Outsourcing Contracts

Thu, 11 Feb 2010 00:00:00 -0800

When it comes to renewal of outsourcing contracts, Debora Card, Associate Partner at outsourcing advisory firm TPI, said the key is to be prepared before negotiating with the supplier. �Effective contract negotiations leverage comes from developing viable alternatives that are financially, technically, and tactically feasible and desirable; and from being ready, willing and able to execute against them.�

Here are Card's top five tips to get the most out of contract renewal:

1.    Start early. If you start renewal planning early, you will have ample time to think about whether to outsource to a different service provider or move business process/es back in-house. For single-process transactions, Card said you need to work on renewal planning about a year before the contract expires. For multi-process transactions, start 24-36 months before expiration.

2.    Do your homework. Take a closer look at the current market and see if the relationship you have with your service provider is at par with industry standards when it comes to pricing and service level agreement. Know what alternative suppliers can offer and find out which can provide a better and more efficient solution for your business.

3.    Realign with reality. It is likely that there are expectations which are not met. This can happen to both parties. In renewing the contract, make sure to realign expectations and responsibilities. These can involve changes in pricing structure and services offered.

4.    Remove the fog. Have a crystal clear agreement. According to Card, parties commonly disagree on two primary areas: scope of services and management or governance. Be clear on your expectations so you will get what you contract for and avoid conflict in the future.

5.    Play out your hand. After analyzing the current market, evaluating the alternative providers, and determining your expectations, it's time to communicate with your supplier. Make sure to document what you want to get in terms of pricing structure, scope of service, and management. It is also important to let the supplier know about your timeline for service delivery.

Don't wait until the last minute. Be fully equipped with the right information about the existing environment and viable options before your existing contract expires.

Diversification of the RP BPO competitive landscape

Wed, 10 Feb 2010 14:00:00 -0800

As new outsourcing locations and technologies emerge, the competitive landscape of the outsourcing industry is becoming more and more diversified. With an increasing amount of countries realizing the benefits of outsourcing on both the buyer and vendor front, it's hard to keep track of who the Philippines is competing with; as a survey by PricewaterhouseCoopers showed.

The survey lists the locations that have stepped up to the plate to rival the Philippines' sunshine industry and the respective outsourcing services they specialize in. Just to give you an idea of how diversified the competitive landscape is, here is what has become quite an exotic list of rival outsourcing locations:

For contact center outsourcing services, Makati Manila and Cebu are challenged by Bangalore, Chennai and Mumbai in India; Beijing, Dalian and Shanghai in China; Sofia in Bulgaria and Budapest in Hungary; Barcelona and Madrid in Spain; as well as Bogota in Colombia, Buenos Aires in Argentina, and Lima in Peru.

For Finance and Accounting Outsourcing (FAO), Makati and Manila will have to contend with Bangalore, Chennai and Mumbai; Beijing, Dailan and Shanghai; Sydney, Australia; Munich, Germany; Zurich, Switzerland; as well as Bogota and Buenos Aires.

For Human Resources Outsourcing (HRO), Makati and Manila stand against Bangalore, Mumbai and Hyderabad, India; Beijing, Shanghai and Guangzhou, China; Taipei; Singapore; Munich; as well as Bogota, Buenos Aires and Sao Paulo (Brazil).

For marketing and sales outsourcing, Manila competes with Bangalore, Chennai and Nashik, India; Dalian, Shanghai and Shenzhen; Kuala Lumpur, Malaysia; Taipei; Munich and Frankfurt in Germany; as well as Bogota and Sofia.

For legal services or Legal Process Outsourcing (LPO), Manila faces Bangalore and Chennai; Sri Lanka; Bogota and Medellin, Colombia; London, UK; and Prague, Czech Republic.

There are outsourcing services on the PwC survey in which the Philippines has yet to make a competitive bid; such as procurement outsourcing in which Bangalore, Chennai and Delhi; Dalian, Shanghai and Shenzhen; Munich; as well as Bogota and Sofia dominate.

The survey reveals that India is the only location to offer the full spectrum of outsourcing services. The Philippines joins India and China as the only outsourcing nations that have developed multiple �most popular� cities; the ones in the Philippines being Manila, Makati and Cebu.

Mistakes Companies Make in Outsourcing Deals

Tue, 26 Jan 2010 00:00:00 -0800

In a study on different outsourcing deals, researchers at the University of Tennessee learned several mistakes that companies make when it comes to outsourcing deals. Kate Vitasek, UT lead researcher and supply chain consultant, said buyers will only get what they contract for, and service providers will only do what is indicated in the legal agreement.

UT researchers identified ten mistakes that are commonly committed by companies in making outsourcing deals:

1.    Penny wise and pound foolish - Having a perception that outsourcing is purely a cost-cutting measure may lead to two end results. According to Vitasek, it can be that "providers will get tired of constant bidding exercises and will decline to compete for the contract�, or "a low-cost bidder will encounter serious operating losses that curtail services and eventually force termination of the contract."

2.    Precise to a fault - The problem with placing precise and clearly defined requirements is that it does not allow enough room for creativity. The statement of work may even become unrealistic, resulting in waste.

3.    Hangers-on - �When employees suspect that outsourcing is on the table, they stake their claim to work that's likely to stay in-house, like managing the IT service provider.�

4.    Transaction trap - An outsourcing deal that is purely transactional has its downside - opportunities for improvement on the part of service provider will be overlooked.

5.    Counterproductive incentives - Giving incentives to achieve a certain level of performance from service provider may be contradicting to what you actually want to get. The provider may end up improving just a little in order to gain the incentive. "Rather than establish the highest level of savings achievable, the provider will offer up savings in small increments over time."

6.    Honeymoon effect - Both parties put their best foot forward at the start of the outsourcing relationship. As time progresses, productivity levels decline.

7.    Ruthless negotiator - It is important to think that outsourcing can be beneficial for both parties. It is also crucial to overcome the perception that the service provider is the only one that gets the good part of the deal.

8.    Rudderless deal - According to Vitasek, outsourcing relationships eventually do not succeed due to lack of metrics to keep track of the service provider's performance.

9.    Measurement minutiae - Placing metrics to monitor everything is not good either, as companies usually fail to keep track of their own metrics.

10.    Hands-off management - "If you don't use the measures you have to make improvements, you should not expect [positive] results," Vitasek said.

Outsourcing Technology: Trends Shaping the Future

Mon, 18 Jan 2010 16:30:00 -0800

There are several innovations in outsourcing technology that experts predict will dramatically change the landscape of the outsourcing industry; as Beth Ellyn Rosenthal writes in her article, �Changes in BPO: How Technology Is Changing the Landscape�.

The article gathers insights from executives of major outsourcing providers, resulting in a list of several technology-dependent trends that are set to have a significant impact on BPO partnerships in the next 5 years:

Emergence of end-to-end solutions

This is made possible by the fusion of IT and BPO. Abid Ali, Vice President of Tata Consultancy Services (TCS), refers to this as "IT/BPO synergy", which some say could far exceed the savings from labor arbitrage.

Use of analytics

According to F&A IBM General Manager, Don Schulman, the advancement of analytics will enable buyers "to leverage insights into their suppliers and customers that they've never had before, allowing them to better align business decisions to their overall strategies at a much faster pace."

Platform/process as a service

Process optimization as a service is something that Abid says �meets the customer's need to upscale processes to industry best-in-class norms in preparation for growth�.

Verticalization and globalization

According to Abid, the economic recession is peaking the interests of buyers in �vertical solutions� - the outsourcing of core processes and not just non-core.

New supplier selection criteria

IBM's Schulman believes that service level agreements will become much simpler due to consolidation of the BPO industry with buyers already having built relationships with outsourcing providers.

Changes in process ownership

Schulman refers to this as the increased focus on end-to-end processes that will more effectively improve business performance in contrast to focusing solely on cost savings from labor arbitrage.

Outsourcing and the Publishing Industry

Sat, 16 Jan 2010 00:00:00 -0800

Outsourcing is not a new phase in the publishing industry, but many publishing companies are still not open to the idea of transferring some of their operations to external providers. After all, outsourcing is a risky business. It can be the ideal solution for companies that want to stay competitive and cut costs. However, for many publishers, there is usually a need to check the quality of outsourced processes in-house. Also, in an industry that follows tight schedules, rework and/or delay in meeting the requirements will have an impact on the overall process of the company. These are some of the reasons why outsourcing is not always favored by the industry.

To know more about the situation and the challenges being faced by the industry, ValueNotes, a leading provider of business intelligence and research, conducted the Publishing Survey 2009-2010 among buyers and vendors in the publishing industry. Specifically, the survey aims to determine the publishers' perception of outsourcing, publishing operations that they outsource, and their satisfaction levels.

Key findings include:

� Cost pressures and lack of in-house capabilities are drivers for outsourcing.
� Sixty-four percent (64%) of respondents said they still have faith in their service providers and they will continue outsourcing.
� Content and production are the publishing operations that are usually outsourced/in demand.
� Sixty-six percent (66%) of buyers choose India as the outsourcing location.
� When it comes to cost savings, buyers achieve/are aiming to get 15-25 percent, while providers perceive 25-40 percent.
� More than 75 percent of buyers think considerable improvement is required in outsourcing, while 16 percent do not approve of outsourcing.

Shifting work to a service provider results to reduced costs and allows publishers to focus on core competencies and experiment with new products and offerings, but like what the survey findings indicate, the entire outsourcing process must first be improved before it can be considered a crucial strategy for the industry.

Tips for Selecting an Outsourcing Advisor

Wed, 13 Jan 2010 00:00:00 -0800

The outsourcing industry is huge, complex, and constantly evolving, so the steps to take in order to have a successful outsourcing operation usually entail a lot of research, time, and effort. Bear in mind that companies are more cautious now more than ever when it comes to entering outsourcing contracts. In times like this, having a legitimate third party that will prod you in the right outsourcing direction is very crucial when establishing and maintaining a relationship with other BPO players.

There are a lot of outsourcing advisors nowadays, claiming that they will guide you in every step of the way, but what do you need to look for in an outsourcing advisor? In the article �Outsourcing Advisors: 6 Tips for Selecting Right One�, Stephanie Overby enumerates six tips to keep in mind when choosing an outsourcing advisor or consultant:

1. Identify what you want to achieve. �Select an advisor that will help you achieve that goal. Some advisors excel at holding vendors' feet to the fire on prices, while others specialize in other areas,� said Richard Matlus, research advisor for Gartner IT Services and Sourcing.

2. Bigger is not always better. Hiring a large and popular advisory firm may come with a hefty price, and it does not necessarily mean that it will be able to get the job done. Do not choose an advisor based mainly on how large or well-known the firm is.

3. Get personal. Establish a good relationship with your outsourcing advisor.

4. Take a good look at the references. Knowing what clients say about the outsourcing advisor you're considering will give you some insights on the kind of service/advice the firm can give.

5. Test the tools / methods used. The outsourcing advisor must be able to apply their tried-and-tested approaches to what your business needs. These must also be flexible enough to accommodate specific requirements.

6. Determine where their interests lie. You and the outsourcing advisor must be on the same page in every step of the process. According to Phil Fersht, former AMR analyst, "[outsourcing advisors] must be focused on your best interests, not theirs".

Outsourcing 2009: A Global Retrospective

Sat, 9 Jan 2010 08:00:00 -0800

Outsourcing in 2009 will be remembered as having among the most compelling stories and most significant game-changing trends. As we welcome 2010 and the challenges ahead, it is important that we also review the preceding year and highlight some of the twists and turns that contributed to the maturity of the ever-complex outsourcing and offshoring industry.

2009 will be most remembered for what has littered the content of almost every business-related blog that was posted throughout the year: you guessed it, the global recession. Prior to the low season that hit in around Christmas of '08, the outsourcing industry had been developing initiatives geared towards innovation and quality high-end services. At the time, the Philippine BPO industry had established itself as the fastest growing in the world � with its Knowledge Process Outsourcing subsector experiencing 200% growth. The weight of the recession meant that affected businesses needed to have more for much less - as a result, cost-effectiveness came marching back to the forefront as the main driver for prospective buyers in the industry.

The stagnation in growth was aggravated by the billion-dollar Satyam scandal early in the year which delivered a huge blow to global confidence in the outsourcing industry. It also signaled rival outsourcing destinations to start closing the gap on India's position as the leading outsourcing destination.

The environment of uncertainty and hardship caused existing outsourcing relationships to either downsize or become severed altogether. At the same time however, the industry saw new entrants that had previously not considered outsourcing an option. CPG, retail, logistics and media and entertainment are examples of industries previously alien to outsourcing.

2009 saw captive centers wane as businesses realized the benefits of third party services, its low costs, and administrative capabilities. The demand for a higher level of control and risk management resulted in innovations on the part of providers in both service delivery models and technology. A product of this is the development of Software as a Service (SaaS) which has caught the industry by storm.

Service providers and governments rose to the challenge in 2009 as businesses began to see the benefits of outsourcing in both good and bad times. This resulted in the births of new locations in tier 2 cities worldwide as well as the geographic expansion of providers to meet the globalized agendas of outsourcing buyers.

In a nutshell, we could say that the recession and barrage of challenges in 2009 (not the least being anti-outsourcing initiatives in the US and Europe) necessitated many new innovations that has provided an exciting new platform for growth in 2010.

Six outsourcing hotspots for 2010

Fri, 8 Jan 2010 10:15:00 -0800

A tumultuous year in outsourcing in 2009 concludes and a new year in the form of 2010 will see a host of emerging developments from the previous year bear full fruit. 2009 marked a year in which leading service providers transitioned towards being global-centric outsourcing providers. As each major outsourcing city has its own specializations, we will increasingly see buyers packaging services to multiple locations or supplementing existing relationships with new ones in emerging markets. Here is a list of six offshore destinations to look out for this year:

China

According to Equaterra consultant, Vibhash Ranjan, China will likely be the favorite outsourcing destination of neighboring Asian countries � particularly in Japan, if it can improve on language skills. Although a promising IT services location, China is plagued by a lack of English proficiency and IP protection concerns among others.

India

India's heritage companies will likely aggressively expand to offshore locations, notably in the US and UK. Look for providers to continue to relocate work to tier 2 cities such as Pune and Chennai. India's share of the outsourcing market will continue to be dominant in 2010.

Africa and the Middle East

South Africa and Egypt are both locations to look out for here as they work together to market their outsourcing services. IT developments that connect East and West Africa with the rest of the world will make way for developing markets like Ghana and Kenya.

Latin America

This continent will likely garner deals from large multinationals this year (namely from nearshoring in the US) as service providers expand � making acquisitions in Mexico, Argentina and Brazil.

The Philippines

TPI Momentum managing director, Melany Williams believes the Philippines will surpass India in terms of outsourcing growth rate. However, it will face fierce competition from Singapore and Malaysia for IT and BPO services.

The United States

This is a strange inclusion as it is not traditionally an offshore outsourcing destination, but it remains a competitor to the aforementioned locations. Analysts predict an increased interest in prospective BPO or IT centers in low-cost locations in the US. Alsbridge consultancy CEO, Ben Trowbridge, believes that given the unemployment rate (over 10 percent), �qualified resources are willing to work for lower wages�.

IAOP: Top 10 Outsourcing Trends to Watch Out for in 2010

Mon, 4 Jan 2010 00:00:00 -0800

Despite the impact of the global recession that companies are still facing today, this new year brings forth a new wave of anticipation for companies willing to outsource and those that expect a higher BPO demand.

A lot of countries are joining the BPO bandwagon, and buyers opt to outsource for reasons beyond cost savings. At the onset of 2010, it is interesting to determine and predict the different factors that may set the trends in the world of outsourcing for this year. In an industry such as outsourcing which is constantly evolving, companies can certainly look forward to a year with new names in the list of outsourcing locations, advanced technological tools, and an increase in social awareness and responsibility, as predicted by the International Association of Outsourcing Professionals (IAOP).

Here's the list of the top 10 outsourcing trends that companies can watch out for this year:

1.    Delayed deals get the green light - Last year, the global economic downturn had compelled many companies to halt outsourcing deals. IAOP predicts that these will push through this year.

2.    Desperately seeking value - In an attempt to recover from the financial crisis, it is predicted that outsourcing players will aim for better relationships, innovation, and flexibility in order to improve total business value.

3.    Flexibility to get out of contracts - Companies will seek shorter-term contracts versus long-term deals.

4.    Uncertainty leads to consolidation - Service providers all over the world will go for consolidation or acquisitions to keep the business going in these uncertain times.

5.    Outsourcing hiring return - IAOP predicts an increase in the number of new graduates who will enter the BPO workforce.

6.    New outsourcing destinations emerge - What used to be an industry with the usual locations such as India, the Philippines, and China will now see the emergence of other outsourcing hubs such as Central and South America.

7.    New destinations differentiate themselves - In relation to no. 6, there will be stiff competition in the outsourcing industry. That is why players must innovate and think of ways to set them apart.

8.    Tooling up with technology - Cloud computing is one of the technological advances to watch out for this year.

9.    Social responsibility - It is predicted that outsourcing companies will strive to be socially responsible and will evaluate the effects of outsourcing to people and the environment.

10.    Political shifts - Service providers and buyers will have to comply with government regulations in an effort to build better relationships.

New year, new things to look forward to. It is with high hopes that this year will be more fruitful and interesting for outsourcing companies all over the world.

Outsourcing may have biggest year ever in 2010

Tue, 8 Dec 2009 00:00:00 -0800

As a result of the global economic slowdown, the outsourcing sector's growth was not as brisk compared to the previous years. Earlier in the year, the CICT pegged industry growth at a cautious 35% this year, conservative considering that the local outsourcing industry was averaging an annual growth clip of well above 40% in the past.

And with customers and locators feeling the pinch of decreased customer demand, the economic pinch put a damper on growth in 2009. However, industry expert and the author of award winning outsourcing blog Phil Fersht of www.fersht.typepad.com says the industry is poised for a huge comeback in 2010. This is because appetite for BPO services will undoubtedly rise and will rise strongly through the recession.

In a blog entry titled 2010 Predictions for the Outsourcing Industry, Fersht outlined some of the outsourcing areas that may see a marked improvement next year.

�BPO will have its strongest year ever. As our soon-to-be released new survey is revealing, transactional finance and accounting BPO will have a resurgence in 2010, with additional interest in management reporting, and we'll also see a fresh wave or HR outsourcing, which has been quiet for a couple of years now, with new uptake in payroll, benefits admin and recruiting outsourcing. Procure-to-pay outsourcing is poised to accelerate, together with renewed focus in the analytics space across several verticals and horizontal areas,� he said.

As an emerging and preferred outsourcing hub, Philippine based BPOs may yet see a resurgence of demand for their services, and may also see opportunities within the new growth areas within the realm of outsourcing.

Fersht counsels companies to take a first mover stance and come out of the gates blazing to take advantage of opportunities in 2010.

�It's time to roll-out the new corporate agenda: quickly and aggressively. 2010 will not be a year for the timid, and we'll have a lot of frantic people trying to grapple with outsourcing - we'll see more political pressure, more negativity, more case-studies, more value propositions, more momentum and more energy than we've seen yet in this crazy industry,� he said.

This prediction from a well respected resource within the outsourcing industry bodes well for BPOs, and will be much felt in the Philippines, where outsourcing remains a sunrise industry. The country's highly qualified and skilled labor will be a good leverage to gain more contracts within the specialized realms Fersht mentioned above, leading to more job generation and the fast tracking of critical infrastructure projects critical to the outsourcing industry.

Virtual relationships becoming key for outsourcing projects

Mon, 7 Dec 2009 00:00:00 -0800

As more and more people turn to social networking sites and other online communications tools, the concept of project management is fast evolving with it. From a business perspective, the value proposition of free utilities is enormous, and companies are realizing that having an online presence is not merely a marketing tool but also an effective way of managing your relationships.

This trend is best illustrated by the outsourcing process. As companies find that it is cheaper and more cost effective to outsource non-core functions, new media tools are stepping up to fill that last mental barrier keeping companies from fully embracing an outsourcing strategy for growth: the absence of tactile, face to face communications. Now, with Twitter, Facebook, Skype, and Base Camp, collaborators from all over the world can converge on one project and do it more efficiently than shuttling between airports or burning the phone lines.

The beauty of the emergence of new media is that it gives companies who outsource non core functions control over how a project proceeds; in fact, it can be argued that new media gives people the ability to affect changes mid stream and in real time, a luxury that was absent a mere decade ago. For outsourcing companies, it also gives them access to a whole new set of potential customers, companies that have seen the wisdom of maintaining an online presence themselves.

Having said this, the increased reliance on new media to facilitate outsourced operations means companies and individuals must now forge and maintain relationships in the digital world. With the increased use of social networks, this 'virtual life' can also be fully harnessed for business purposes as catch basins for increased interaction between team members. With these new tools, no longer will a manager in the US constantly worry about not getting through to his foreign outsourced partner; new media has made communications a mere mouse click away, and this bodes well for the outsourcing industry because it gives potential customers a new comfort level when dealing with people they have never personally met.

Establishing a Good Governance Process

Thu, 26 Nov 2009 15:00:00 -0800

Although outsourcing is widely considered a cost-cutting measure, it is the ability of an outsourcing provider to work within the interests of their clients - and not just their own - that separates moderately successful partnerships from highly successful ones. It is for this reason that there is an increasing need for outsourcing to involve a framework within which the outsourcing partner must perform. This is what is called the �governance framework� and it is this that determines whether or not many outsourcing relationships succeed or fail.

Given the main goal of a governance process as one that ensures value-adding services and the preservation of the end-user experience, the governance structure should be built on the principles and guidelines behind the rules � and not just the rules themselves. The following are a few tactical aspects of good governance espoused by ERP management outsourcing firm, OneNeck:

Service Level Agreements (SLAs) � as this is the foundation of your services package, it should clearly define process, service levels, checks and balances, and the reporting mechanism for your outsourcing agreement.

Quality of Service reporting (QoS) � ideally you will be able to define your own metrics for QoS allowing you to establish the standards of which your agreement will be measured against. This will also involve time frames, the reporting process, and problem resolution structures.

Face-to-face meetings � as rapid as developments have been for online communication, it will never really be able to substitute frequent meetings in person. Paying a visit to the outsourcing partners offices and assessing the quality of the workplace and infrastructure can go a long way for fostering the trust and transparency that successful outsourcing relationships demand.

Flexibility � unforeseen changes and difficulties are often the downfall of outsourcing partnerships. The outsourcing vendor must therefore be flexible enough to keep up with the changing needs of customers, especially with regard to expansion of services. Flexibility is the main factor involved in the longevity of an outsourcing relationship.

Benefits of Having a Sourcing Advisor

Wed, 25 Nov 2009 00:00:00 -0800

Outsourcing is constantly changing and evolving. As more companies discover its potential and what it can do for their businesses, the entire concept of what outsourcing is sometimes becomes a tangled web of information. For companies which are just testing the waters, information overload on what to do and what to avoid can be confusing. They may even end up shying away from it.

So what can companies do to ensure they are on the right track? They can do their own research or hire a competent outsourcing or sourcing advisor, a consultant/guide who helps companies in developing the right outsourcing deal. In an industry that involves an increasingly complex landscape of service providers, someone who has adequate knowledge and experience in the industry will prod you in the right direction.

Sourcing advisors play an integral part of your outsourcing endeavors. They can provide insights and present market analyses that will help you in making decisions. Sourcing advisors will be there in every step of the way. Whether you are a service buyer or provider, a sourcing advisor has the right capabilities that will help you establish a good outsourcing relationship.

In an article entitled �7 Ways an Outsourcing Advisor Can Save You Money� by Stephanie Overby, she said that while joining the outsourcing bandwagon without external help will already enable you to reduce costs, having a sourcing advisor may save you money in any or all steps of the outsourcing process. She enumerates the seven ways a sourcing advisor can do for you that will let you cut costs:

1. Rigorous and relevant Requests for Proposal (RFPs)
2. Pricing intelligence
3. Access to innovation
4. Vendor knowledge
5. Focus
6. Presence of an upper hand in negotiations
7. Preparedness in transition and governance

It is a good thing to work with someone who is knowledgeable on the industry that you want to venture into. With the help of a good sourcing advisor, not only can you reduce costs - you will also be able to create the right outsourcing deal for your company.

A Look at Project Based Outsourcing

Thu, 19 Nov 2009 11:15:00 -0800

The rapid development of the outsourcing industry has given rise to multiple variations of service providers � offering end-to-end services within multiple disciplines delivered across varying parts of the globe. Selecting a service provider increasingly depends on the service delivery method or the sourcing model that is appropriate for the buyer's outsourcing needs. In an article regarding such, Infosys expressed that each model will offer a host of advantages that will be applicable only to specific situations. Let us have a closer look at one such situation in which service providers are given full responsibility for an outsourced project: Project Based Outsourcing

Project based outsourcing is an increasingly popular sourcing model among clients as more and more buyer organizations develop sourcing maturity � efficiently assessing needs, setting expectations, and applying outsourcing as a tool for strategic enterprise-wide improvement. Project based outsourcing dictates that the service provider manage all tasks involved in an outsourced project until the agreed upon outcome is achieved or a certain deliverable is received. Such will require that the service provider possesses the manpower with necessary skills to accomplish tasks involved. The service provider will also provide project management expertise in order to run the project. The client will thus not need to be involved in day-to-day operations but will rather focus on the final outcome of the project.

Vendor management mechanisms in this case are reliant on end-to-end project outcomes and ensuring quality levels in each task. The vendor/buyer relationship is the cornerstone of project based outsourcing. The buyer will only need to benchmark and monitor outcomes as the responsibility of the project rests solely on the vendor.

The client's loss of control over day-to-day operations can be both a pro and a con in project based outsourcing. This will require a better understanding of the offshore model on the part of the client and a assurance of operational management capabilities from the part of the vendor.

Overall, project outsourcing highly depends on clearly defining requirements and specifications of the project from the start. When successful, project outsourcing can provide a high level of productivity at lower costs. Documentation, programming, testing, quality assurance and detailed design are all entrusted to the vendor � requiring advanced skills and a high level of expertise in the relative field of the project being outsourced.

Factors to Consider in Choosing a Service Provider

Wed, 18 Nov 2009 00:00:00 -0800

With the rising number of companies discovering the advantages of outsourcing, and as the current global recession compels affected companies to outsource in order to stay afloat, the number of countries that offer outsourcing services increases. In the Global Services-Tholons study entitled �Top 50 Emerging Global Outsourcing Cities�, there's India at the forefront, followed closely by the Philippines in the list of Top 5 offshore nations. Countries from different parts of the world are also emerging as great outsourcing destinations. This makes selection of the right service provider more difficult and time-consuming.

Do not fall into the trap of many outsourcing vendors promising way more than what they can actually do. In an article �How to Choose an Outsourcing Provider�, Randy Vetter, Director from Alsbridge, Inc., discusses the factors buyers can bear in mind when it comes to finding the right service provider for them:

Take a closer look at the company profile. The provider's experience in the world of outsourcing will give you insights on the company's industry knowledge and capabilities. Also, know the clients that utilize its services.

The service provider's management style must be aligned with the buyer's requirements. Also, it should be flexible enough in such a way that it can deliver by adapting to the buyer's working environment.

Buyers which are looking for outsourcing partners may also want to consider these factors:

deep delivery capability
length of the provider's experience
relevant and positive references
financial stability
innovation
investments in research and development
quality achievement

Establishing a good outsourcing relationship and maintaining it will always be a challenge. The first step would be to find a service provider that understands the buyer's business goals and has the capability to meet them. Finding the most suitable provider may be difficult, but once the buyer has created an effective working relationship with its outsourcing partner, the set goals will soon be met and the advantages of outsourcing will be realized.

Crowd Sourcing as a Key Business Trend in the Future

Fri, 13 Nov 2009 00:00:00 -0800

In a nutshell, crowd sourcing is a type of outsourcing that involves transferring a certain business task or process to a group of people (crowd). What makes it different from the usual form of outsourcing is the fact that the company makes use of the service/s of an unknown group of people, or even an individual. A typical crowd sourcing process goes something like this: a company informs the public online about a problem, people will submit their solutions, the company will choose the best and most suitable proposition, then gives incentive to whoever had formulated the chosen solution.

According to Alexandra Cain in her article�Outsourcing on Steriods�, crowd sourcing is �revolutionizing the economics of doing business�. What used to be done in-house can be outsourced to a company or someone else from any part of the world. Obviously, this form of outsourcing has become popular because it allows companies to cut costs and focus on their core competencies, but there's more to crowd sourcing than cost reduction and having more time to take on core functions. Since the company presents what it needs online for everyone to see, it can have access to a vast group of people with varying talents and capabilities. Also, crowd sourcing enables companies to gain feedback and suggestions straight from the public. In this way, companies will have insights on which products/services would appeal to consumers.

Of course, crowd sourcing has its own share of drawbacks. For one, it is not applicable for every company. This is usually a great solution for those looking for ideas on creative projects - a website design, logo, slogan, name of a new product or service, etc. Another pitfall of crowd sourcing is difficulty in coordinating with supplier/s throughout the entire process. Language barriers and time difference are some of the factors that can affect the smooth flow of the project.

As crowd sourcing becomes a useful process for an increasing number of companies, it is poised to emerge as a major business trend in the future. The key is to weigh the pros and cons before venturing into crowd sourcing. It is also crucial to bear in mind that cost reduction is and should not be the sole factor on deciding whether to crowd source or not.