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June 2012 | Outsourcing Blog | BPO Industry Updates and Articles

Signs of Informality in Outsourcing Relationships

by: Sarah Joson

Friday, June 29, 2012 | Comments (0)

Category: Outsourcing News

Outsourcing Partnership has become too Informal?

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 Company code, procedures manual, and contract clauses are out-of-date.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)

by: Sarah Joson

Tuesday, June 26, 2012 | Comments (0)

Category: Outsourcing News

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.
 

How to build an effective program management office


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

by: Sarah Joson

Thursday, June 21, 2012 | Comments (0)

Category: Outsourcing News

Trust Issues in Outsourcing Operations?

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

by: Sarah Joson

Wednesday, June 20, 2012 | Comments (0)

Category: Outsourcing News

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.
 

Tips to manage cloud operations properly

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

by: Sarah Joson

Monday, June 18, 2012 | Comments (0)

Category: Outsourcing News

New Locations for Outsourcing Business Processes

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.
 

Multi-process Human Resources Annual Report highlights

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

by: Sarah Joson

Thursday, June 14, 2012 | Comments (0)

Category: Outsourcing News

Outsourcing Trends 2012

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.

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