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July 2012 | Outsourcing Blog | BPO Industry Updates and Articles

Why Outsourcing Providers Lose in the Bidding Process

by: Sarah Joson

Tuesday, July 31, 2012 | Comments (0)

Category: Outsourcing News

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.

Common mistakes of outsourcing service providers during proposals

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.

Game Developers in the Philippines

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

by: Sarah Joson

Thursday, July 26, 2012 | Comments (0)

Category: Outsourcing News

Faster Growth in Global IT Spending

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.


How to Properly Evaluate Service Providers

by: Sarah Joson

Wednesday, July 25, 2012 | Comments (0)

Category: Outsourcing News

Finding the Right Outsourcing Service Provider

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

by: Sarah Joson

Wednesday, July 18, 2012 | Comments (0)

Category: Outsourcing News

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.

Value of finance and outsourcing market to reach $4.5B

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

by: Sarah Joson

Monday, July 16, 2012 | Comments (0)

Category: Outsourcing News

Useful Customer Service tips

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

by: Sarah Joson

Thursday, July 12, 2012 | Comments (0)

Category: Outsourcing News

Advice for Outsourcing Clients

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.

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