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February 2013 | Outsourcing Blog | BPO Industry Updates and Articles

Using Operating Level Agreements in Multisourcing

by: Sarah Joson

Wednesday, February 27, 2013 | Comments (0)

Category: Outsourcing News

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.

What to expect from using operating level agreements

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

by: Sarah Joson

Tuesday, February 26, 2013 | Comments (0)

Category: Outsourcing News

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.  

Why service providers outsource lead generation processes

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

by: Sarah Joson

Monday, February 25, 2013 | Comments (0)

Category: Outsourcing News

Using Benchmarking on Outsourcing Contracts

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

by: Sarah Joson

Friday, February 22, 2013 | Comments (0)

Category: Outsourcing News

Careful with your next IT Outsourcing Plans

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

by: Sarah Joson

Friday, February 15, 2013 | Comments (0)

Category: Outsourcing News

Average Growth in the Global Services Segment

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

by: Sarah Joson

Tuesday, February 12, 2013 | Comments (0)

Category: Outsourcing News

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.

Opportunities in the SMB cloud market

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

by: Sarah Joson

Monday, February 11, 2013 | Comments (0)

Category: Outsourcing News

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.

India working aggressively to tap more investors for biotechnology

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.

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