According to the Economic Times, Forbes.com reports that "after fizzling out over the past couple years as companies simply slashed jobs rather than move them, outsourcing is back in vogue," referring to a study by Pricewaterhouse Coopers (PWC). The study indicates that outsourcing has been active in countries such as India, China, the Philippines, Costa Rica and even Romania.
"Cost is still the major factor," said PWC shared services practices managing director, Charles Aird. "But people are also looking for greater efficiency, better quality and access to talent."
Forbes remained critical of some processes that have been outsourced in the past stating that “computer customer service that was outsourced to India, for example, was notorious for alienating customers.”
The study by PWC also revealed a growing list of services being outsourced. Forbes warns however, that outsourcing some core services may not be the ideal solution:
“The key is that you've got to tie your sourcing strategy to your business strategy.”
President Barack Obama said in his State of the Union address that it was time to cease tax breaks for American firms that outsource jobs overseas, helping those that increase employment within the country instead.
“...it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America,” the President said.
"Now, the House has passed a jobs bill that includes some of these steps. As the first order of business this year, I urge the Senate to do the same, and I know they will. They will. People are out of work. They're hurting. They need our help. And I want a jobs bill on my desk without delay."
The President acknowledged, however, that the move would not compensate for the current rate of unemployment.
"But the truth is, these steps won't make up for the seven million jobs that we've lost over the last two years.”
Supply management, which refers to “identification, acquisition, access, positioning and management of resources of an organization”, and legal process outsourcing (LPO) are the new outsourcing services that the Philippines can offer.
According to Charlie Villasenor, president and chief executive officer of Transprocure, companies are now planning to outsource supply chain management and procurement to reduce costs and improve efficiency. He added that the country has the potential and capability to offer supply management services.
On the other hand, Judith Lopez, chairman and senior partner of Pricewaterhousecoopers Philippines, said "the Philippines’ close alignment to the US legal system attracts a number of LPO businesses from US companies." She added that lower costs and English-speaking workers will be beneficial for the country in meeting the LPO demand.
by: Karen Cayamanda
Key findings of The WNS Annual CFO Survey 2010 show that this year, the demand for finance and accounting outsourcing (FAO) will continue to grow.
One hundred CFOs from companies with over $3bn in revenues took part in the online survey. More than 75 percent of senior finance executives said they aim for expansion of their outsourcing programs this year, while 85 percent are satisfied with the benefits from outsourcing finance and accounting processes.
"The survey clearly suggests that FAO has become a mainstream tool as 85 percent of respondents say they are satisfied with the benefits. While FAO has been commonly used to reduce cost of operations, it is increasingly becoming more strategic, focusing on transforming F&A operations," said Sulakshana Patankar, Business Unit Leader, WNS Finance and Accounting Solutions. "It is extremely encouraging to note that respondents who outsource plan to increase the scale of their programs in 2010, expanding both processes in scope and adding business units and geographies."
The survey was commissioned by WNS (Holdings) Limited (NYSE: WNS) and conducted by EquaSiis, an EquaTerra company.
The National ICT Confederation of the Philippines (NICP) has joined the campaign for legislators to pass the bill to establish a Department of Information and Communications Technology (DICT), Philippine Daily Inquirer reported. NICP chair Jocell Sigue believes the creation of the DICT is a necessary step in fortifying the country's position in the global outsourcing marketplace – especially throughout the current recession.
“It is time that the clamor for a DICT to be heard by the highest law-making bodies of this country. Other Asean governments heeded the call for an ICT department or ministry, and are now closing the gap on our hard-earned and much-valued ICT competitiveness,” Sigue said.
Sigue stressed the importance of ICT in developing the local outsourcing sector, which helped the country post positive numbers throughout the recession. In 2008, the Philippines' IT and Business Process Outsourcing (BPO) sector earned $6 billion in export revenues – employing around 400,000, NICP reported. The House of Representatives passed the DICT bill in the same year. A similar proposal is currently pending in the Senate.
Other groups joining the campaign include the Joint Foreign Chambers, the Business Processing Association of the Philippines, the Contact Center Association of the Philippines, the Management Association of the Philippines, and the Philippine Chamber of Commerce and Industry.
by: Karen Cayamanda
For the 10th year of business process outsourcing (BPO) in the country, the sector eyes earnings of at least $11 billion and over one million workers employed in the industry.
According to TeleDevelopment Services (TDS) President Jon Kaplan, 2010 is a big year for the industry as it marks the 10th anniversary of call centers in the country. “As we approach this milestone, it is necessary to evaluate and carefully map our plans for our continued development. We need to resolve training challenges for a more specialized workforce to addressing the increasing demand for high-value and value-added services,” Kaplan said.
He added that outsourcing higher-value services (knowledge process outsourcing or KPO) will be the next revenue earner, so BPO players must be ready to meet the demand and challenges in the next decade.
Information and communication technology research and advisory firm, XMG Global, claims in a report that “outsourcing will present its full potential once more in 2010” - with revenues for the year expected to reach $412 billion.
While some predict that affordability will continue to dominate as the driving factor for buyers in the outsourcing industry, XMG says that outsourcing this year will be considered as a business model aimed more towards efficiency and profitability and not simply a means to cut costs.
“In the face of global competition, governments of major outsourcing destinations will formulate new rounds of resolutions to improve business environments and promote new investment locations,” XMG said.
Among other predictions for the year in the report by XMG were India and China being the most preferred outsourcing destinations. XMG warns of a skills shortage by the second quarter and higher levels of competition for workers and customers in the telecommunications sector, Philiippine Daily Inquirer said.