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Outsourcing News for May 2011 | MicroSourcing

With a total of $100 million worth of investments, six US-based companies are outsourcing non-voice business process outsourcing (BPO) work to the Philippines, generating 10,000 job opportunities for Filipino workers. According to Cristino Panlilio, managing head of the Board of Investments (BoI), these American firms are new outsourcing players, though the names remain undisclosed.

Nurses needed for clinical support services

In an earlier report, BoI said AETNA, US-based insurance company, will hire Filipino nurses to provide two kinds of services: clinical support and home care for American patients. BoI Executive Director Fe Reyes-Agoncillo said there are 250 nurses who are already providing clinical support, and the firm needs a total of 500 for that service. On the other hand, 250 nurses are needed to provide home care services for patients. This number is expected to reach 1000 in the next two years.




Cebu is PH's New IT BPO Locator

The business process outsourcing (BPO) industry of Cebu continues to expand as new IT buildings and sites emerge to cater to the influx of IT firms that are interested in establishing operations in the province.

Cebu Property Ventures and Development Corporation (CPVDC) and Ayala Land Inc. (ALI) have teamed up in managing Asian i-Office Properties Inc. (AiO), a company that recently led the topping out of eBloc Tower 2 at the Asiatown IT Park.

Francis Monera, CPVDC President, said, “Cebu’s booming BPO sector is ripe for the expansion of new and existing IT locators. The opening of an eBloc Tower 2 will open the door to more investments and job opportunities in the area.”

eBloc Tower 2 is a follow-up to the eBloc Tower which was completed in 2009. The 16-level office building is situated at a 4,383-square meter lot, and is predicted to become the best location for BPO, IT, and IT-enabled services (ITES) business locators.   

Monera also said that various BPO companies are very interested in leasing office space. Sixty-five percent (65%) of the total occupancy were already reserved for upcoming operations, and once occupancy rate has reached 70%, AiO will begin the construction of the third tower.

ALI senior vice president and Visayas-Mindanao group head Emilio Tumbocon said that eBloc Tower 2 only accounts for one of Ayala’s 13 new projects to be launched this year. “With these strategic directions, we will take on new ventures and maximize the potential of the BPO industry, particularly in the Visayas and Mindanao areas,” he said.


Bristish Company Looking for Call Center Agents in the Philippines

According to Business Inquirer Manila, a British company has considered entering the Philippines’ business process outsourcing (BPO) market, and even train call center employees to speak like a British.   

Presidential spokesperson Edwin Lacierda said that representatives from prominent companies Convergys (Philippines) and Everything and Everywhere (Britain) contacted President Benigno Aquino III and presented the plan. The British company is looking to hire employees and establish foothold here in the country. “And since this is a British BPO, there’s also a need for the Filipinos to be trained in the British accent, which we are not familiar with,” he added.

Lacierda said, “They are very, very bullish. They are interested and they are very open to the situation here in the Philippines. We’re the No. 1 BPO destination in the world and they recognize our ability. They recognize we have the infrastructure to maintain our status as the No. 1 BPO destination in the world,”

In line with that, Trade Undersecretary Zenaida Maglaya said that Everything and Everywhere is working on a partnership with Convergys in hopes of penetrating Philippines’ BPO market.


More Opportunities for Nurses in the Philippine BPO Industry

Thousands of unemployed nursing graduates may consider working for business process outsourcing (BPO) companies in the Philippines, where they can perform jobs that are related to their educational background.     

According to Fe Agoncillo-Reyes, assistant secretary of the Department of Trade and Industry (DTI), a New York-based company, Aetna Insurance, has a unit in the Philippines called EXL Service Philippines. This company, which started out with 250 nurses at an office in SM Mall of Asia, is now looking to hire 1,000 nurses to provide basic clinical support like assessing and approving insurance claims. Other services include calling home-care patients based in the US.  

The healthcare BPO sector provided jobs to 14,000 healthcare professionals in 2010, and produced $102 million in revenue, an 11% increase from 2009. Today, medical transcription is no longer the solitary work available in the healthcare BPO sector according to the Healthcare Information Management Outsourcing Association of the Philippines (formerly Medical Transcription Industry Association of the Philippines Inc.), Reyes added.

In line with this, the sector is preparing for the increasing demand for healthcare services in the United States due to changes in US healthcare regulations.

On the other hand, Business Processing Association of the Philippines (BPAP) reported that the Philippine IT-BPO industry grew 26 percent in 2010 to $8.9 billion and employed 525,000 professionals. BPAP also projected a 15% baseline increase in the next few years. The projection would then account for 900,000 total direct jobs, 1.7 million indirect jobs, and $20 billion in revenues.


Everest Group examined 20-plus FAO service providers and released data about the increasing progression of Finance and Accounting Outsourcing (FAO) service providers worldwide. The Global FAO Service Provider Landscape report states that 65% of the market by Annual Contract Value (ACV) and 55% of the number of contracts are represented by six of the leading FAO service providers.

However, several major service providers are quickly catching up, a phenomenon similar to that of the pre-recession era. The report includes analyses of provider dynamics, market share, performance, capabilities, and trends.

Leading FAO service providers

One of the factors of the survey is the PEAK (Performance/Experience/Ability/Knowledge) matrix. More than 20 FAO service providers were categorized as Leaders, bagged by known service providers like IBM and Genpact, as well as Capgemini, Infosys BPO, and HP. The Major Contenders are TCS, Wipro, WNS, and ACS-Xerox.

Others providers ranked in this category are Cognizant, EXL Services-OPI, iGate-Patni, Intelenet, Steria, Sutherland Global Services, and Vengroff Williams & Associates. Meanwhile, the Emerging Players are Aditya Birla Minacs, HCL, and KPIT Cummins Infosystems.

Last year, Accenture, Genpact, IBM, TCS, and WNS were hailed as 2010 FAO Market Star Performers, and were recently examined by the Everest Group.  These were the fastest year-on-year developing companies, according to the report.

Saurabh Gupta, vice president for Research said, “Now that buyers have snapped out of the recessionary lull in spending, competitive intensity is driving service providers to innovate and push the boundaries of traditional FAO solutions to capture market share. In response, service providers are investing in technology, maturity models, new markets, and differentiated offerings to deliver greater value in the market.”

Leading FAO providers are now offering flexible products and services to meet the demands of the market, which accounts for their growth, according to the report. Service vendors are also targeting diverse market sectors like India and the Middle East.


Data Center Outsourcing Survey

An increasing number of large companies are starting to outsource to the cloud due to a potential congestion of in-house data centers, and to avert additional construction costs.

The first ever data annual assessment from Uptime Institute shows that 36% of large companies which took part in the survey are likely to exhaust their data center storage within the coming months.

The survey also exhibited that companies boost their capacity through server consolidation and power and cooling equipment upgrades, though 29% have opted to move workload to the cloud. It’s actually a new feat because according to Matt Stansberry, a research analyst from the Uptime Institute, large companies are known to have always kept IT operations in-house. He also said “This is a trend we've been seeing," referring to the occurrence that more companies are now outsourcing IT operations.

According to a different study commissioned by Digital Realty Trust, a company that builds and operates data centers for third parties, 60% of the respondents who are looking to expand data center capacities in 2011 opted to lease space from a third party rather than construct their own.

Michael Foust, Digital Realty's CEO, said "Increasingly, enterprises appear to be favoring the lease model, as fewer companies are choosing to go it alone on these capital-intensive projects.”

A total of 525 large data center operators participated in Uptime’s assessment process last March and April, and included "typically conservative organizations" like banks, insurance companies, collocation providers, and government agencies. On the other hand, Digital Realty's study had 300 IT executives directly involved in data center decision-making at large corporations in North America.



BPO to Outpace IT Services

by: Ronald Escanlar

Friday, May 6, 2011 | Outsourcing News | Comments (0)

Rising competition among outsourcing companies

Outsourcing companies based in India are gobbling up other companies to widen their portfolio of services as they scale up their growth in the global marketplace, especially with rising competition from other outsourcing destinations such as the Philippines and China.

For example, Aegis Ltd. has spent up to USD 400 million in acquiring 18 companies for the past few years. Early this year, Genpact bought Headstrong for USD 550 million, while US-listed EXL Service Holdings Inc. announced on Tuesday their acquisition of Outsource Partners International for USD 91 million.

According to Gaurav Gupta, a managing partner at outsourcing consulting firm Everest Group, the fast growth of IT-related services in the outsourcing sector was only a short-term trend.  "[Information-technology] services has bounced back strongly and is growing much faster than BPO. In the long-term, however, especially given that the [infotech] services market is very well penetrated, it is BPO which will outpace growth."

EXL Service president and CEO Rohit Kapoor agrees with Gupta. "A data point that we have considered suggests that worldwide IT outsourcing spend is growing at 4% while BPO is growing or will grow at 6-8%," he explained. "Look at the actual IT spend of companies. That is growing at only around 2%, reflecting their actual growth."

"[BPO] is a much larger market and it is not that well-penetrated, so the long-term road ahead is clear," Kapoor concluded.