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Outsourcing News for July 2011 | MicroSourcing

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Outsourcing Spending Rises but Value Decreases

Outsourcing consultancy firm TPI said compared to 2010, businesses spent more on outsourcing in the second quarter this year. However, the average value of IT outsourcing contracts decreased for the same period.
Based on the TPI Index, while the total value of deals posted a 13 percent increase or €7.6 billion, the value of the global outsourcing industry decreased by 18 percent as the number of mega deals declined. In other words, there is an increase in IT and BPO spending, but the contracts have lower value. 
“We have actually seen the pace of UK public sector activity increase in 2011, but contract values have declined,” said Duncan Aitchison, a partner at TPI. Increase in demand for outsourcing is seen in the UK, particularly in the Netherlands and France. 


PH Warned against too much Reliance on BPO

by: Karen Cayamanda

Thursday, July 28, 2011 | Outsourcing News | Comments (0)

UNCTAD Warns PH on BPOs during World Investment Report

While the business process outsourcing industry is greatly contributing to the Philippine economy, the United Nations Conference on Trade and Development (Unctad) said the country should not depend too much on BPO since it is an example of non-equity modes (NEMs) which are attained and lost easily.

According to University of Asia and the Pacific Economics Prof. Jovi C. Dacanay who presented the World Investment Report 2011, non-equity modes are types of foreign direct investments (FDIs) and contractual deals that do not have high fixed assets. Aside from BPO, other examples of NEMs are contract manufacturing, franchising, and contract farming. Unctad said governments need to establish regulations on NEMs to make the most out of them and mitigate the risks.

Unctad said there are four areas to focus on to maximize the advantages that developing economies can get out of NEMs. These are: creation of policies embedded in development strategies, government support to initiatives in establishing domestic productive capacity, a strong legal and institutional framework, and creation of policies directed to the negative impact and risks brought about by NEMs.



Global Business Process Outsourcing to Lose Traction?

Traditional outsourcing will be a thing of the past as the shift to innovation and emergence of technologies such as the Cloud take over. This is according to independent technology and market research firm Forrester Research.

“IT outsourcing as traditionally understood is on its deathbed,” said Ellen Daley, vice-president and practice leader at Forrester Research.

A Forrester study, involving 568 companies, reveals that expectations on costs savings are not met and more and more clients are not satisfied with the quality of work. Without cost reduction which is a primary reason companies outsource, clients are considering better technologies such as the Cloud.

Daley said there is a significant decrease in client spending on aspects that are usually present in corporate IT outsourcing budgets such as enterprise resource planning and human capital management software. On the other hand, the study reveals an increase in client spending when it comes to aspects such as business intelligence.


In President Benigno Aquino III’s second State of the Nation Address (SONA) delivered yesterday, he said that there are more jobs available in the country for Filipino workers. He added that the workforce is slowly embracing the idea of working in the country and not in a foreign land.

There may be more job opportunities and thousands of graduates every year, but PNoy stated that the jobs mismatch remains a challenge that local industries are facing. He asked the government units and agencies concerned to address this problem. The Department of Labor and Employment (DOLE), Commission on Higher Education (CHED), the Technical Education and Skills Development Authority, and the Department of Education (DepEd) are called on to analyze the present curriculum and guide students in choosing courses that will help them land jobs in industries that are in need of workers.

BPO industry works with academe and government agencies to help improve skills of students

The business process outsourcing (BPO) industry has been working with the academe and government agencies to help improve the skills of students, especially when it comes to English proficiency. According to Julito Vitriolo, CHED executive director, they are taking steps to improve the communication skills of students to make them globally competitive and meet the demands of the BPO sector and other industries.


Social Media as a Platform for Customer Care

Survey findings from outsourcing services provider Capgemini show that social media is a critical part of customer care operations of many businesses from various industries.

Out of 302 senior executives from Fortune 1000 companies, more than half (52 percent) said they are using social media as part of their customer care operations. Fifty-seven percent said they are keeping track of social media activities, while 36 percent are monitoring the value of using social media in their customer care strategies.

More than half of survey participants see social media as a tool to gain customer feedback on their products and services, generate leads, and measure customer satisfaction. While social media is perceived as an integral part of customer care operations, 73 percent of senior executives are not aware of the number of employees who are monitoring online conversations of customers. Forty-one percent said their companies are keeping track of customer’s social media activities. However, they are only answering questions and responding to complaints of customers, and are therefore not getting the most out of social media.

“The use of social media as part of a strategic customer operations strategy is still emerging, but it presents companies with a clear opportunity to engage with current customers, find new ones and build brand awareness in an increasingly competitive landscape,” said David Poole, Vice President and Head of Americas Business Process Outsourcing, Capgemini.


Aquino Administration Full Support of PH BPO

President Aquino recently said in a statement during the inauguration of NetworkLabs, Nokia Siemens Network’s (NSN) research and development facility, that the government will fully support the developments in the BPO industry.

The President said that some of the things the administration is looking into are: business registration processes, efficiency of tax ruling procedures, and reduction of required documents for bidding in public works. The government also intends to draw investors by proposing tax incentives like income tax holidays for BPO-related investments, which enabled the BPO sector to gain net margins that are higher than those in India for 2010.

“We want to see more businesses opening, and to see many more skilled Filipinos being employed. More businesses open, the more opportunities our countrymen will have to show what they are capable of," said President Aquino.

NSN NetworkLabs is the first R&D facility in Southeast Asia that services and supports R&D teams globally. He added that it is an honor to be chosen as the facility’s location, because it proves that the Philippines is a leader in the BPO industry.


Impact of CICT Downgrade to PH BPO Industry

Following President Benigno Aquino III’s decision to downgrade the Commission on Information and Communications Technology (CICT) and make it an office of the Department of Science and Technology, Senator Edgardo Angara said this could have a negative impact on the growth of the country’s business process outsourcing (BPO) industry.

Angara noted that this move of downgrading CICT to Information and Communications Technology Office “sends the wrong signal” about how we think of ICT, which is an industry that can open opportunities for jobs and investment. This might slow down the growth of companies in the BPO industry. By 2016, it is expected that the industry will employ 1.3 million workers, and revenues could hit the $26 billion mark.

He has filed a bill to establish a Department of Communications Technology. The senator as well as the IT and BPO sectors are all for the creation of a department which will serve as the government body that addresses their needs and issues.


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