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Outsourcing News for June 2013 | MicroSourcing

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Study Shows UK Firms more Picky with their Outsourcing Partners

The outsourcing market in the UK is becoming stricter in selecting their outsourcing partner, according to a study by Whitelane Research, a European outsourcing market analyst. The report showed that 13 percent of businesses are either looking forward to decreasing the use of outsourcing, or sourcing processes internally. Furthermore, 20 percent out of the 700 active outsourcing contracts will not be renewed.       

Jef Loos, head of sourcing research for Whitelane’s European sector, stated that the report generated unexpected results. For instance, he was surprised that nearly 50 percent of the contracts have already been going through renegotiations, and 80 percent of which were able to improve expenses, terms and conditions, and overall quality of services.

Loos said this is proof that British outsourcing buyers are now more careful and that outsourcing service providers are retargeting their leads.

Whitelane also said clients should consider mergers and acquisitions in the service provider side, with several activities such as Atos’ purchase of Siemens SIS, Vodafone taking over Cable & Wireless at the forefront.

Meanwhile, Loos and the rest of Whitelane recommend that buyers who are satisfied with their current partners should renew and renegotiate contracts with their current provider for them to avoid transition expenses. Suppliers, on the other hand, should strive to maintain their contract to stay away from costly tendering processes, and use surplus to offer their patrons discounts.


With the recent market turbulence, debt watchers are certain that the economy of the Philippines will withstand crisis and maintain its credit rating as it possesses strong credentials.  

PH credit ratings unaffected despite unstable global economic environment

According to financial services companies Standard & Poor’s (S&P) and Fitch Ratings, the Philippines can hold out through the unstable global economic environment.

Agost Bernard, a credit analyst at S&P, confirmed that the credit ratings of the country will not be affected.

Meanwhile, Andrew Colquhoun, Head of Fitch’s Asia-Pacific Sovereigns, said the country can endure critical issues such as the plans of the US to retract grants and provisions.

However, it was observed that investments that helped Asia to grow are now seen in the US and are being utilized as tools to improve interest rates in the country.

Moreover, Colquhoun said the country is able to pay off its external obligations with the massive current account surplus that grew since 2003. For this year’s first quarter, the surplus reached $3.4 billion. The Philippines’ revenues from other segments such as remittances, exports, and business process outsourcing (BPO) were able to underwrite its total balance of payments (BOP) as of May, which reached a surplus of $1.884 billion.        


Firms Believe the Philippines is the best Outsourcing Hub

According to the Managing Director of Shore Solutions, Darcy Lalonde, the Philippines is considered as one of the best outsourcing hubs because of its human resources and sound business environment. The Filipino workforce is said to have the commonly preferred traits such as great English-speaking ability, proper work ethic, and loyalty.

Moreover, he said the Philippines is the only country in Asia that offers affordable business solutions and high-quality human resources and it will only take 30 to 60 days to get an operation up and running, as long as clients contract with reliable experts and advisers.

Lalonde expected that foreign investors will continue to patronize the Philippines because of its welcoming environment. He noted that even if Malaysia and Singapore outgrew the Philippines over the last 10 years, the latter is now regaining traction and is becoming one of the key countries for investment opportunities.

A report from Bangko Sentral ng Pilipinas indicated that inflow of foreign direct investments grew to $1.3 billion during the first quarter of 2013.

Tourism, manufacturing, business process outsourcing (BPO), and health and wellness are cited as the sectors that will continue to benefit from foreign capital investments.


Outsourcing Summit Philippines

The Information Technology and Business Process Association of the Philippines (IBPAP) said the International Outsourcing Summit (IOS) will be held in the Philippines at the Makati Shangri-La Hotel on October 6-8.

The conference "Unlocking Possibilities, Creating New Vistas" is expected to highlight new markets, opportunities, and innovation, plus the effects of the global power shift.

According to IBPAP President and CEO Jose Mari Mercado, the IOS extensively contributes to the growth of major outsourcing segments specifically the information technology and business process management (IT-BPM) industry. It provides the structure for partnerships, reinforces discourse, and it addresses relevant issues.

Meanwhile, the Philippines was cited by research firm Everest Group to have broken through the software development industry and IT outsourcing.

For 2012, the healthcare information management (HIM) industry of the country posted the highest growth - reaching up to $430 million last year. The voice segment also grew 21 in the same year.


Onshore Business Outsourcing Solutions

Several topics were recently discussed between CIO.com and a US outsourcing provider. First off, organizations are said to be in talks of creating a domestic outsourcing model as more and more US companies are not satisfied with the results of their offshore operations. There are also issues on how the impending immigration reform can affect outsourcing in the US and the challenges for the Gen Y.

Onshore outsourcing is now being used by IT services clients to either improve or replace current outsourcing operations.

In a report released by Gartner last May, it was projected that onshore business outsourcing solutions will continue to grow because customers want operations to be closer and business value to be maximized.

Meanwhile, the number of operations that were once outsourced to Indian IT service providers and are now subcontracted to specialized domestic providers had increased.

However, US-based companies that are considering outsourcing processes to local providers face several challenges such as lack of skilled personnel, the aging workforce, and even the basic supply to the growing customer demand.

One of the solutions that key industry players have come up with is the development of the local talent pool. They are teaming up with domestic universities to design programs that can develop the skills needed by candidates to make it in the IT services industry.

A good example is IBM Global Services Investment on Louisiana State University in hopes of growing its Baton Rouge delivery center. Another one is CGI, a company that partnered with Hocking College and Ohio University to reinforce operations in Ohio and Athens.


Philippine Outsourcing Industry Driven by Young Talent

Having a young workforce and strong support from the government reinforces the position of the Philippines as one of the top countries for business process outsourcing (BPO, or IT-BPO) services, according to Information Technology and Business Process Association of the Philippines (IBPAP) Senior Executive Director Gillian Joyce Virata.

Virata said BPO companies consider the Philippines and India in terms of having an educated workforce at competitive rates. Moreover, she noted that they are constantly coordinating with two to three firms every week, proving that the Philippines is an ideal offshore outsourcing destination.

Tholons, a globalization and investment consultancy firm, ranked Manila as the third destination in its top 100 global destinations list. The organization also mentioned the continuous effort of the Philippine IT-BPO industry in maintaining its position in voice-based outsourcing processes while venturing into other offerings such as healthcare information management (HIM)outsourcing , IT outsourcing, software development, game development, and animation.


The Philippines an Ideal Location for Investment

During the recent World Economic Forum (WEF) in East Asia, President Benigno Aquino III said the vigorous economic environment and stable political climate of the Philippines are making it a prime destination for investments.

The President identified tourism, infrastructure development, and agriculture as some of the key industries that investors can look into. Moreover, he highlighted the continuous efforts of his government in creating a better business environment for investors, minimizing regulatory risks, and providing equal advantages and opportunities for the public and private sectors.

President Aquino also talked about the economic vitality of the Philippines in a conference attended by 200 businessmen and organized by Ayala Corporation. He identified low inflation and borrowing rates, various growth opportunities, supportive government, and a loyal and creative workforce.

Moreover, he noted that by forming partnerships, the country, across all sectors and backgrounds, will move forward as a whole.

With the changes made by the President, particularly with corruption, the Philippines is now in a favourable position in attracting new investors. He said the country’s success has already received various names such as the brightest spark in Southeast Asia, Asia’s Rising Tiger, and a hotspot. 

He also noted that while other countries are experiencing a slowdown, the Philippines saw robust growth and has even received investment grade ratings from two renowned rating agencies.


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