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Outsourcing News for May 2014 | MicroSourcing


Continuous Growth Seen in PH IT-BPO

by: Sarah Joson

Tuesday, May 27, 2014 | Outsourcing News | Comments (0)

In one of the sessions at the World Economic Forum on East Asia held in Makati City, Marife Zamora, Chairperson at Convergys Philippines, said the IT-BPO sector of the country is experiencing sustainable growth, thanks to foreign investments. She added that the growth in the sector is being driven by investments from medium to large businesses abroad and well-known companies that are looking to expand operations.

IT-BPO sector growth factors

Zamora also credited the growth to other factors such as additional support from the government, school institutions, and the business sector. Moreover, she said human capital development, improvement in infrastructure, and educational programs focused on improving the country’s poverty rate are key contributors as well.  

The executive noted that the local BPO sector employed 900,000 Filipinos, and posted revenues worth $15.5 billion in 2013. She said they are targeting to employ more than one million Filipinos and post $18 billion in revenues by the end of this year. The revenue target for 2016 is $25 billion.


Faster Growth in Cebu ICT-BPM

According to Wilfredo Sa-a Jr., Executive Director at Cebu Educational Development Foundation for Information Technology, the information and communications technology and business process management (ICT-BPM) of Cebu, Philippines will create more opportunities for employees in the province.

This is made possible by the influx of large multinational companies that are establishing shared services, and health and insurance information management operations in the province. In addition to those segments, he highlighted that ICT-BPM is well on its way to becoming a premier sector in the outsourcing industry of Cebu.
Nurses and other medical professionals in particular will be benefiting from the growing number of health information management (HIM) companies that are setting up operations in Cebu. Some of the major players are United Health Group, ExlService Philippines Inc., Cognizant, QBE Insurance, and Manulife Business Processing Services.

For the shared services segment, Sa-a noted that Lexmark Shared Service Center and new player Daimler Group Services are also doing well in their Cebu operations. Sa-a also stated that the province is in a new wave of outsourcing - in a higher-value bracket.

However, there are still concerns about the result once the Association of Southeast Asian Nations (Asean) is integrated in two years’ time. Before the integration, Cedfit and the Cebu Chamber of Commerce and Industry have partnered in launching the 2014 Cebu ICT-BPM Conference and Expo on June 2-3 at the Marco Polo Plaza Hotel. The forum is set to be one of the main activities of the Cebu Business Month.


Outsourcing Market in Asia Continues to Thrive

The Grant Thornton International Business Report (IBR) 2014 shows that as the outsourcing industry in Asia continues to grow, opportunities are seen increasing as well. Businesses in the region are said to be experiencing more mergers and acquisitions, higher costs, and more talent management challenges which is why more firms are outsourcing business functions.

Data from the IBR show that only 42 percent of businesses in the Asia-Pacific region are outsourcing or are strongly considering outsourcing. Japan has been identified as the country that favors outsourcing the most with 60 percent. Thailand is next with 48 percent, 38 percent for India, Hong Kong with 18, Vietnam with 12 percent, and the Philippines with only four percent.

As for the rest of the world, Brazil and Argentina are some of the top outsourcers with 53 percent and 64 percent, respectively. This is a strong indication that outsourcing is more favored in Latin America than their counterparts in Asia.

The survey also highlighted that like in Hong Kong, where only 27 percent of the total number of survey participants accept outsourcing as a business tool, the rest of businesses based in the Asia-Pacific region are worried over losing control of a key process.
Meanwhile, Laure Mathieu, Managing Director of Outsourcing - Grant Thornton Hong Kong, said trust is the most important thing in outsourcing relationships. Goals should be set and achieved as a team. This will help both parties ensure the operation is managed properly.

Other factors that affect the perception of business executives towards outsourcing are the high cost of implementation (15%), lack of a strategic outsourcing plan (7%), and complexity or risks associated with hiring a contract service (7%).


PH BPO Companies to Relocate Outside of CBDs

JLL (formerly Jones Lang Lasalle) said business process outsourcing companies may soon move out of heavily-saturated business districts like Makati or Fort Bonifacio and into areas that are close to where employees live. Those who will be working in these areas will have more access to public transportation.

According to JLL Associate Director for Markets Philip Añonuevo, office rent in central business districts is the major component in this initiative. He further explained that rents are going up since the leasing contracts of BPO offices in CBDs are short-term (6-12 months) only.

The executive also said the trend has sparked the interest of high net worth individuals and have prompted them to develop their own non-CBD properties to accommodate BPO companies.

Rent in non-CBDs is more competitive than in Ortigas (20 percent), as well as in Makati and Fort Bonifacio (30 percent). 


Back Office Services for Latin American Firms

Data from the International Business Report (IBR) created by Grant Thornton found that two in five business leaders across the globe either have already outsourced their back office work or are strongly considering it.

The report also indicated that outsourcing has become a popular business tool in Latin America. In fact, over 50 percent of business executives are outsourcing their back office processes. The report predicts that even with varying views on outsourcing, it will remain as a key business tool and will gain more traction in the coming years.

According to Samantha George, head of outsourcing at Grant Thornton UK, since three-fifths of the market is not yet saturated and familiar with outsourcing, it could present more opportunities for service providers.

Business entities are just realizing that apart from significant cost savings, outsourcing also helps streamline operations through freeing up budget tied to back office processes. However, 44 percent of businesses that took part in the survey are keeping an eye out for challenges like loss of control over the operation and the process itself.

George was quick to clarify that this rarely happens, saying outsourcing can even help senior leaders see the bigger picture and compare the performance of their outsourced process with their regular strategy.

There are still misconceptions about outsourcing. These include the view that it’s expensive and that subcontracting processes elsewhere is risky.

Some of the most outsourced back office processes are tax (49%), IT (46%), and HR and payroll (36%).

Nowadays, outsourcing has become available to various processes and industries. Providers, on the other hand, have come up with flexible and scalable solutions to fit the requirements of their clients.


DOST to Promote BPO Jobs in Philippines' Provinces

Through a series of workshops called "Digital Employment through Rural BPO for Inclusive Growth" to be launched in rural regions of the Philippines, the Department of Science and Technology (DOST) is hoping to encourage job seekers to try their hand at online freelance careers.    

College-level students, graduates, and working professionals are encouraged to join the workshop. The provinces included in the itinerary are Koronadal, South Cotabato; Kalibo, Aklan; Surigao City, Surigao del Norte; and Calbayog, Samar.

According to the DOST-ICT Office, the campaign is coordinated based on the government’s goal to create 1.3 million jobs in the IT-business process management (IT-BPM) sector by 2016. The organization is also pushing for the use of new technologies to gain access to digital markets and emerging BPO regions so that more jobs will be created.

Meanwhile, Louis Casambre, Executive Director at DOST-ICTO, said the organization is actively seeking ways to improve their readiness against the rapid changes in the tech world. He cited Rural Impact Sourcing, which enables investors to contribute to the progress of provinces. He also explained that workers from these areas no longer have to go to developed cities to get jobs.

One of the processes highlighted throughout the workshop is virtual assistance, a highly sought-after service in online job portals. Employees will be expected to work remotely and perform administrative tasks such as technical support.



PH BPO Earnings 15% Higher in 2013

by: Sarah Joson

Monday, May 5, 2014 | Outsourcing News | Comments (0)

PH BPO On Track in Hitting 2016 Targets

The business process outsourcing (BPO) sector of the Philippines is now closer to its 2016 targets of 1.3 million employees and $25 billion in earnings.  

According to data released by the Contact Center Association of the Philippines (CCAP), revenues from the country’s BPO sector amounted to $10 billion in 2013 - 15% higher than 2012’s $8.7 billion. In line with that, 2012’s revenues were reportedly 18% higher than revenues posted in 2011.

As for the number of full-time employees (FTE), in 2012, the sector had 497,000. It rose by 18% or 89,000 in 2013, and the total headcount reached 586,000. The industry body said they are striving to achieve a compounded growth rate of 14-15% for both revenues and FTEs in 2014 and 2015.

The latest performance of the sector puts it on the right path, making the industry body confident that the 1.3 million employees and $25 billion-revenue goals will be met in 2016.

CCAP explained that voice-based processes make up 70% of the entire information technology-business process management (IT-BPM) industry.

Moreover, the organization named the United States as the country’s key market for call center processes, and countries such as United Kingdom, Australia, and New Zealand are cited as emerging markets.

Meanwhile, Benedict Hernandez, CCAP President, said the Philippines’ strength and resilience in the voice industry helped protect it against external challenges that can affect its growth and sustainability. An example would be the continuous decrease of the US call center market and customer service accounts.

Another challenge, according to the executive, is the continuous fluctuation of currency. He said call center firms should come up with innovative solutions that can help them stay relevant in the cutthroat world of the contact center segment.

The CCAP has around 100 member organizations. Recently, it was reported that the Land Transportation Franchising and Regulatory Board (LTFRB) has partnered with industry representatives to come up with solutions that can help improve the safety of BPO workers who take public transportation.