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Outsourcing News for June 2014 | MicroSourcing

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Regulations Push AU, NZ CIOs to Outsource

by: Sarah Joson

Friday, June 27, 2014 | Outsourcing News | Comments (0)

NZ and AU CIOs Prefer to Outsource App Development and Testing

With the continuous changes in legislation and industry standards when it comes to an organization’s mainframe applications, it was found that almost  one-third of CIOs in Australia and New Zealand prefer to outsource processes such as application development and testing.
A study commissioned by Micro Focus shows that in all development and testing markets, the US takes the lion’s share with 62 percent, followed by the UK with 40 percent. More than 500 respondents were from around the world, while 50 were from Australia and New Zealand.

Regarding the compliance issues faced by firms in Australia and New Zealand, 50 percent said it is very likely that the original knowledge of their mainframe and supporting data structure are no longer in the organization.

Furthermore, almost three quarters (74%) declared that documentation on their processes is incomplete.

The study also shows that 49 percent of ANZ CIOs who are aiming to comply with new regulations contractually pass legal responsibility for data security and privacy requirements to the outsourcing providers, while18 percent said they are planning to do the same.

Derek Britton, Director of Product Marketing at Micro Focus, said organizations are having a hard time addressing compliance issues because of unclear records. In fact, 23 percent of CIOs have indicated that they are not able to change application compliance internally because their records are not organized.


A list of Philippine products was recently prepared by the Department of Trade and Industry (DTI) which is set to be showcased in select European countries.

BPO services included in list of products with marketable potential

Products included in the list are said to have strong marketable potential. It includes processed fruits and marine products, organic food, auto parts, high-end garments, giftware, home furnishings, and business process outsourcing (BPO) services.

Seven European countries that have viable sectors for promotion were also listed down by the DTI’s Bureau of Export Trade Promotion Group.

One of the countries cited in the list is Germany, where a growing demand for bio-coconut products, as well as design-driven products such as furniture and houseware is seen. Although the footwear and garments segment has been described to have marginal prospects in the Eurozone, German firms Ariston Nord West Ring Schuh for shoes and Katag AG are expected to explore suppliers from the Philippines.

The report also said other sectors have long been promoted in Germany. These are BPO, Knowledge Process Outsourcing (KPO), and Intellectual Property.


Recruitment outsourcing grows 16%

New deal activity and decreased terminations fuelled the growth of the global Recruitment Process Outsourcing (RPO) market last year. It grew 16 percent, while annual spend is expected to reach US$1.8 billion.

Last year, North America became the dominant region for the RPO market. This is after a moderate performance in 2012, which then grew to 21 percent in 2013 - its highest growth rate in the last three years. Latin America likewise witnessed remarkable growth at 23 percent.  Meanwhile, Europe, Middle East, Africa (EMEA), and Asia-Pacific (APAC) experienced a moderate growth rate.

These findings were highlighted in the latest Everest Group report, Recruitment Process Outsourcing (RPO) Annual Report 2014 - Time to be Strategic.

Everest Group Vice-president Rajesh Ranjan said a lot of RPO contracts are nearing its expiration, and renewals are expected. During these renewals, clients have been found looking for providers that offer not only the in-demand services, but value-added ones as well. These include new ways to improve the quality of the talent pool, address employee-job mismatch, and new ways to collect and interpret data. He added that buyers should invest in strategic initiatives to develop the skills of employees. They should also capitalize on staff members who are experts in complex accounts and consider nurturing outsourcing relationships.


Growing Demand in KPO Fuels Growth

The voice-based sector used to account for 65 percent of the entire outsourcing industry of the Philippines, but it has dropped to 60 percent, which means that the higher-value knowledge process outsourcing (KPO) sector is catching up with the call center sector. According to Jose Mari Mercado of the Information Technology and Business Process Association of the Philippines (Ibpap), this tells us that both sectors are continuously growing.

However, Mercado said this steady growth of KPO does not mean that the industry will no longer offer voice-based processes. The country remains the top destination for call center work. He said the industry will still use this advantage.

Moreover, Mercado noted that while growth is seen on both sectors, the industry is not aiming for a balance in the percentage between KPO and voice-based services. It’s all about taking advantage of the growing demand. Also, he dismissed the misconception about one sector having more or "higher" value than the other. He wanted to utilize what the industry has and take advantage of the opportunities for growth.



NZ Firms Seen to Invest More in PH

by: Sarah Joson

Thursday, June 19, 2014 | Outsourcing News | Comments (0)

More Investors from New Zealand Anticipated

According to Reuben Levermore, New Zealand Ambassador to the Philippines, the country’s robust business process outsourcing (BPO) industry is further improving its image as an investment destination, particularly for engineering and IT firms based in New Zealand.

Levermore noted that more and more companies from New Zealand are not only outsourcing call center work, but are actually setting up IT offices as well. Since New Zealand firms are setting up in the Philippines, they are able to grow their business while contributing to the inclusive growth of the Philippines through job creation. This, he said, is possible because New Zealand companies can provide the technology and expertise, while the Philippines offers scalability.

Meanwhile, New Zealand Trade Commissioner to the Philippines Hernando Banal said he has seen an increase in the number of IT companies that are opening offices in the Philippines. Banal said the first few firms that took interest in the Philippines are engineering and food and beverage companies. But in recent years, more and more IT companies are seen setting up their back office operations in the country. A company was said to have grown from two employees to 500 in a period of four years.

One major challenge of companies in New Zealand is finding the right local talent. This is because of its small population and a low turnout of university graduates annually.

Banal added that New Zealand firms have the in-demand product ideas and innovations, but they do not have the capacity to mass produce. For instance, one of the commonly outsourced processes to the Philippines today is product testing. It requires many testers for a short period of time and is very labor-intensive. Basically, the design and concept will come from New Zealand firms, while the labor-intensive parts such as actual production and testing will be sent out to the Philippines.


2014 CommunicAsia Summit

In an effort to boost the Philippines’ image as one of the e-services hubs and global position in the information technology and business process management (IT-BPM) in CommunicAsia 2014, the Department of Trade and Industry (DTI) through the Philippine Trade and Investment Center (PTIC) in Singapore expressed their full support to the country’s representatives.

DTI Undersecretary Ponciano C. Manalo Jr. said as the Philippines is set to participate in Asia’s largest integrated information and communications technology (ICT) exhibit, the country will be able to showcase its position in high-value IT-BPM processing space which includes applications and software development, creative content and game development, and big data and business analytics.

The event is scheduled from June 17-20 at the Marina Bay Sands in Singapore. The representatives to the summit will be led by the Department of Science and Technology-Information and Communications Technology Office (DOST-ICT Office), the main agency for government-driven ICT efforts, as well as the Information Technology and Business Process Association of the Philippines (IBPAP), the main organization of the IT-BPM industry in the Philippines.  

Some of the key segments that will be showcased in the event are information technology, cloud computing, mobile, wireless solutions, broadband, managed services, internet, IT-enabling services, data center, international gateway facility (IGF) services, contact center services, back office, data processing solutions, and employment screening services.

Meanwhile, DOST Undersecretary and ICT Office Executive Director Louis Napoleon C. Casambre said the DOST-ICT Office is continuously striving to enable local innovative ICT companies to become globally competitive and to make them more attractive to foreign investors. He added that through CommunicAsia 2014, he’s hoping that there would be more opportunities for the Philippines and that it would become a major ICT hub.

Manalo then noted that as the Philippines maintains its image as the leading e-services hub of Asia with its existing cyber parks and IT companies, it remains as a key outsourcing services provider for companies based in the US, Japan, and Europe.


Healthcare Outsourcing Growing Rapidly in the Philippines

The healthcare information management services-business process outsourcing (HIMS-BPO) is reportedly the fastest-growing segment in the Philippines’ outsourcing industry. The segment posted a 114-percent growth in revenues and an increase of 47 percent in employment last year.

According to the Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP), the sector generated $277 million in 2011, $462 million in 2012, and leaped to $988 million in 2013.
As for the number of full-time employees, the sector employed 24,700 in 2011, 44,849 in 2012, and 65,895 last year.
This could mean that the HIM sector’s $1 billion revenue target could be achieved earlier, with the FTEs projected to reach 100,000 for the same year.

One of the advantages of the booming HIMS-BPO industry is it has created opportunities for the oversupply of nursing graduates and medical professionals. They can find employment in telemedicine, pharmaceutical, revenue cycle management (provider and payer Functions), and healthcare application support (clinical and non-clinical) jobs.

HIMOAP is set to hold the IMS Conference 2014 (formerly known as Healthcare Information Management Outsourcing Services Congress or HIMOSC) on August 28 in Makati with the theme, "Philippine HIMS: Trailblazing to Global Leadership".


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