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Outsourcing News for August 2015 | MicroSourcing


Report Reveals Growth in IT Outsourcing

by: Sarah Joson

Monday, August 24, 2015 | Outsourcing News | Comments (0)

IT research company Computer Economics released a new report called "IT Outsourcing Statistics 2015/16" where it was discovered that spending on IT outsourcing has grown consistently with the IT operational budgets across the globe.

The report also found that companies utilize outsourcing to reduce costs, preserve capital, improve operational flexibility, reduce management overhead or rapidly deploy new capabilities, and increase service levels.

The survey conducted on 132 IT organizations in the US and Canada also declared that outsourcing is used to boost in-house operations without having to share long-term risks with the provider, or having to spend on large capital investments. The entire operation is anchored on the decision of IT executives, who are also expected to control and evaluate the process so that they are ensured that they will reach the tactical and strategic objectives.

Growth in IT outsourcing spending

The study showed that large companies that have IT operating budgets of $20 million and above are leading the growth trend as they are seen spending 7.8 percent of their IT budgets on outsourcing. The top processes outsourced are help desk and web/e-commerce functions.

Meanwhile, cost-reducing opportunities are seen in disaster recovery and desktop support segments of the IT sector, and outsourcing IT security and web functions has potential in improving a company’s overall service.

Software-as-a-Service has also grown rapidly wherein 65 percent of the respondents said they outsource application hosting and is the most outsourced function found in the report. Organizations also indicated that they are planning to increase the amount of work they are outsourcing.


More Jobs in the Philippine Healthcare Outsourcing Sector

As the requirements of the healthcare segment in the US continue to expand, business process outsourcing (BPO) companies are expected to create 150,000 job opportunities in the Philippines this year.

According to the Information Technology and Business Process Association of the Philippines (ITBPAP), the rising demand for skilled healthcare professionals is expected among US firms to address the need for special type of healthcare support.

Jose Mari Mercado, ITBPAP President and Chief Executive, said the US has turned to the Philippines for additional support as the US migrates to the International Code for Diseases 10 from the current ICD 9.

He explained that it is a very complex and sophisticated process that will require Filipino nurses to get US nursing certification to be qualified for the job. Moreover, he said the Philippines has the supply of nurses, but needs to build competency. As for other healthcare professionals, they would need to accomplish several weeks of additional training, assessment, and certification to qualify.  

ICD 10 is much different from ICD 9 as it will require 10 digits coding system for disease identification and processing. This process will of course need thousands of encoders.

ITBPAP predicts that total BPO revenues will reach $21.9 billion in 2015 and $25 billion in 2016 - from $18.9 billion in 2014.

As for the revenues of the entire BPO sector, the voice segment still leads with revenues of $11 billion in 2014, while healthcare contributed $3 billion and employed 87,000 people last year.

Mercado pointed out that the healthcare segment is a great source of opportunity for the Philippine outsourcing industry, and the country is expected to develop and catch up in terms of competency in the near future.


Philippine Nurses to Find More Jobs in BPO

With the recent Supreme Court verdict on the Affordable Care Act in the US, or Obamacare, more Filipino nurses are expected to find jobs in the business process outsourcing (BPO) sector.

Pasig City Representative Roman Romulo, Chairman of the House Committee on Higher and Technical Education, said the Philippine division of Dublin-based Accenture plc, and New York-based EXL Service Holdings Inc. are seen hiring more Filipino nurses for their operations in Cebu City. Romulo pointed out that both firms are ready to accommodate the needs of American health insurers. Accenture has 16 delivery centers in the Philippines while EXL has three.

BPO firms are said to be hiring Filipino nurses with US licenses, and those who have passed the NCLEX but do not have US licenses yet.

Obamacare is anticipated to increase customer support, insurance claims processing, clinical support analysis, medical coding, and other non-core business support jobs of US health insurers to the Philippines through independent BPO providers or in-house back offices.

Other functions that Romulo said will be open to nurses and even fresh graduates by UnitedHealth Group Inc. are transition management, assistant manager positions, team lead for operations, specialists handling healthcare accounts, customer service, and medical coding work.


A healthy level of outsourcing activity was seen in the Europe, Middle East & Africa (EMEA) region in the second quarter. This is according to market intelligence and advisory services company Information Services Group (ISG) in its EMEA ISG Outsourcing Index™.

Record-high outsourcing growth

Based on the index, 169 outsourcing deals worth €2.2 billion were awarded to the EMEA region. This is 23 percent higher than the annual contract value (ACV) posted in the previous period. This is also one-third more than the number of contracts.

There may be a record-high outsourcing activity in the second quarter, but the region still fell short compared to figures posted last year. ACV in the second quarter was 12 percent lower than what was posted in the second quarter last year. Compared to last year’s first six months, ACV posted in the first half this year was lower by 21 percent.

The market seems to be shifting to getting smaller deals, as the strong activity in the second quarter posted only two mega outsourcing deals (contracts valued at €80 million or higher). ISG North Europe Partner and President John Keppel said the market has moved to awarding a high number of contracts with lower ACV in recent years.