Business process outsourcing
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searchBusiness process outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party
service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in the marketplace. BPO is often divided into two categories:
back office outsourcing, which includes internal business functions such as
billing or purchasing, and front office outsourcing, which includes customer-related services such as
marketing or tech support.
BPO that is contracted outside a company's own country is sometimes called
offshore outsourcing. BPO that is contracted to a company's neighboring country is sometimes called
nearshore outsourcing, and BPO that is contracted within the company's own country is sometimes called
onshore outsourcing.
[1]The most common examples of BPO are
call centers,
human resources,
accounting and
payroll outsourcing.
Use of a BPO as opposed to an
application service provider (ASP) usually also means that a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer. BPO includes the software, the process management, and the people to operate the service, while a typical ASP model includes only the provision of access to functionalities and features provided or 'served up' through the use of software, usually via web browser to the customer. BPO is a part of the
outsourcing industry. It is dependent on
information technology, hence it is also referred to as information technology enabled services or ITES.
Knowledge process outsourcing and
legal process outsourcing are some of the subsets of business process outsourcing.
ITES
Information technology enabled services, or ITES, is a form of outsourced service which has emerged due to involvement of IT in various fields such as banking and
finance,
telecommunications,
insurance, etc. Some of the examples of ITES are medical transcription, back-office accounting, insurance claim, credit card processing and many more.
Firms usually from developed countries outsource such services to countries like
Egypt,
India,
Bangladesh,
China,
Romania and
Philippines in order to gain from large talent pool and low labor cost.
Industry size
India has revenues of 6.4 billion USD
[2] from offshore BPO and 36
[3] billion USD from IT and total BPO. India thus has some 5-6% share of the total BPO Industry, but a commanding 63% share of the offshore component. This 63% is a drop from the 70% offshore share that India enjoyed last year, despite the industry growing 38% in India last year, other locations like
Eastern Europe,
Philippines, and
South Africa have emerged to take a share of the market.
China is also trying to grow from a very small base in this industry. However, while the BPO industry is expected to continue to grow in India, its market share of the offshore piece is expected to decline.
The top five Indian BPO exporters for 2006-2007 according to NASSCOM are Genpact, WNS Global Services, Transworks Information Services, IBM-daksh, and TCS BPO.
[4] However, people who talk about the Indian Big 5 in the UK will usually be referring to TCS (Tata), Wipro, Infosys, Satyam Computer Services, and HCL Technologies.[
citation needed]
The global BPO Industry is estimated to be worth 120–150 billion dollars, of this the offshore BPO is estimated to be some US$11.4 Billion.
Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company.
[1]Outsourcing became part of the business lexicon during the 1980s.
The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the
competencies of a particular business, or to make more efficient use of labor, capital, technology and resources.
Contents
[
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1 Overview2 Process of outsourcing2.1 Deciding to outsource2.2 Supplier proposals2.3 Supplier competition2.4 Negotiations2.5 Contract finalization2.6 Transition2.7 Transformation2.8 Ongoing service delivery2.9 Termination or renewal3 Reasons for outsourcing4 Criticisms of outsourcing4.1 Public opinion4.2 Against shareholder views4.3 Failure to realize business value4.4 Language skills4.5 Social responsibility4.6 Quality of service4.7 Staff turnover4.8 Company knowledge4.9 Qualifications of outsourcers4.10 Work, labor, and economy4.10.1 Net labor movements4.10.2 Productivity4.10.3 Standpoint of labor4.10.3.1 The U.S.4.11 Security4.12 Fraud5 See also6 References7 Further reading8 External linksOverview
Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider.
[2] The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. Business segments typically outsourced include
information technology,
human resources,
facilities and
real estate management, and
accounting. Many companies also outsource
customer support and
call center functions like
telemarketing,
customer services,
market research, manufacturing and engineering.
Outsourcing and
offshoring are used interchangeably in public discourse despite important technical differences. Outsourcing involves contracting with a supplier, which may or may not involve some degree of offshoring. Offshoring is the transfer of an organizational function to another country, regardless of whether the work is outsourced or stays within the same corporation
[3]HYPERLINK \l "_note-2"[4].
With increasing globalization of outsourcing companies, the distinction between outsourcing and offshoring will become less clear over time. This is evident in the increasing presence of Indian outsourcing companies in the US and UK. The globalization of outsourcing operating models has resulted in new terms such as
nearshoring and
rightshoring that reflect the changing mix of locations. This is seen in the opening of offices and operations centers by Indian companies in the U.S. and UK.
[5].
[6]Multisourcing refers to large (predominantly IT) outsourcing agreements.
[7] Multisourcing is a framework to enable different parts of the client business to be sourced from different suppliers. This requires a
governance model that communicates
strategy, clearly defines
responsibility and has end-to-end
integration.
[8]Process of outsourcing
Deciding to outsource
The decision to outsource is taken at a strategic level and normally requires board approval. Outsourcing is the
divestiture of a business function involving the transfer of people and the sale of assets to the supplier. The process begins with the client identifying what is to be outsourced and building a business case to justify the decision. Only once a high level business case has been established for the scope of services will a search begin to choose an outsourcing partner
Supplier proposals
A
Request for Proposal (RFP) is issued to the shortlist suppliers requesting a proposal and a price.
Supplier competition
A competition is held where the client marks and scores the supplier proposals. This may involve a number of face-to-face meetings to clarify the client requirements and the supplier response. The suppliers will be qualified out until only a few remain. This is known as down select in the industry. It is normal to go into the
due diligence stage with two suppliers to maintain the competition. Following due diligence the suppliers submit a "best and final offer" (BAFO) for the client to make the final down select decision to one supplier. It is not unusual for two suppliers to go into competitive negotiations.
Negotiations
The negotiations take the original RFP, the supplier proposals, BAFO submissions and convert these into the contractual agreement between the client and the supplier. This stage finalizes the documentation and the final pricing structure.
Contract finalization
At the heart of every outsourcing deal is a contractual agreement that defines how the client and the supplier will work together. This is a legally binding document and is core to the
governance of the relationship. There are three significant dates that each party signs up to the contract signature date, the effective date when the contract terms become active and a service commencement date when the supplier will take over the services.
Transition
The transition will begin from the effective date and normally run until four months after service commencement date. This is the process for the staff transfer and the take-on of services.
Transformation
Ongoing service delivery
This is the execution of the agreement and lasts for the term of the contract.
Termination or renewal
Near the end of the contract term a decision will be made to terminate or renew the contract. Termination may involve taking back services (
insourcing) or the transfer of services to another supplier.
Reasons for outsourcing
Organizations that outsource are seeking to realize benefits or address the following issues:
[9]HYPERLINK \l "_note-8"[10]HYPERLINK \l "_note-9"[11]Cost savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.
[12]Cost restructuring.
Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.
Improve quality. Achieve a step change in quality through contracting out the service with a new
Service Level Agreement.
Knowledge. Access to intellectual property and wider experience and knowledge.
[13]Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.
[14]Operational expertise. Access to operational best practice that would be too difficult or time consuming to develop in-house.
Staffing issues. Access to a larger talent pool and a sustainable source of skills.
Capacity management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.
Catalyst for change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a
Change agent in the process.
Reduce time to market. The acceleration of the development or production of a product through the additional capability brought by the supplier.
Commodification. The trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a wide range of businesses access to services previously only available to large corporations.
Risk management. An approach to
risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.
[15]Time zone. A sequential task can be done during normal day shift in different time zones - to make it seamlessly available 24x7. Same/similar can be done on a longer term between earth's hemispheres of summer/winter.
Criticisms of outsourcing
Public opinion
There is strong public opinion regarding outsourcing (especially when combined with
offshoring) that outsourcing damages a local labor market. Outsourcing is the transfer of the delivery of services which affects both jobs and individuals. It is difficult to dispute that outsourcing has a detrimental effect on individuals who face job disruption and employment insecurity; however, its supporters believe that outsourcing should bring down prices, providing greater economic benefit to all. There are legal protections in the
European Union regulations called the
Transfer of Undertakings (Protection of Employment) that protects individual rights. Labor laws in the
United States are not as protective as those in the European Union. A study has attempted to show that public controversies about outsourcing in the U.S. have much more to do with class and ethnic tensions within the U.S. itself, than with actual impacts of outsourcing.
[16]Against shareholder views
For a publicly listed company it is the responsibility of the board to run the business for the
shareholders. This means taking into consideration the views of the shareholders. Shareholders may be interested in
return on investment and/or
social responsibility. The board may decide that outsourcing is an appropriate strategy for the business. Shareholders have a responsibility to make their views known to the board of directors if they are against outsourcing.
Failure to realize business value
The main business criticism of outsourcing is that it fails to realize the
business value that the outsourcer promised the client.
Language skills
In the area of call centers end-user-experience is deemed to be of lower quality when a service is outsourced. This is exacerbated when outsourcing is combined with off-shoring to regions where the first language and culture are different. The questionable quality is particularly evident when call centers that service the public are outsourced and offshored.
There are a number of the public who find the
linguistics features such as
accents, word use and phraseology different which may make
call center agents difficult to understand. The visual clues that are present in
face-to-face encounters are missing from the call center interactions and this also may lead to misunderstandings and difficulties.
[17]Social responsibility
Some argue that the outsourcing of jobs (particularly off-shore) exploits the lower paid workers. A contrary view is that more people are employed and benefit from paid work.
Quality of service
Quality of service is measured through a
service level agreement (SLA) in the outsourcing contract. In poorly defined contracts there is no measure of quality or SLA defined. Even when an SLA exists it may not be to the same level as previously enjoyed. This may be due to the process of implementing proper objective measurement and reporting which is being done for the first time. It may also be lower quality through design to match the lower price.
There are a number of
stakeholders who are affected and there is no single view of quality. The
CEO may view the lower quality acceptable to meet the business needs at the right price. The retained management team may view quality as slipping compared to what they previously achieved. The end consumer of the service may also receive a change in service that is within agreed SLAs but is still perceived as inadequate. The supplier may view quality in purely meeting the defined SLAs regardless of perception or ability to do better.
Quality in terms of end-user-experience is best measured through
customer satisfaction questionnaires which are professionally designed to capture an unbiased view of quality. Surveys can be one of research
[18]. This allows quality to be tracked over time and also for corrective action to be identified and taken.
Staff turnover
The staff turnover of employee who originally transferred to the outsourcer is a concern for many companies. Turnover is higher under an outsourcer and key company skills may be lost with retention outside of the control of the company.
In outsourcing offshore there is an issue of staff turnover in the outsourcer companies call centers. It is quite normal for such companies to replace its entire workforce each year in a call center.
[19] This inhibits the build-up of customer knowledge and keeps quality at a low level.
Company knowledge
Outsourcing could lead to communication problems with transferred employees. For example before transfer staff have access to broadcast company
e-mail informing them of new products, procedures etc. Once in the outsourcing organization the same access may not be available. Also to reduce costs, some outsource employees may not have access to e-mail, but any information which is new is delivered in team meetings.
Qualifications of outsourcers
The outsourcer may replace staff with less qualified people or with people with different non-equivalent qualifications.
[20]In the
engineering discipline there has been a debate about the number of engineers being produced by the major economies of the United States, India and China. The argument centers around the definition of an engineering graduate and also disputed numbers. The closest comparable numbers of annual gradates of four-year degrees are United States (137,437) India (112,000) and China (351,537).
[21]HYPERLINK \l "_note-20"[22]Work, labor, and economy
Net labor movements
Productivity
Offshore outsourcing for the purpose of saving cost can often have a negative influence on the real productivity of a company. Rather than investing in technology to improve productivity, companies gain non-real productivity by hiring less people locally and outsourcing work to less productive facilities offshore that appear to be more productive simply because the workers are paid less. Sometimes, this can lead to strange contradictions where workers in a third world country using hand tools can appear to be more productive than a U.S. worker using advanced computer controlled machine tools, simply because their salary appears to be less in terms of U.S. dollars.
In contrast, increases in real productivity are the result of more productive tools or methods of operating that make it possible for a worker to do more work. Non-real productivity gains are the result of shifting work to lower paid workers, often without regards to real productivity. The net result of choosing non-real over real productivity gain is that the company falls behind and obsoletes itself overtime rather than making real investments in productivity.
Standpoint of labor
From the standpoint of labor within countries on the negative end of outsourcing this may represent a new threat, contributing to rampant worker insecurity, and reflective of the general process of
globalization (see
Krugman, Paul (2006). "Feeling No Pain." New York Times,
March 6,
2006). While the "outsourcing" process may provide benefits to less developed countries or global society as a whole, in some form and to some degree - include rising wages or increasing standards of living - these benefits are not secure. Further, the term outsourcing is also used to describe a process by which an internal department, equipment as well as personnel, is sold to a service provider, who may retain the workforce on worse conditions or discharge them in the short term. The affected workers thus often feel they are being "sold down the river."
The U.S.
Outsourcing became a popular political issue in the United States during the
2004 U.S. presidential election. The political debate centered on outsourcing's consequences for the domestic U.S. workforce.
Democratic U.S. presidential candidate
John Kerry criticized U.S. firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of U.S.
taxes during his 2004 campaign, calling such firms "
Benedict Arnold corporations". Criticism of outsourcing, from the perspective of
U.S. citizens, by-and-large, revolves around the costs associated with transferring control of the labor process to an external entity in another country. A
Zogby International poll conducted in August 2004 found that 71% of American voters believed that "outsourcing jobs overseas" hurt the economy while another 62% believed that the U.S. government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource.
[23] One given rationale is the extremely high corporate income tax rate in the U.S. relative to other OECD nations
[24]HYPERLINK \l "_note-23"[25]HYPERLINK \l "_note-24"[26], and the peculiar practice of taxing revenues earned outside of U.S. jurisdiction, a very uncommon practice. It is argued that lowering the corporate income tax and ending the double-taxation of foreign-derived revenue (taxed once in the nation where the revenue was raised, and once from the U.S.) will alleviate corporate outsourcing and make the U.S. more attractive to foreign companies.
Sarbanes-Oxley has also been cited as a factor for corporate flight from U.S. jurisdiction.
Policy solutions to outsourcing are also criticized.
Security
Before outsourcing an organization is responsible for the actions of all their staff and liable for their actions. When these same people are transferred to an outsourcer they may not change desk but their legal status has changed. They no-longer are directly employed or responsible to the organization. This causes legal, security and compliance issues that need to be addressed through the contract between the client and the suppliers. This is one of the most complex areas of outsourcing and requires a specialist third party adviser.
Fraud
Fraud is a specific security issue that is criminal activity whether it is by employees or the supplier staff. It can be argued that fraud is more likely when outsourcers are involved. In April 2005, a high-profile case involving the theft of $350,000 from four
Citibank customers occurred when call center workers, acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank.
[27].
The
business process outsourcing industry in India refers to the Services
Outsourcing Industry in
India, catering mainly to Western operations of
MNCs (Multinational Corporations).
The sector witnessed considerable activity during 2004–05, including a ramping up of operations by major multinational corporations players and Indian organizations stepped up hiring. The domestic BPO market, catalyzed by demand from the
telecommunications and
BFSI segments, matched the growth of BPO exports. The market experienced maturity and consolidation, a result of numerous mergers and acquisitions taking place within the sector. There were over 400 companies operating within the Indian BPO space, including captive units (of both MNCs and Indian companies) and third-party services providers. The key enabler for this has been cheaper
bandwidth leading to low telecom costs for leased lines and availability of educated English speaking workforce in India.
The Indian BPO industry remains on a growth path, emerging as one of the key investment markets in the country.
It is also referred to as
Information Technology Enabled Services or
ITES, and high end work with specialisation is referred to as
Knowledge Process Outsourcing or
KPO. There are other variants in use such as
Legal Process Outsourcing (LPO).
NASSCOM is a chamber of commerce that represents this body and lobbies for it, as well as creates a platform for members to take up common issues. NASSCOM services both the
Indian Software and the Indian BPO industry.
Contents
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1 History1.1 Airlines1.2 Amex1.3 General Electric1.4 Third party BPO's1.5 Entry of IT majors2 Size of industry3 From a PricewaterhouseCoopers survey4 Leading BPO-ITes cities in India5 Leading BPO organizations in India5.1 Captive6 Companies Outsourcing to India7 References8 See also9 Further reading10 External linksHistory
Airlines
In the early 1980s several European airlines started using Delhi as a base for back office operations,
British Airways being one among them. The BA captive was finally spun off as a separate organisation called
WNS in the current millennium.
Amex
In the second half of the 1980s,
American Express consolidated its JAPAC (Japan and Asia Pacific) back office operations into New Delhi. This center was headed by Raman Roy, and has been a source of several leading names in the Indian BPO Industry.
General Electric
In the 1990s
Jack Welch was influenced by
K.P. Singh, (A Delhi based realtor) to look at
Gurgaon in the NCR region as a base for back office operations.
Pramod Bhasin, the India head of G.E. hired Raman Roy and several of his management from American Express to start this enterprise called
GECIS (GE Capital International Services). Raman for the first time tried out voice operations out of India, the India operations also was the Beta site for GE
Six sigma enterprise. The results made GE ramp up their Indian presence and look at other locations. In 2004 GECIS was spun off as a separate legal entity by GE, called
Genpact. GE has retained a 40% stake and sold a 60% stake for $500 million to two equity companies,
Oak Hill Capital Partners and
General Atlantic Partners.
Third party BPO's
Till G.E most of the work was being done by "captives"- a term used for in house work being done for the parent organisation. In 2000 Raman Roy and some team members from GECIS quit , and with VC funding from Chrysalis Capital started Spectramind. At the same time an organisation called
EXL started in
Noida and
Efunds started in Mumbai and Gurgaon, and Daksh in Gurgaon. However, recently most of the Indian BPO's even smaller and mid-sized ones are actually setting-up their onshore presence. Most of the serious players are actually improving the outsourced business processes by leveraging on years of experience and now some of them are directly competing with their own older clientbase by marking this transition to
KPO 's.
Entry of IT majors
In 2002 Spectramind was bought by software major
Wipro, and BPO by then had become mainstream like the IT Industry in India. The team that had setup Spectraming went on to start
Quatrro in 2006, a BPO specialising in high end BPO/KPO services. By 2002 all major
Indian software organizations were into BPO, including
Infosys (
Progeon),
HCL,
Satyam( Nipuna)and
Patni. By 2003 Daksh was bought out by IBM and later in 2006 MphasiS by
EDS. Even international 3rd party BPO players like
Convergys and
Sitel had set up shop in India, swelling the BPO movement to India. Then service arms of organizations like
Accenture,
IBM,
Hewlett Packard,
Dell too set up captives in India.
Size of industry
The industry has been very growing rapidly. It grew at a rate of 38% over 2005. For the FY06 financial year the projections is of US$7.2 billion worth of services provided by this industry. The base in terms of headcount being roughly 400,000 people directly employed in this Industry. The global BPO Industry is estimated to be worth 120-150 billion dollars, of this the offshore BPO is estimated to be some US$11.4 billion. India thus has some 5-6% share of the total Industry, but a commanding 63% share of the offshore component. The U.S $7.2 billion also represents some 20% of the IT and BPO Industry which is in total expected to have revenues worth US$36 billion for 2006. The headcount at 400,000 is some 40% of the approximate one million workers estimated to be directly employes in the IT and BPO Sector.
The related Industry dependent on this are Catering, BPO training and recruitment, transport vendors, (home pick up and drops for night shifts being the norm in the industry). Security agencies, Facilities management companies.
From a PricewaterhouseCoopers survey
An Indian call center
Table 1: Global BPO Market by Industry
[1]Industry
Percentage (%)
Information Technology
43
Financial Services
17
Communication (Telecom)
16
Consumer Goods/ Services
15
Manufacturing
9
Table 2: Global BPO Market by Geography
[1]Country
Percentage (%)
United States59
Europe27
Asia-Pacific (incl.
Japan)
9
Rest of the World
5
Table 3: Size of Global Outsourcing Market
[1]Year
Size (USD Bn)
2000
119
2005
234
2008 (est.)
310
Table 4: Size and Growth of BPO in India
[1]Year
Size (US$ Bn)
Growth Rate (%)
2003
2.8
59
2004
3.9
45.3
2005
5.7
44.4
Currently the Indian BPO Industry employs in excess of 245,100 people and another 94,500 jobs are expected to be added during the current financial year (2005-2006)
Table 5: Call Center Employee cost
[1]Country
Cost (USD/yr)
USA19,000
Australia17,000
Philippines9,050
India7,500
Nearly 75% of US and European multinational companies now use outsourcing or shared services to support their financial functions. 72% of European multinational companies have outsourced financial functions over the past two years.
Additionally, 71% of European companies and 78% US companies plan to use these services in the next 12-24 months. Overall, 29% of US and European companies expect to increase their use of outsourcing of financial functions, with spending expected to be nearly 16% higher than current levels.
Growth in this sector will get a further impetus as Indian
BPO companies have robust security practices and emphasis is laid in developing trust with clients on this score. While earlier there were varying quality standards on this aspect, today there is focus on standardization of security, such as data and IP security.
Leading BPO-ITes cities in India
Bengaluru,
Chennai,
Hyderabad,
NCR (
New Delhi,
Delhi,
Gurgaon,
Faridabad,
NOIDA,
Greater Noida,
Ghaziabad),
Pune,
Mumbai are Tier I cities that are leading IT cities in India.
With rising infrastructure costs in these cities, many BPO's are shifting operations to Tier II cities like
Mangalore,
Mysore,
Hubli-Dharwad,
Belgaum,
Coimbatore,
Madurai,
Hosur,
Nagpur,
Kochi,
Trivandrum,
Chandigarh,
Mohali,
Panchkula,
Kolkata,
Ahmedabad,
Bhubaneshwar,
Jaipur, and
Vishakapatnam.
Tier II cities offer lower
business process overhead compared to Tier I cities, but may have a less reliable infrastructure system which may hamper dedicated operations. The
Government of India in partnership with private infrastructure corporations is working on bringing all around development and providing robust infrastructure all over the nation.
Leading BPO organizations in India
The Dataquest BPO Top 20
Bootstrap Technologies Pvt Ltd.GenpactTransworksIBM DakshTCS BPOCambridge SolutionsWNS Global SolutionsWipro BPOConvergys IndiaFirstsource SolutionsHCL BPOAegis BPOInfosys BPOEXL ServicesOutsource Partners InternationalSutherland Global ServicesvCustomerHTMT Global24/7 CustomerAptarae2zMphasiS BPOSource : dqindia.ciol.com/dqtop20/2007/sas&bpo07/
Captive
MotorolaNokiaOption OnePrudentialPrincipal Financial GroupReutersSiemensStandard Chartered BankTescoUBS AGUnited HealthYahooaMarketForceBootstrap Technologies Pvt Ltd.,
Companies Outsourcing to India
This is a list of companies sending work to 3rd parties in India, or having partners to run their centers.[
citation needed]
AetnaAlcoaAvivaBarclaysBBC (in planning stages)
Blue Cross and Blue Shield AssociationBT GroupCapital OneCiscoDelta Air LinesHelion-primeHewitt AssociatesHSBC (HSBC Data Processing India Pvt, Ltd)MercerNorwich UnionVerizonBusiness process outsourcing or BPO is an emerging industry in the
Philippines.
Contents
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1 Overview2 Legal and medical transcription3 Finance, logistics and accounting4 Software development and animation5 References6 See alsoOverview
Main article:
Business process outsourcingThis industry is regarded as one of the fastest growing industries in the world. International investment consultancy firm McKinsey & Co. predicts that the demand for outsourcing services will reach $180 billion in 2010, with the customer contact services, finance and accounting, and human resource sub-sectors taking up the biggest shares. When it comes to the trend in primary business requirements, experts are seeing a shift from cost-effectiveness to skills quality and competence. This development all the more strengthens the Philippines' position as an emerging global leader in the BPO industry (BPAP 2006).
The BPO boom in the Philippines is currently led by demand for
offshore call centers. The Philippines raked in offshore service generating revenues of $2.1 billion in 2006, placing third behind India and China and slightly ahead of Malaysia. That's up 62% over the $1.3 billion it gained in 2004, and a huge increase from the start of the decade when the outsourcing industry in Manila employed just 2,400 people and the industry had revenues of merely $24 million. It is estimated that 200,000 people are working in 120 BPO (mostly Contact Centers) in the Philippines in 2006. Overall, Philippine BPO is forecasted to earn US$11 billion and employing 900,000 people by the year 2010 (Shameen 2006).
The recent growth spurt in the outsourcing industry in the Philippines has been fueled not by traditional low-value-added call centers but more higher-end outsourcing such as legal services, Web design, medical transcription, software development, animation, and shared services. Though call centers still form the largest part of the sector, the Philippines has begun leveraging its creative design talent pool, its large pool of lawyers, and its professionals in accounting and finance (Shameen 2006).
To achieve and sustain this rapid growth, the Philippine government is offering significant fiscal and non-fiscal incentives to attract foreign direct investment in these industries as part of the 2006 Investment Priorities Plan. The IPP was prepared by the Board of Investments (BOI), as the lead agency in promoting investments, focused on the sectors identified in the Medium-Term Philippine Development Plan (MTPDP) 2004-2010 (PBOI 2006).
Majority of the BPO facilities are located in
Metro Manila and
Cebu City although other regional areas such as
Baguio City,
Bacolod City,
Cagayan de Oro,
Clark (Angeles City),
Dagupan City,
Davao City,
Dumaguete City,
Lipa City and
Iloilo City are now being promoted and developed for offshore operations.
Major companies that already operate in the Philippines include AIG, AOL, Barnes & Noble, Chevron, Citigroup, Dell, HP, HSBC, IBM, Intel, JPMorgan Chase, Motorola, Procter & Gamble, Siemens AG and Trend Micro. Roster of outsourcing clients includes NEC Telecom, Caltex, Fujitsu and Alitalia. Notable BPO vendors include Affiliated Computer Services (ACS), Accenture, Convergys, Sykes, PeopleSupport, SupportSave Solutions and Unisys. There are numerous smaller operations that either support larger vendors during seasonal demands, or directly service Small and Medium overseas companies. Major vendors are managed jointly by expatriate and local managers whereas smaller operations maintain their viability through direct management by its owners, who themselves are most likely to be from the BPO and ICT industries. Industry associations include the BPO Services Association (BSA/U) and Business Processing Association of the Philippines (BPA/P).
The Philippines' Center for International Trade Expositions and Missions (CITEM) report for 2004 cited the Philippines as among the top 10 choices for offshore operations. Consultancy firm McKinsey & Co has been tapped to draft a five-year roadmap for the country's BPO industry.
Legal and medical transcription
These companies do mostly medical reports, discharge summaries, operative reports, therapy/rehabilitation notes, chart notes, and hospital and clinic reports using state-of-the-art software and equipment from the U.S. They can transcribe up to 1,000 lines per medical transcriptionist per day at a 98% average accuracy rate, and they conduct training programs for their transcriptionists to continuously upgrade their performance. Most of them offer 24x7 services and have an average turnaround time of 24 hours, with the ability to deliver output in 3 to 6 hours in emergency cases.
The industry is now in the process of pursuing certification for individual companies’ services to further promote the country’s capabilities in this area. An industry alliance is also now being forged to ensure the sector’s continued growth in partnership with the government. Inclusion of medical transcription subjects in medical courses is likewise being pushed, to further expand the country’s pool of skilled medical transcriptionists.
Finance, logistics and accounting
The Philippines is fast becoming a regional and global hub for shared corporate backroom operations, especially for financial services such as accounting and bookkeeping, account maintenance, accounts receivable collection, accounts payable administration, payroll processing, asset management, financial analysis and auditing, management consulting, inventory control and purchasing, expense and revenue reporting, financial reporting, tax reporting, and other finance-related services such as financial leasing, credit card administration, factoring and stock brokering; as well as for logistics management, and cargo shipment management.
Accounting primarily for these companies’ choice of the Philippines as the location for their shared backroom operations is the country’s rich pool of low-cost yet English- and IT-proficient business, accounting, HRM and engineering graduates. Moreover, the World Competitiveness Report 2001 ranked the Philippines 16th of 49 countries for "International Business Experience." These professionals are also particularly noteworthy for their marked customer service orientation, superior work ethic, high degree of trainability, flexibility, multicultural adaptability, and loyalty. Rounding up the Philippines’ advantages as a BPO destination are its strategic location, the availability of prime yet low-cost real estate in the country, its good and increasingly cost-competitive telecommunications and other business infrastructure, its expatriate-agreeable lifestyle, and its progressively IT-supportive policies and incentives.
Software development and animation
The Philippines is ranked #1 in the availability of knowledge-based jobs and workers worldwide, and ranked 4th among Asian nations in terms of labor quality, according to a survey conducted by the U.S. based Meta Group. Aside from the huge pool of productive, trainable and multi-skilled labor force, the country competes in the quality of its managers and information technology (IT) staff and engineers. The unique edge comes from a high level of proficiency in English (the Philippines is the 3rd largest English-speaking country in the world) (Gov.ph 2007).
Fueling the recent growth spurt in the outsourcing industry in the Philippines are more higher-end outsourcing services such as Web design, software development, and animation (Shameen 2006).
Filipino animators do well in the global market for animation, which is fast growing due to the increasing popularity of animation as an entertainment medium not just for free and cable TV and the movies but also for computer games, as well as an advertising medium, a graphics medium for Internet content, and an information and educational tool.
Their services range from full 2D and 3D animation, including pre- and post-production services such as layouting, in-betweening, clean-up, digital background production through scanning and pre-compositing, color styling, special effects creation, and digital ink and paint application, to flash animation and web design, graphic and art design, mobile applications, and art and animation training.
Major studios like Disney, Marvel, Warner Brothers and Hanna Barbera have offices in the Philippines (CNN 1995). Some of the latest works of Filipino animators include scenes in Pixar's
Finding Nemo, Paramount Picture's Barnyard and Twentieth Century-Fox's
Anastasia (ABS-CBN Interactive 2004).
Here are a list of companies conducting software development and animation outsourcing in the Philippines.
1. Accenture 2. IBM 3. HP 4. SYSTEMA Computer Solutions Corp. 5. Headstrong 6. Unisys 7. Toei Animation
The South African BPO and Call Centre Sector
South Africa already has a vibrant BPO industry with 80,000 staff and 70 companies offering services, and wants to boost this by creating another 100,000 jobs in this sector over the next five years
Approximately 70 service providers serve local and offshore customers, with almost 4 500 agents serving offshore customers and 5 000 serving local customers (excluding local captives)
The sector is forecast to expereince rapid growth to 7,400 APs in 2010 and achieve Annual growth rates of 20%+.
Sector Demand drivers
First-world infrastructure
International Connectivity
Sophisticated Financial Services Industry
International Financial, Legal and Security compliances
Cultural affinity of agents
Time-zone affinity to Europe
Multi-lingual staff
Learnerships & work ethic
South Africa Call Centres
South Africa InformationSouth African Call Centre CommunityCalling the CapeKwaZuluNatal Call CentresContact In GautengEastern Cape call CentresRetrieved from "http://en.wikipedia.org/wiki/Business_process_outsourcing_in_South_Africa"
BPO security
From Wikipedia, the free encyclopedia
Jump to:
navigation,
searchInformation security has emerged as a significant concern for banks, mobile phone companies and other businesses that use
call centers or
business process outsourcing.
Theft of personal data has been reported from both US-based
[1]and India-based
[2] call centers. In one case, one of the alleged criminals has stated that the data he offered for sale was fake.
[3],
Britain's Financial Service Authority examined standards in India in April 2005 and the Banking Code Standards Board audited eight Indian call centres in 2006, handling more than a million calls per month from the UK. The BCSB report stated that "Customer data is subject to the same level of security as in the UK. High risk and more complex processes are subject to higher levels of scrutiny than similar activities onshore."
[4]India's
NASSCOM has said that they take breach in security extremely seriously and will assist the police in their probe.
Contents
[
hide]
1 Common countermeasures2 See also3 References4 External linksCommon countermeasures
There are three identifiable types of illicit activities concerning fraud emanating from call centres:
1. Crooks who pretend to be legitimate call centres.
2. Hackers who gain access to call centre information through illegal means
3. Call centre agents who illegally misuse the information they have access to in call centres.
While items 1 and 2 are mostly subject to police action, call centres can use internal procedures to minimise risk. Such mitigation measures include but are not limited to:
1. Creating a paperless environment, preventing employees from writing down and removing information by ensuring that all work processes are done on the computer, without having to record anything on forms or notes.
2. Prohibiting the use of cellphones and cameras on the floor.
3. Prohibiting paper, pens and digital recording devices from being brought onto the floor.
4. Preventing internet access for employees on the floor.
