Posts Tagged ‘BPO’

European IT and BPO outsourcing deals grow at fastest rate since 2010

April 17th, 2014

According to a recent article published by, the latest figures from market-watcher ISG show that the number and value of IT and BPO outsourcing contracts signed in Europe over the past three months have grown at their fastest rate in over four years. outsourcing59

The total value of contracts signed over the quarter year period are reportedly worth €2.4bn, which is a 29% increase from the same period last year, alongside a 21% increase in the number of contracts signed, reaching 165 in 2014.

€2bn of the total value was made up of the 127 IT outsourcing deals that took place during the first three months of the year, which is an 18% increase from last year.

It is of interest, then, that in contrast with the rising value of IT outsourcing contracts, ISG report that BPO value has decreased in 2014 to just €370m.

Nevertheless, in the UK alone, 59 contracts were recorded at a cost of €1bn, representing a 66% increase in value and the highest number of contracts in a single quarter for three years.

According to John Keppel, president of ISG North Europe, outsourcing activity remains high and it was the return of large relationship awards that can be seen to have positively affected the market. The future, however, will see an increasing number of customers move towards smaller contracts.

“Although these larger contracts have a strong role to play in the market”, Keppel explains, “the smaller deal size brackets will continue to grow more sharply as enterprises opt for greater flexibility and more specialised services from a greater number of providers. Multi-sourcing, increasing competition among providers and lower technology costs will continue to be the factors that drive the market for the foreseeable future.”

Keppel said global IT and BPO outsourcing is expected to grow 15% in the first half of the year and a “high single digit” figure for the full year.


Business Process Outsourcing Services in the US Industry Market Research Report from IBISWorld Has Been Updated

April 15th, 2014

Business Process Outsourcing (BPO) is a form of subcontracting that involves the delegation of specific business functions to third-party service providers. “It is the process of hiring another company to handle certain business activities in order to achieve maximum savings, increased efficiency and a greater return on investment,” according to IBISWorld Industry Analyst Stephen Morea. BPO services is distinct from information technology (IT) outsourcing, which hires a third party business to conduct IT- related activities, such as application management and data center operations. Moreover, BPO is often divided into two main categories: back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services like marketing or tech support.outsourcing56

The Business Process Outsourcing Services industry fared well over the five years to 2014, supported by an improving overall economy and rising revenue in the human resource, finance and accounting, customer relations management and insurance sectors, which provide a large portion of BPO business. “Additionally, rising wages and increased operating costs associated with the passage of Patient Protection and Affordable Care Act (PPACA) helped drive employers to BPO companies as a method of cost control,” says Morea. As a result, in the five years through 2014, BPO Services industry revenue is expected to increase at an annualized 4.1% to reach $127.4 billion and includes a 4.5% increase in 2014 alone.

In the next five years, wages will continue to rise with federal legislation presently in the pipeline to increase the federal minimum wage to $10.10 per hour. Also, the healthcare industry will encounter an upsurge in costs due to the burgeoning number of new individuals slated to receive health insurance. In response, companies will continue to pursue outsourcing to reduce personnel expenditures and offset escalating back office costs.
For more information, visit IBISWorld’s Business Process Outsourcing Services in the US industry report page.


Open Access BPO Fortifies Multilingual Call Center Services with Four More Asian Languages

April 14th, 2014

Leading outsourced business solutions provider Open Access BPO now offers voice-based customer service in Vietnamese, Thai, Bahasa Malaysia, and Bahasa Indonesia.outsourcing52

The four Asian languages will bolster the outsourcing firm’s multilingual call center unit, which originally offered its services in other Asian tongues namely Chinese, Japanese, Korean, and Tagalog, as well as Western languages including English, French, German, Italian, Portuguese, and Spanish.

As one of the few firms offering a wide range of foreign language services under one roof, Open Access BPO leads the niche of multilingual call centers in the Philippines, where the company operates. The firm’s venture also answers the demand for customer service representatives (CSR) and technical support agents (TSA) who will communicate using the languages spoken by the growing Vietnamese, Thai, Malaysian, and Indonesian markets.

Similar to the delivery method of the initial lineup, the four new voice-based services will be handled by native-speakers to provide customers with the type of genuine cultural affinity that eliminates contextual differences that hinder customers from fully understanding second-language agents.

Open Access BPO provides training for its agents on the culture of the customers they will be attending to. This is in addition to the training for proper call etiquette, articulation, and problem-solving, among other benchmark skills necessary for voice work.

The strategic location of the company’s operational sites also makes Open Access an ideal choice for multilingual call center services. The Philippines is reportedly the most lucrative multilingual outsourcing hub in the Southeast Asian region, as the country is situated at the heart of the Asia-Pacific. Multinational businesses catering to culturally diverse customers have been centralizing operations in the Philippines instead of spreading offices across the continent.


BPOs: The road best not taken

April 9th, 2014

If there is one activity that is reshaping the fortunes of a city like Pune, it is Information Technology. All over what is called the “fringes” of the old town with its cantonment and the “native” city, the screech of drills has shattered the tranquillity for which the city was once famous; iron rebars shooting up into a sooty sky obliterate the green cover that almost justified old timers calling Pune a hill station.outsourcing47

Pune has become a vast construction site, the frenetic pace of disruptive construction blotting out its history and re-inventing its geography. Rivers are asphyxiated, old wadas give way to malls, the city yearns to be known as the state’s ‘Bangalore’, a global IT hub.

In every direction are visible the icons of the new economy: glass-fronted facades of angular buildings, cement roads and plastic trees planted at regular distances on sidewalks to give off an aura of de-culturised globalisation as the city’s destiny.

But the economic slowdown has had its impact on the ebullience of construction activity. New townships planned to cater to the “IT sector” exude a sense of listlessness, of fading hopes as demand for new office space wilts.


Not many can clarify what they mean by IT if they do not mean BPO. It is not the arrival of IT global research centres Verizon, Symantec or brick-and-mortar manufacturing that excites local business instincts as much as outsourcing. For this is an employment intensive activity; it carries upscale connotations unlike blue-collar manufacturing. There are “economies of scale”, economic “externalities” that spell profit for ‘lifestyle’ builders peddling an urban dream for first generation home-owners with paychecks fatter than the workers of a previous generation huddled in shantytowns along the old Bombay-Poona highway.

The city’s hillsides, once verdant and roads once lined with ancient trees now conjure a meta-reality in giant hoardings promising personalised fantasies at “Euthania” or “Balmoral” or “Capriccio.”

But the wheel is turning. Other nations compete for the same enchantments. BPO centres have been sprouting in other developing countries for years.

For western firms seeking back-end support at the lowest cost, India is becoming high wage country — particularly Bangalore, Pune and Delhi.

The choice now is between the Philippines and Patna, and the lowest wage rate counts.

Losing to neighbours

Outsourcing began in the early part of the new millennium as a novelty and has now become a necessity. Its benefits hinge on locating the lowest cost outsourcing hubs. A study by industry body Assocham and consultancy KPMG on India’s information and communication technology ICT sector felt India could lose 70 per cent of all incremental voice and call business to the Philippines, among other competitors.

English language skills are fairly developed and wages are lower, so far. It’s not surprising that Indian firms too have been making a beeline for lower cost destinations to outsource operations.

As far back as 2007, Indian majors such as Infosys, Wipro and TCS were scouting around in Poland, Romania in east Europe and Mexico and the Philippines to not just exploit the advantages of low cost but also to get closer to their clients.

The study estimates something like $30 billion in revenues could be lost to India in the coming decade unless something is done to retain the outsourcing business.

What can be done?

India enjoys the advantages of backwardness, low employment and a demographic dividend most investors in the BPO space find tempting. Wages are climbing but the spike is the highest in and around Tier-1 cities.

So the study recommends the development of BPO business to small towns and urban spaces that mirror Tier-1 cities at an earlier stage of their growth with high educational levels but low employment. The biggest advantages, of course, are the low levels of wages and cost of living in non-Tier-1 cities.

The logic of this kind of industrialisation is its basic transitoriness. Nothing stays; if wages rise firms look for other areas of low wage to pitch their tents. Perhaps urbanisation is an unintended benefit but if Pune is any example to go by then it is possible that the urbanisation will be hollow within; new glass fronted buildings hiding empty opportunities.

The Assocham-KPMG study’s recommendations of creating opportunities in non-Tier cities appear expedients to a rather dubious employment generating urbanisation.

Outsourcing of voice and call centre operations may sound similar to the subcontracting in manufacturing.

Multinational companies in the pre-digitalised world of manufacturing in the 1950s and 1960s sub-contracted operations to developing countries with an eye on low- cost labour and skills. They still do.

Hidden advantages

But the process of shifting parts of the manufacturing processes over time benefit host countries because of the spin offs in ancillary development. Technologies could be repeated, copied, operations require supply chains, feeder units. A labour force acquires skills that given enabling conditions could create entrepreneurship.

The bulk of outsourced operations — voice and call centres, medical and legal transcriptions other back-end transactions do not carry any such externalities. There is no skill development in transcribing or answering calls in fake accents.

The attrition rate as the Assocham study notes is high among employees because rootlessness is the abiding condition of the work. No job in modern times is as alienating as one at a call centre and the only redeeming quality is the paycheck that, after a while does not compensate enough for the banality of the work.

But the rate of attrition is not high among the workers alone. It is also high among outsourcers that come looking for low cost workers and leave once costs rise.

In this sense, they are not very different from portfolio capital, “fair-weather” friends looking in this case, not for high returns in a host country but low wage levels.


IRR Strategies Launches BPO, LPO Offshore Outsourcing Services Specially Designed to Improve Ebitda, Valuation of Private Equity, Vc and Hedge Fund Portfolio Companies

April 8th, 2014

IRR Strategies, a Miami-based BPO and LPO company specializing in outsourcing solutions for underserved SMEs and private equity investors, recently launched BPO and LPO offshore outsourcing services specially designed to help hedge funds, private equity and venture capital funds improve the financial performance of their portfolio companies.outsourcing44

“We can dramatically improve the financial performance of portfolio companies using our extensive long-term understanding of the BPO business on a global basis,” said Hector Botero, IRR Strategies president and CEO. “Our offering is very straightforward: whether in the acquisition or investment evaluation period, the management and growth period or the investment exit process, we can add substantial value.”

IRR Strategies provides global solutions for underserved small and medium-sized enterprises (SMEs), as well as small and mid-level private equity groups, serving their strategic BPO, LPO and/or shared services needs through nearshore, onshore and offshore business and legal process outsourcing, subcontracting to suppliers all over the world.

“With an extensive global network of best-in-class operators, IRR Strategies is at home implementing programs designed to bring more efficient processes, applying the latest technology and, at the same time, providing a two thirds reduction on HR costs.”

IRR strategies is comprised of an exceptional management team covering most industries and a very well-established outsourcing network of companies in Asia-Pacific, India, Central and South America. Botero, in particular, spent the last 15 years of his career implementing outsourcing programs for Business Wire, a Berkshire Hathaway company, and Marketwired, an OMERS private equity company. During his tenure at both Berkshire Hathaway and OMERS private equity portfolio companies, Botero successfully implemented offshore outsourcing projects that provided increased EBITDA and valuation for the portfolio companies.


Accenture de-emphasizes the term “outsourcing” – is this the final death knell for the O word?

April 7th, 2014

A momentous event quietly occurred on Friday which could well have significant ramifications for the business practice that calls itself “outsourcing”.outsourcing40

Accenture dropped the term from its strategy line, “Consulting, Technology, Outsourcing”, which it had been using for more than a decade, changing it to “Strategy, Digital, Technology, Operations”. In addition – and perhaps more significantly – it renamed its BPO growth platform “Accenture Operations”.  The BPO term is still used when you drill right down to the specific business service lines, but Accenture wants to emphasize to its clients that it provides end-to-end services that go beyond just BPO.

As many of us universally lamented last weekend, the outsourcing (so-called) industry has long been struggling to create a clear, meaningful identity and establish recognized career paths for almost two decades, and much of this is because so many of the service providers, advisors and enterprise customers have failed to create a positive brand perception – and communicate effectively – the value of partnering with service providers to improve and extend operational capability and productivity.

Accenture was one of the last bastions of the outsourcing term, and its de-emphasis of it may be the final nail in the coffin for the dwindling band of outsourcing diehards still clinging to the fantasy that an “outsourcing industry” actually exists. In fact, the term IT Outsourcing is already practically dead, with only a couple of advisors and IBM (oddly) still using it, so let’s see which of the providers actually still use BPO as their official terminology:

Well – there you have it – most have actively distanced themselves from the term, with only Capgemini, Dell, Infosys, Wipro and Sutherland still wed to it. Oh – and for some inexplicable reason, the major HR services firms like ADP still use it, even though the HR profession looks more negatively at outsourcing than any other.

The Bottom-line:  It doesn’t ultimately matter what the providers call it, more how the enterprise clients view it

In my view, “outsourcing” really describes the initial act when an enterprise moves the responsibility for processes and operations over to an external party. Once that act is complete, those processes being executed form part of an externalized service or operation for the customer.  ”Operation” signifies more than merely a service, but the orchestration of an end-to-end suite of processes, so I give Accenture credit for the being the first provider brave enough to use the “operation” term.  Now we can sit back and observe many of the above providers also slip that word onto their websites and marketing copy.

However, whatever these providers name their offerings, the real litmus test is going to be whether the buyers of services will start approaching service partnering as a genuine opportunity to improve their capabilities. Ultimately, they are the ones who would need to drop the O word and view services as what they are:  services.

Accenture’s move is the most significant yet in terms of rebranding the outsourcing business – my best guess is that O will be pretty much gone from our business vernacular within a year.


India losing IT-BPO business to Philippines: ASSOCHAM

April 7th, 2014

India is currently losing about 70 percent of all incremental voice and call centre business to competitors like Philippines and Eastern Europe and unless the domestic BPO (business process outsourcing) industry diversifies the delivery footprint to take advantage of low-cost centers, our competitors will further consolidate their position, according to an ASSOCHAM-KPMG joint study.outsourcing39

The study on Information and communications technology (ICT) jointly conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and KPMG says, “IT-BPO companies could reduce the total operating costs by 20-30 percent by moving to a low-cost city within India with cost differential at around 10-15 percent for non-voice processes and upwards of 20 percent for voice processes.”

“It is estimated that in the ongoing decade India might lose about $30 billion in terms of foreign exchange earnings to Philippines which has become the top destination for Indian investors, thus the need to reduce costs and make operations leaner is increasingly becoming significant across the BPO industry,” secretary general of ASSOCHAM, D.S. Rawat Sunday said, while releasing the findings of the study.

Reportedly, even a number of Indian firms have also set up substantial operations in Philippines which has a large pool of well-educated, English-speaking, talented and employable graduates (about 30 percent graduates in Philippines are employable unlike 10 percent in India where the training consumes considerable amount of time).

“Employees in Philippine call centers speak English fluently with a neutral accent which is what customers look for and that is something missing in Indian accents and that is a prime reason why BPO business is thriving in that country,” said Mr Rawat. “Cultural proximity to the US together with availability of talented manpower are key reasons as to why BPO companies prefer expanding their operations in Philippines.”

Expansion of non-English BPOs in Tier-2 and Tier-3 centers, which can provide services to the telecom and aviation sectors at low costs will increasingly play significant role in growth of domestic outsourcing industry, further noted the ASSOCHAM-KPMG study.

“Lower attrition rate in smaller towns is a big positive owing to lower recruiting and training costs, while there is comparatively high attrition rate of 30-35 percent in tier I cities,” said Rawat while quoting the study. “Besides, even transportation costs for BPO employees and real estate prices in smaller cities are lower as compared to the metros.”

Cities like Ahmedabad, Chandigarh, Coimbatore, Dehradun, Jaipur, Kozhikode, Nagpur, Nashik, Palakkad and others can help meet 50-60 percent of projected talent requirement of BPO industry over next five years, it added.

In order to provide the content in local language there is need to address challenges of fonts, poor bandwidth and the sector specific need based services should be offered.

Besides, projects like the National e-governance Plan (NeGP), the Unique Identification Authority of India (UIDAI)  and other government projects are likely to give a fillip to the domestic BPO sector in smaller cities and towns if the industry is able to tap the talent successfully.

The decision to set up BPO centers in Tier 2 and 3 cities requires striking the right balance between all elements and a patient, long-term approach is the key, added the ASSOCHAM-KPMG study.


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