Posts Tagged ‘BPO’

700 Internet cafés to be utilized as BPO service centers

October 31st, 2014

The 700 internet cafés in the city are eyed to be utilized as service centers for job recruitment of business processing outsourcing (BPO) .Outsourcing57

So far, only 400 of them could be harnessed for this activity, said lawyer Samuel Matunog, president of the Information and Communications Technology – Davao Industry Development (ICT-DID), He said the 400 cafes are the ones still active.

“We are thinking that maybe we can qualify these internet cafés to farm out jobs for the unemployed especially those from rural and urban poor communities that we usually thought of them as not part of ICT community,” he said.

He said the internet cafés will be transformed as service delivery centers and as a work space for the workers.

“After the conversion of internet cafés into service centers there will be training for the owners of the cafés for them to be able to handle BPO services and also to train their clients after,” Matunog said.

He said he was glad that the city’s Information and Communications Technology Office (ICTO) spearheaded this project and already trained and developed service centers where unemployed sectors are tapped to be part of the ICT industry.

This will help maximize the operators of internet cafés to generate jobs for the communities near them, he said.

Part of the training that Matunog mentioned is content-handling for the government’s database.

Industry leaders are looking forward to jobs which could be done outside City Hall to the internet cafés or barangay halls.

“These are simple tasks but someone could earn with minimum wage,” he added.

There are problems expected to arise though, during the preliminary implementation of the impact-sourcing in the city. Matunog said that most of the workers are not familiar with the tasks that they are doing, “therefore there must be more trainings to be done.”

He admitted that the challenge is the training part.

“It will take longer time [for the training] given that the targets are from the unemployed and retired sectors from urban poor up including Indigenous People in the rural areas who are under-educated people in terms of knowledge in ICT.”

Matunog’s group is looking forward in generating 600 trained workers from unemployed sectors.

He said that the local government, through the city’s Information and Communications Technology Office (ICTO), is already giving its support by spearheading in the training provided for the target sector.

This project is part of the 6th SummIT which was held in the city last October 24 wherein part of the discussion is the utilization of impact-sourcing outside Metro Manila “as a tool for economic development of the least-developed communities and to connect them to the global economy”.

According to Monchito Ibrahim, deputy executive director on eBusiness of Department of Science and Techonology – Information and Communications Technology Office (DOST-ICTO), impact-sourcing could be defined into two models:

“First is people doing BPO jobs at home and second is partnership between the large BPO companies and small-local BPO companies for them to re-outsource some of the projects that the larger companies are doing,”.

“Instead of the big companies investing in the regions, the work will be given to the small business present in the region,” Monchito said.

He added that it would definitely have a “big impact in the region” especially that, according to him, “Davao is one of the biggest players in the information technology and business process management (IT-BPM) sector.”

The said conference was attended by about a hundred ICT experts from Association of Southeast Asian Nations (Asean), ICT practitioners, academe, and students under the ICT programs.


Is Outcome-Based Pricing in BPO Here to Stay?

October 30th, 2014

The recent rise in the number of contracts containing outcome-based pricing models provides obvious benefits for buyers in the contact center industry. These agreements, which reward service providers for meeting specific objectives, can prove mutually beneficial by encouraging better results and enabling sellers to increase their earnings, but that is not always the case. Although this model is evidence of a closer strategic relationship between clients and service providers, its continued growth may be stemmed by the fact that the sellers have to assume almost all of the risk involved.Outsourcing53
The aim of outcome-based pricing is to provide incentives for service providers to achieve certain goals, while reducing risk from the buyer’s perspective by limiting costs if their aims are not met. “Outcome-based pricing is a very fast-growing area within contact center contracting models and I think that’s important because it tells you that the goal of the contracts has changed and that the perception of service providers is better aligned with the business outlook of the client organization rather than being just a cost-saving mechanism,” Katrina Menzigian, Vice President of Research Relations at Everest Group, told Nearshore Americas. “This whole concept of outcome-based pricing has been growing in the BPO space for about five years and in contact centers we’ve noticed a bigger pickup in the last two to three years.”
Bob Dechant, Chief Sales and Marketing Officer at Qualfon, believes that this trend has emerged because the prices of outsourcing contracts have dropped as far as they can. “People have been offshoring now for a long time and there’s not much room for negotiation for lower price points,” he told Nearshore Americas. “The outsourcers and their clients have gotten to the point when they realize there’s no more room to take the price-per-hour down any lower and have the outsourcer make a profit, which they need in order to reinvest in the business. There’s no more wriggle room so what you’re seeing now is people trying to be creative.” In this context, outcome-based pricing is growing more popular because it enables buyers to pay even less if their vendors are not performing well, while guaranteeing that they only have to pay top dollar if their goals are being met.
Measuring the Metrics
The outcomes that buyers typically want to achieve differ depending on whether they are outsourcing sales or customer care, Dechant said. “The three key metrics on the sales side are close rates, average order spend, and the other one is revenue-generating units, which is very common in the telecom world. They’re all really based around generating revenue.” On top of these are the typical call center metrics like service level, handle time, quality experience, but “those are just a given, you have to do them to be effective,” he added.
“The metrics on the care side are a little bit harder to define, but they’re often more around quality experience,” Dechant said. “Again clients are moving away from the more one-dimensional metrics like handle time and service level and towards the important ones as they see it, which include quality, customer experience, net promoter – all similar things around enhancing the value that the customer has with their brand.”
Such metrics must be very clearly defined in the contract because measuring them can be complicated. Service providers must agree with their clients whether the outcomes are to be measured internally or externally, through surveys for example, Dechant said. While the metrics on the sales side are easily definable and measurable, some of those on the customer care side can be somewhat ambiguous. For this reason, incentives account for anywhere from 10% to 100% of pricing in sale contracts, but in care they are typically limited to around 10%, he explained.
Other outcomes typically linked to financial incentives in outcome-based contracts include churn, growth in a particular product line, client satisfaction levels and collection achievement, Menzigian added. Many of these metrics are measured in ranges “because business outcomes typically involve some fluidity,” she said. Most contracts involve hybrid payment structures rather than 100% outcome-based pricing, Menzigian said, explaining that “part of it needs to be fixed to cover the expenses that the service providers are incurring and then part of it is incremental.”
Who’s Buying?
According to Everest research, 34% of all contact center contracts signed in the last two to three years used some kind of hybrid pricing model. Of these, 69% included some kind of outcome-based component, Menzigian said. This means almost one in four of all contact center contracts now contain some degree of outcome-based pricing.
“The range of buyers involved in outcome-based contracts is fairly broad,” Menzigian noted. But they tend to be companies that “are very mature in their outsourcing processes” and that want to improve their customer experience.

According to Dechant, outcome-based contracts are “probably most prevalent in the United States because among the buyers here there are a lot of long-tenured, very sophisticated clients that have been outsourcing for a long time and they’re using this as the next evolution of the model. Those buyers push the vendors pretty hard. That’s not to say you’re not seeing it in other markets, but that percentage of outcome-based pricing is probably highest in the United States.”

Denchant has observed two distinct buyer profiles. “One is the very, very experienced outsourcer that has had a lot of interaction with a lot of service providers and they’re very mature in their relationships and they’re trying to move to the next level,” he said. “Then there are novices who are very early into the game and they might have got some information from a consultant.” These are much riskier potential clients because they have less experience in defining metrics, he noted.

Menzigian agreed that it makes little sense for sellers to enter into outcome-based contracts with new buyers because this is “something that involves a closer working relationship and a sense of mutual gain. I don’t think it’s the kind of thing that you would be using in a brand new relationship, I think it’s something you grow into, so as the relationship matures you can open up discussions around ‘what are we going to tackle next and how can we make it effective?’” Menzigian continued: “If the relationship expands and you have a combination of transactional services and volume-based services and the contract becomes more complex then you’re entering the kind of environment where outcome-based pricing potentially becomes part of the conversation.”

As outcome-based pricing is still only an emerging trend, the major service providers typically find the number of buyers that are interested in adopting the model is much greater than the number that are really able to take advantage of it in the end, Menzigian noted. “There are many cases that we hear about where the clients go through the whole process to do outcome-based pricing, they negotiate prices and everything but they just can’t get to the point of signing the contract,” she said. This is because the model is not suited to all clients, and sellers must be very careful about who they do business with in order to minimize the risk that they are exposing themselves to.

Risk Assessment

There is an inherent degree of risk within all outcome-based contracts, Dechant stated. This means service providers must do a lot of due diligence to understand the metrics and the objectives that they can be held accountable to. “If you’re not performing well then those contracts will mean that you only break even or you’re actually losing money. That’s not a sustainable model so it forces you as an operator to deliver and it forces you to do a lot more diligence on the front end,” Dechant explained.

“First you need to determine what kind of work it is. Is it sales work or care work?” he continued. “The next thing you need to understand is what the current operating levels are. Are you looking at the actual performance of today’s partners or are you looking at aspirational goals? Are you being held accountable toward unattainable goals? There’s a fine line between improvement and aspiration. (In an outcome-based model) you need a lot more two-way discussion and early diligence in order to understand the objectives.”

When it comes to due diligence, service providers must verify that their “client’s contact center or customer care operations are mature in the core areas. Then you can build on that and tie the contract and the payment to these more emerging outcome-orientated models,” Menzigian said.

“As a service provider you’re looking for a client that you think is reasonably mature in how they work with relationships with their service providers, how they manage the process, the kinds of programs they have in place with their contact centers, because the service provider is looking for a match that gives them some confidence that the client truly understands what they’re getting themselves into and what it involves,” she explained. “The service providers are putting their compensation at risk. It takes two to tango and the client needs to be the kind that can fulfill its share of the obligations and has an environment that is likely to yield the kind of process changes needed in order to make the outcome-based pricing work.”

Simply put, if the arrangement does not have the potential to be mutually beneficial for both parties then it is not going to work out in the long term. “I tend to find that it has to have a combination of benefits, otherwise it doesn’t have longevity, so that’s why the pure outcome-based model is very difficult to make work and it doesn’t really happen very much, because all the risk is being taken by the service provider and not by the client,” Menzigian said. “So that’s why you typically find a hybrid kind of environment.”

Is This the Future?
“It’s important to mention that this is an area that’s gaining attention and the adoption is picking up but it’s certainly something that’s not mainstream right now,”  Menzigian stated. Nonetheless, she believes outcome-based pricing “will become more common because more and more client organizations are really interested in developing compelling analytics and creating closer partnerships with their outsourcing service providers. They understand that you have to look at the whole package of the business impact you’re trying to create and I think that outcome-based pricing is an extension of that thought process.”

For Dechant, the future of this model depends on how well service providers can adapt to it. Outcome-based pricing will become more common “as long as the providers are able to be successful,” he said. “But some aren’t. There’s going to be fallout, there’s going to be some contracts that really impact those outsourcers that are struggling financially and if you have a sizeable contract then that can go upside down and put a lot of strain on your business.”

Service providers need healthy partners who understand that they must be successful financially in order to enjoy a productive relationship with their clients, Dechant added. Do outcome-based contracts facilitate such a relationship? “I think the jury’s still out on that,” he said. “It’s still early, but if it ends up being just another way of getting further price decreases, even for your performing vendors, then the model is going to have to adjust itself. But at the end of the day, if the performing vendors are able to use this as a way to drive more profitability through results then it will continue to grow.”


BPOs, AEC seen key as country enters demographic window

October 28th, 2014

As the Philippines enters its demographic window next year, a period of expected economic growth given a bigger employable population, the information technology and business process outsourcing (IT-BPO) industry and the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) are seen as key to providing the necessary job opportunities.Outsourcing48

“What’s good about the BPO industry is that for every job that they create, there is an additional 2.5 jobs created, that’s the multiplier effect,” said Zedric J. Matubis, vice-president for retail sales of Philam Asset Management, Inc. (PAMI) during a roundtable discussion with the media here last week.

“That 2.5 factor will be taken into consideration in economic growth prospects,” Mr. Matubis added, citing the consequent impact on food services and the retail industry, among others.

The demographic window, projected in the Philippines from 2015 to 2050, is defined by the United Nations as a period when majority of the population is within the productive ages of 15 to 64, while those below 15 years old comprise a maximum of 30% and those 65 and above are less than 15%.

Data from the Philippine Statistics Authority indicate a projected population of almost 103 million by next year, of which about 44 million are within the 15-64 age group.

“That will bring us to a higher level of economic growth because half of the population is earning,” Mr. Matubis said.

The IT-BPO industry registered one million employees as of mid-2014 with a projected increase of at least 120,000 new jobs annually within the next three years, according to the Information Technology and Business Process Association of the Philippines (IBPAP).

Meanwhile, the formation of the AEC — through the economic integration of the ASEAN member-countries — starting December 2015 is also expected to open more employment opportunities, especially given that the region is considered part of “emerging Asia”.

Dr. Brian Murray, chief economist of the Hong Kong-based AIA Group Limited’s Investment Department, said indicators within the emerging Asian countries point to a “zero risk of recession,” citing analysis from the International Monetary Fund (IMF).

“This is the region that will see growth,” Mr. Murray said.

IMF Working Papers on “emerging Asia” cover China, India, and the ASEAN member countries Indonesia, Malaysia, Philippines, Thailand, and Vietnam.

For the Philippines, he said foreign direct investments are expected to flow in considering the country’s strong economic fundamentals and improved perception on good governance policies.

Mr. Matubis added, “We feel that the economic growth will enable companies to invest more and hire more and new investors will come in.”

For PAMI, the investment arm of Philippine American Life and General Insurance Company (Philam Life) which is part of the AIA group, the positive outlook on employment and the Philippine economy as a whole is anticipated to give a boost to the fund management sector.

Ferdinand L. Berba, PAMI chief executive officer, said while Filipinos still by-and-large simply put savings in banks, the growth of their long-term fund portfolio is an indication of growing awareness on other investment options.

“The Philippine growth story will continue… the question is how do we take advantage of that? We provide options for our clients, and you don’t need a lot of money to invest (in mutual funds),” Mr. Berba said.

PAMI is currently holding a series of investment forums in key cities around the country and company officials said they will consider organizing a similar road show targeting college-level students who will soon join the employment market.


Cuisia woos American BPO firms

October 24th, 2014

Philippine Ambassador to the US Jose Cuisia urged the American information technology and business process management industry to consider the Philippines an ideal location for customer service and technical support outsourcing.Outsourcing39

“The IT-BPM industry has been the fastest-growing industry in the Philippines in the last 10 years,” he told  business executives and decision makers from Wall Street and Fortune 500 firms, who attended a networking event hosted by the Philippine Consulate General in New York and the Seven Seven Corporate Group in the US.

Cuisia in a statement stressed the 6.4-percent economic growth in the second quarter of 2014, urging executives from New York, New Jersey and Connecticut to seriously consider putting some of their investments in the Philippines.

Philippine Consul General Mario de Leon noted that the IT-BPO industry directly employed one million Filipinos and was expected to earn $18 billion this year.

He added the industry also supported 2.5 additional jobs for each direct hire.

“The Philippines, now recognized as the number one provider of voice services, is determined to increase its market share for more sophisticated outsourced operations in such areas as financial services, software design, medical and legal transcription, animation and gaming,” De Leon said.

The report noted that by 2016, the Philippine business process management industry was expected to expand further with projected revenues of $25 billion and direct employment for 1.3 million people, accounting for 7.8 percent of the Philippine gross domestic product.


BPO sector celebrates reduction in illegal activity

October 17th, 2014

A year ago, lotto scamming activities threatened to flat-line the business processing outsourcing (BPO) sector. Today, with a clampdown on the illegal activity, bolstered by the relevant legislation, there is now next to no reports of the illegal activities and the industry is thriving.Outsourcing31

“I would say a year or so ago that was the number one issue affecting not only the sector but more broadly and certainly in the last couple of months I have not heard that as a major issue anymore,” Julian Robinson, the state minister in the Ministry of Science, Technology, Mining and Energy, told the Jamaica Observer West.

Robinson attributed the reduction of complaints to Government’s introduction of legislation to battle the illegal sweepstakes, which not only posed a threat to the existence of BPO industry but has resulted in a spate of killings across western Jamaica.

In the past, scammers would get data from within some of the BPO companies. They then used that data to target their victims, mostly elderly United States residents. As the activity flourished local companies were at risk of losing their contracts from overseas entities.

BPO services target offshore or near-shore back-office operations such as accounting, human resource management and customer service (call-centre facilities).

Meanwhile, President of the Business Processing Industry Association of Jamaica (BPIAJ), Yoni Epstein confirmed that reports of scamming activities within the sector has fallen.

“The reality of it is it is on the decline. We have not heard of any instances, and to me more importantly, I haven’t heard any instances locally as the clients and prospective clients are asking about it less and less,” Epstein told the Observer West.

Both Epstein and Robinson were speaking to the Observer West following the historical signing of a deal between Columbus Communications and the BPIAJ to establish an incubator within the Montego Bay Freezone, which is expected to trigger growth, enhance market access and create new jobs.

The incubator, which is slated to be fully operational by December, will fast-track entry of new players into the business process outsourcing sector as well as facilitate short-term expansion for current investors.

The telecommunications firm — which trades as Flow and has been vigourously marketing its business brand Columbus Business Solutions (CBS) — will install, as part of its workstation solutions, screens and a combination of physical and so-called soft phones.

Columbus, which offers telephony, Internet and cable services, has ramped up its infrastructure to capitalise on businesses’ appetite for one-stop-shop, holistic technology solutions. “The partnership recognises the importance of the Business Process Industry to Jamaica’s national development and is intended to provide a solution that fast tracks new entrants to the local market, a problem that has often been cited by the Government and Industry players alike” said Sean Latty, head of the communications giant.

The BPO sector is a fast-growing industry which local economists and Government officials see as having great potential for growth, as business confidence rises and investment opportunities emerge.

Currently, there are approximately 40 BPO companies in operations, accounting for approximately 14,000 jobs in Jamaica, according to Epstein.

“We believe that this is a small portion of what the industry is capable of and the partnership with CBS will ease one of the challenges that has stifled the sector’s growth,” Epstein said. Epstein’s point is supported by JAMPRO, the government’s trade and investment promotion agency, that has indicated the sector could create 15,000 new jobs over the next five years.

“The BPO sector represents the fastest growing growth sector in the economy right now and we commend Flow as a private sector partner for coming on board and supporting this initiative,” he added.

As Jamaica seeks to improve its rankings in global competitiveness and the ease-of-doing-business indices, CBS’s initiative will help to expedite the entry of new BPO entrepreneurs, making the industry more dynamic and innovative.

Epstein was upbeat over the soon-to-be established incubator.

“The incubator is a 200 seat call centre that will be developed in the Montego Bay Freezone. The goal of the incubator is to attract foreign investors as well as local investors to start up businesses. Its cheaper access to entry, lower barriers to entry and faster uptime to get started into business. We want to make it as easy as possible for investors to want to come to Jamaica as well as for local investors and entrepreneurs to start businesses,” Epstein told the Observer West.

Epstein added: “It is also going to foster growth in existing businesses because if we have the space and someone can’t build out fast. Enough they will have access to the incubator to start-up grow their business while they develop their existing spaces.”


Capgemini, NetSuite launch ‘virtual company’ BPO toolkit

October 17th, 2014

French IT consulting firm Capgemini and cloud-based software provider NetSuite have teamed up to offer out-of-the-box, pre-configured software and applications to startups and organizations looking to scale or expand into disruptive environments. Outsourcing28

The bundled business process outsourcing (BPO) toolkit works by combining outsourced services, processes, technology and infrastructure to offer a pre-configured back office in the cloud.

It includes services such as HR and finance that the companies say can integrate seamlessly with the parent company’s existing technology. By doing so, users can lessen their go-to-market timeframe and focus on core business priorities, according to the two companies.

For example, when entering a new market, organizations are typically faced with a barrage of personnel and IT requirements. But with this virtual company model, organizations can cherry pick which business processes they wish to automate and outsource, theoretically increasing their agility when it comes to expansion.

“Many organizations generate new ideas but struggle to industrialize them due to the challenges of the administrative burden,” said Christopher Stancombe, CEO for Capgemini’s business process outsourcing. “Our Virtual Company solution was created in response to this growing demand for outsourced technology platforms to aid speed to market and reduce set-up costs. This is where the BPO market is evolving – helping solve some of the most pressing challenges in business today, by understanding what really affects the performance and culture of an organization.”


Golden Gate BPO Solutions, LLC Providing Customer Service for Multi-Channel Retailer of Exclusive Coins and Collectibles

October 16th, 2014

Today, Golden Gate BPO Solutions, LLC, a leading global customer management and Business Process Outsourcing (BPO) company, announced that is has secured a long-term agreement to provide customer service and other support on behalf of one of America’s leading retailers of coins, medals, collectible knives and die-cast models, a company established over 30 years ago that currently has over 10 million customers around the world.Outsourcing27

“First, we were thrilled back in June of this year when this unique retailer trusted us enough with their customers to provide customer care in a manor consistent with their product standards including commitment to quality, product authenticity and exclusivity. Our customer engagement centers play a vital role in delivering first class customer services for some of the world’s leading companies and we are so proud of the achievements of our team. Now, to be awarded a long-term agreement that will make us the primary outsourced provider of customer service for this phenomenal client, in addition to creating new jobs and opportunities for others, is a testament to the hard work of our agents, supervisors, quality assurance personnel, and operations and client service managers,” said Stephen Ferber, Managing Partner at Golden Gate BPO Solutions, LLC.


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