Phillippine BPO Trends to Watch Out for This 2017

Business Process Outsourcing undeniably has become a common term in modern business. In the past, BPO was seen primarily as a cost-control strategy with relatively short-term objectives, mostly to meet economic changes or to meet a sudden demand on service. Today, many organizations are looking to their BPO suppliers to provide other value in addition to cost control. According to a survey conducted by Forbes on more than 200 top-level and C-suite executives at $1 billion-plus multinational companies, organizations are now seeing BPO on a newer light on how it can be a medium in achieving other business priorities such as growths plans, expanding, and stabilizing sales. They believe it is very important for their BPO relationships to have added value and that it should go beyond those short-term objective. Nowadays BPOs have also become more strategic in providing value-added services in line with the competition with other BPO provider. BPOs are now helping organization in the free cash flow, market penetration, and customer satisfaction.

It has been predicted in the past that BPO will make a lot of impact especially for English-speaking countries like the Philippines. In 2016, the Philippines have already made a reputation of being the call center of the world. Philippines is now the more preferred location for outsourcing. BPO in the Philippines continues to grow and spread out it roots. BPO companies are even looking at the possibilities of expanding their reach. There are now many offices outside of the National Capital Region. It is expected that it will still continue its steady growth in 2017 and years to come as many companies believe that BPO will still be an option that will support their business model for at least three more years.

Clearly, organizations have changed their perspective on how they look at BPOs nowadays and the demands for outsourcing continue to rise in this swift-paced era. But this still doesn’t guarantee the stability of the industry. With great changes on the international market and from countries that offshore to the Philippines like United Kingdom and USA, we may also experience a lot of changes on the structure of the BPO industry in general. The following are just some of the predicted trend for BPO in the Philippines in the coming years:

1.       BPO revenues will take over OFW remittances.  Jose Mari Mercado, president of the Information Technology-Business Process Association of the Philippines has predicted that with more than one million people working for the business processing outsourcing industry, its contribution to the Philippine economy is seen to overtake the income remittances from overseas Filipino workers (OFWs) in the next two years.

2.       More BPO offices will be constructed outside of Metro Manila. According to the Colliers International Philippines director for research and advisory Julius Guevara on a phone interview with Manila Times, the increasing rental rates on Metro Manila has pushed BPOs to find affordable locations that at the same time will become more accessible to labor. And with the expected talks on Federalism, this might really be a wise move for BPO service providers.

3.       BPO will endure international political movement. BPI Securities president Michael Angelo Oyson in an interview with Inquirer said that the BPO might take a hit on the potential protectionist policies from US with the change on the power but will soon get back on as eventually the political rhetoric will be tempered by the political realities. 

3 Key Business Functions You Should Never Outsource

Outsourcing companies have a long list of BPO services to offer but you should be careful what you‘re signing up for.  Not all business functions can be entrusted to vendors. What you have thought of as a clever way to save resources and money might be the cause of your corporation’s collapse.

Although delegation is a way to efficiently run your business, you must sort out which services are best handled by outsourcing companies and which stays in-house.  According to Gregg Landers of CBIZ MHM on Entrepreneur, the “types of services that can be outsourced fall into three general categories: tasks who need highly-skilled employees or in executive positions; highly repetitive tasks; and jobs that require specialized knowledge” while Planet Marketing says to retain the task if it is highly confidential, too expensive to outsource and may cause loss of control.

You may use the decision tree below to help you out:

We’ve discussed before the business functions you can outsource. Despite how advantageous outsourcing is, there are the services you shouldn’t let go of your grasp:

Never outsource your Core Competency

This is the most popular advice/warning in the world of outsourcing, but what exactly is a core competency? Based on Tech Target’s definition it “is a company’s unique characteristic or capability that provides a competitive advantage in the marketplace, delivers value to customers, and contributes to continued organizational growth.”

If a core competency is an indispensible element in a business, how can you identify what is yours so you can’t inadvertently giveaway a classified company information? In the paper entitled “The Core Competence of the Corporation” by C.K. Prahalad and Gary Hamel, they’ve provided a three-point checklist to identify core competencies in a company as follows:

• It should provide access to a wide variety of markets.
• It should provide the value behind end-product benefits.
• It should be difficult for competitors to imitate.

A core competency is the rare gem of a business and outsourcing it to another company is surely a gamble. This is the greatest mistake Netflix made when they partnered with Amazon.

Netflix’ core competency is its on-demand streaming. In order to deliver content to their customers, Netflix relied on Amazon Web Services for more of its streaming services, tells Online File Storage. However, Amazon is a direct competitor of Netflix because of Amazon Prime, which offers unlimited streaming of movies and TV episodes for a price. This situation clearly contradicts item no.3 of the checklist above as well.

We don’t know if it was a coincidence or not when Netflix experienced major downtimes during Christmas Eve and New Year’s Eve last 2012 while still with Amazon at the time. Something’s fishy, right? Both companies have severed ties with each other because of this.

Never outsource (some) of your HR Services

The Human Resources department is the “blood bank” of the company and it is not wise to hire an entire team thousands of miles away from you. It is considered a blood bank because it provides and manages the most valuable asset of a company—its employees.  According to BBC, it is responsible of “recruiting suitable candidates for the organization.” Furthermore, it has the role of ensuring the employee’s welfare, fostering positive employee relations and maintaining a safe working environment for employees. You cannot do these overseas. Simply put, HR is best run locally or on-site.

The Huffington Post reiterates this and according to them “good HR people are embedded, with at least one ear to the ground all the time.” The site also cited sample scenarios of why having an in-house HR is irreplaceable, such as:

•  Two managers have a jurisdictional dispute and need some help sorting out where the lines fall.
• The CEO is concerned that his Marketing VP may not be right for the job.
• Your New Employee Orientation program is so outdated; you’re embarrassed to deliver it.

…and the list goes on.

In addition, Ere Media states four reasons outsourcing HR  services HR is bad for business:

• The company may lose control over who’s doing what and the details.
• It is risky to be fully dependent on a third-party HR. You may suffer from the poor quality of work they deliver, sudden change of management, or worse, if it goes out of business.
• A conflict of interest between the vendor and the client might arise when developing integrated talent management plans.
• It could lead to knowledge deficit because the HR is not directly involved in the process.

However, as we stated above, there is an exception to the rule. You can safely outsource employee benefits processing; employee assistance program processes; HR information systems data-crunching and reporting; payroll; and compensation analysis and reporting, the Huffington Post states.

Never outsource your Sales

Sales generate income, so it is important to have an effective sales process.  In developing a sales process, consider how long you should respond to a lead and formulate ways to nurture that lead. Based on an infographic by Kissmetrics, 35-50% of sales go to the vendor that responds first and 79% of marketing leads never convert into sales because of lack of lead nurturing.

Of course, without a top caliber sales team, your sales process is worthless. In a blog article on Inside Sales, it says that in a typical organization, 13% of sales reps bring in 87% of the revenue. This result would be possible if your sales team possess these seven personality traits, according to Steve Martin of USC Marshall School of Business:

1. Has modesty and humility.
2. Has strong sense of duty and is responsible and reliable.
3. Is goal-oriented and continuously measures their performance.
4.  Has a strong curiosity to acquire knowledge and information.
5.  Lacks gregariousness.
6.   Lacks self-consciousness.
7.   Lacks discouragement and is not frequently overwhelmed by sadness.

When you outsource sales, the power to choose who’s going to be in your team is under the HR department of your chosen outsourcing company and not yours. Unfortunately, there is a possibility that you won’t be able to form your own dream team completely. 

      It is not only you who will be disappointed but your customers as well. Below are the 10 factors customers find in an ace sales rep:

Remember that when sales contribute to the overall company strategy, a 15% increase in revenue is seen, as stated by salesforce.com. Better keep your sales under your roof to have full control of the management of your sales team.

Wisely choose which services you want to outsource because as we have read, some business functions should stay in-house. While you identify which services to outsource, keep in mind your company’s corporate strategy, objectives, strengths, weaknesses and it should be aligned with your future plans. Outsourcing is not a panacea. Never stray away from the fact that it is only a part of your overall business strategy. In this way, you’re going to reap the benefits of a sound and well-thought-out outsourcing plan.

7 Rules Every Outsourcing Relationship Must Abide by to Avoid Fallout

Outsourcing services to another company, especially, to a foreign one is a hard pill to swallow. It is one of the hardest business strategies to implement and maintain. Who wouldn’t be apprehensive to entrust a function of your organization to a complete stranger, even though that stranger is a well-known company in the outsourcing industry? Outsourcing is all about taking risks but you have to set pre-emptive measures to be able to handle those risks.

Are there rules or guidelines that both parties could follow to have a healthy and proactive outsourcing relationship? In ComputerWeekly, Martyn Hart posted a ten-point rule for successful outsourcing. Whereas, seven of these can be applied to prevent fallouts:

“This is going to be all about people, not technology, methods or tools. So put people first.”

People are not robots. We are referring to the employees of the outsourcing company you’re going to hire—don’t treat them as tools but as human beings who just happened to have an exceptional knowledge and skill on the job you’ve asked of them. Consider them as your business partners and not paid workers. You’re not just outsourcing services but also the people behind them. Another article in ComputerWeekly says, “The key to getting outsourcing right is to take a holistic view.”

“In reality, because this is a change programme it will be difficult, so be realistic about the business case, especially the predicted benefits and timescales.”

The business case occurs during the decision-making stage. It is an act of convincing the top management that such decision will have effect on profitability or return on investment (ROI), as defined by BusinessDictionary. Therefore, you should set realistic, measurable, and attainable benefits and timescales. Carefully identify and specify the scope and limitations in detail. Don’t set requirements that are too general and ambiguous. Put everything in paper. This last item is a necessary step so once the specifications in a form of service level agreement (SLA) are handed to the outsourcing company, it wouldn’t be lost in translation.

“This is likely to be one of the most important programmes you’ve managed, so beg, borrow, or steal the best people to work with you on it.”

Bring in competent, dedicated and skilled people on your project team that will capably deal with the ups and downs of the relationship. According to the paper entitled “Outsourcing the Finance and Accounting Functions” published in CIMAglobal.com, a team consists of a project manager; at least one expert from the department who understands the process you want to outsource; someone who is good at negotiations; and a legal expert. The most important characteristic the team must possess is that they have an unwavering confidence in the outsourcing deal.

“You must have visible senior management commitment, so get them involved and supportive.”

CustomerThink pointed out that “stakeholders only commit to change as they see senior leaders do it.” You can secure a support of a senior leader by showing a realistic business case. This also establishes a reassurance to both parties that someone from the top-level of the organization supports them.

“No surprises – up or down, keep bosses and staff involved.”

“Aren’t we enough? What if this decision is only a waste of time, resources and money? Will there be lay-offs?” These are the questions you are going to face once the top management nods their heads in agreement without the knowledge of those who are below the organizational ladder.

Also, involve the bosses and the affected departments before changes are made in agreement. On the part of the vendor, establish a process on how you’re going to do such alterations in the SLA so everyone is on the same page.

“Track the programme from the top down; make it simple by measuring a few key goals with key performance indicators (KPIs), [and] take the helicopter view.”

Establishing key goals with KPIs is a good tool to monitor the progress of the work performed by the outsourcing company. However, avoid creating vague KPIs. Klipfolio recommends using the “SMART criteria” in making KPIs. According to their website, a KPI must answer the following questions:

• Is your objective Specific?
• Can you Measure progress towards that goal?
• Is the goal realistically Attainable?
• How Relevant is the goal to your organization?
• What is the Time-frame for achieving this goal?

Make sure these KPIs are delivered clearly to the provider so they can execute them well.

“Communicate! Communicate! Communicate!”

Communication is the most vital ingredient of a successful outsourcing relationship. What are the communication barriers you need to overcome with your vendor? Chron identifies three problems such as:

Language or Dialect
Choose a provider that understands and fluently speaks your mother tongue. The universal business language is English. One of the safest bet is outsourcing in the Philippines because based on the 2010 TOEFL (Test of English as a Foreign Language) it ranked 35th out of 163 countries worldwide, as stated in the Huffington Post. In Asia, it is on the 3rd spot next to Singapore and India.

Cultural Differences
This barrier can be overcomed by spreading cultural awareness. According to CIO, it “involves conducting workshops and sessions… to make both sides aware of each other’s cultural practices.

Communication Technology
This is no longer a problem nowadays because today’s technology has a wide range of applications to connect people regardless of the time zone and distance.

Communication and cultural understanding are important factors to maintain trust in outsourcing relationships as well, based on the paper entitled “Critical Factors in Establishing and Maintaining Trust in Software Outsourcing Relationships” from the University of New South Wales.

Outsourcing services is a risky endeavor but it could be well-managed by observing the rules stated above so you and your vendor can have a smooth outsourcing relationship.