BUSINESS PROCESS OUTSOURCING 101 – MODULE 1

Introduction - IT-BPM INDUSTRY OVERVIEW

Overview

Purpose This module introduces the students to the IT-BPM Industry. This should give
them an idea on what the industry is all about, what is currently happening and
what opportunities can be found inside the industry.

Participants Participants of this course are students in the collegiate level.

Module Objectives

By the end of this course, students should be able to:

 Define and explain what is outsourcing
 Identify the reasons why companies outsource
 Identify the functions/ Services that are being outsourced
 Enumerate the advantages and disadvantages

Duration 390 minutes

IT-BPM INDUSTRY OVERVIEW

• THE country’s information technology and business process management (IT-BPM) industry,
widely known as the business process outsourcing (BPO) sector, is diversifying its growth to the
provinces toward 2022.
• Benedict Hernandez, chairman of the Executive Committee of the IT and Business Process
Association of the Philippines (iBPAP), said that the industry is targeting a 50-50 distribution of
BPO companies within and outside the Metro Manila by 2020.

• The current mix is 70 percent of BPO firms are based in the metro while only 30 percent are in
the provinces. According to iBPAP, the Philippines has “significant opportunity” to further grow
in the next six years.

• Frost & Sullivan, iBPAP’s partner in crafting the roadmap, found that the Philippine BPO sector is
expanding “two to three times faster” than the 6 percent yearly industry growth globally.

• This would mean that with sustained performance, the local BPO industry may likely grow
between 12 percent and 18 percent yearly in the next six years.

• Hernandez said the robust Philippine BPO industry already takes up “nearly 10 percent” of the
global outsourced work which is valued at $166 billion to date. This is expected to increase given
the large growth opportunities presented by the global outsourcing market.

• In the 11th International Contact Center Conference and Expo last September 27 and 28, 2016
which was hosted by CCAP, the industry has invited more than 100 foreign investors that are
keen about the Philippine IT-BPM industry.

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 BUSINESS PROCESS OUTSOURCING 101 – MODULE 1

• Majority of the companies that will attend are from Europe and the US—two of the traditional
markets of local outsourced work —while other new companies from South Africa, Indonesia,
Bangladesh, and the Asia Pacific are also scouting for growth opportunities from the Philippine
BPO industry.

• Based on the previous 2010-2016 roadmap, the industry is targeting revenues of $25 billion —of
which $16 billion is contributed by the call centers—and job generation of 1.3 million this year.
As of end-2015, actual industry revenues amounted to nearly $22 billion while jobs created
reached 1.1 million.

• iBPAPhas teamed up with growth solutions and strategies provider Frost & Sullivan in crafting
the 2017-2022 roadmap and has partnered with 11 sponsors to fund the roadmap.

Aside from CCAP, Ibpap members include:

 Animation Council of the Philippines Inc. (ACPI)

 Game Developers Association of the Philippines (GDAP)

 Global In-house Centers Council (GICC)

 Healthcare Information Management Association of the Philippines (HIMAP)

 Philippine Software Industry Association (PSIA).

The Philippines is a recognized global strategic partner in providing continuously excellent service in the
following:

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 BUSINESS PROCESS OUTSOURCING 101 – MODULE 1

The industry not only provides us jobs for making and receiving calls. Those with expertise in other
subsets of the IT-BPM industry such as Knowledge Process Outsourcing, Software Development,
Animation and Game Development and Engineering Design also have opportunities.

So, contrary to popular understanding, beyond making outbound and taking inbound phone calls, the
Philippines is a proven preferred solutions provider to global clientele.

The current nationwide challenge and opportunity is to consistently and reliably provide highly skilled
and professional “homegrown” personnel. This is a golden opportunity for each of you to join this very
progressive, dynamic, and financially robust industry as a means to grow personally, professionally and
economically, at the same time, actively contributing to the overall growth and development of the
country.

IT-BPM INDUSTRY

 Definition of Outsourcing

 Rationale of Outsourcing

 Functions or Services being Outsourced

 Advantages and Disadvantages of Outsourcing

 To define and explain outsourcing

 To identify the reasons why companies outsource

 To identify the functions and services that are being outsourced

 To know the advantages and disadvantages of outsourcing

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 BUSINESS PROCESS OUTSOURCING 101 – MODULE 1

To help us explain the concept of outsourcing, here is a short activity. ASK your participants, “When you
wake up in the morning, what would you prefer to have for breakfast? A fully-loaded cheese burger or
corned beef?” For each question, ask participants to raise their hands then write the numbers on the
boar.

Outsourcing is –

• An arrangement in which one company provides services that could also be provided in-house
by the client company

• A trend that is becoming more common among local and global industries of today

Reasons why companies outsource

 Capacity management

 Lower cost

 Better performance

 Swiftness and expertise

 Risk-sharing

 Reduced operational and recruitment costs

• Capacity Management

Management of the organization’s capacity limit whereby resources are increased or decreased
in step with rising or falling demand. Example is Demand Chasing

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 BUSINESS PROCESS OUTSOURCING 101 – MODULE 1

• Lower Cost

The uses foreign companies with lower wages to produce resources

• Better Performance

Allows the firm to concentrate its resources in its core competencies

• Swiftness and Expertise

Tasks are outsourced to vendors what specialize in their field

• Risk-sharing

Since the outsourced vendor is a specialist, they plan your risk-mitigating factors better

• Reduced Operational and Recruitment costs

Outsourcing eludes the need to hire individuals in-house

Commonly Outsourced Streams of Business

 IT outsourcing
 Content development
 Recruitment
 Manufacturing
 Legal services
 Web design and maintenance
 Logistics
 Technical/customer support

What is being “Outsourced”?

 Support or Auxiliary Services

- Cafeteria - Security

- janitorial service - Payroll

- copy center - Trucking/Shipping

- building maintenance - Legal

 Routine activities or activities that can be automated at larger centers

- small banks outsourcing check processing to larger banks, riding on ATM base of multi-bank
power

- small vendors using Amazon.com as data center, marketing and payment processing platform

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 BUSINESS PROCESS OUTSOURCING 101 – MODULE 1

- banks using common/multi-bank core banking services of large technology providers

 IT Services:

- Application development

- Application maintenance and management

- Production/Data Center Operations

- Production technical/systems support

- Helpdesk

- software as a service: shared application software

- cloud services: shared data storage facilities, database management

What functions/activities are outsourced?

• Non-core functions/activities –service aspects that are not necessarily required by a firm in
fulfilling its value proposition to its customers

ADVANTAGES OF OUTSOURCING – EMPLOYER PERSPECTIVE

 The service provider (BPO company) determines most efficient number of resources, process,
and supervision to achieve output

 Service Provider may have more expertise/capability that the buyer

 Buyer can leverage economies of scale of the Service Provider

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 BUSINESS PROCESS OUTSOURCING 101 – MODULE 1

• Buyer can leverage economies of scale of the Service Provider

Example:

 Technical Infrastructure

 Human Resources

 Technical Expertise

ADVANTAGES OF OUTSOURCING – Employee PERSPECTIVE

• Professional Growth

• Financial Independence

• Employee assistance
• Enjoy your favorite food

Disadvantages OF OUTSOURCING – Employer PERSPECTIVE

• Cost can be higher

• Buyer does not have full control resources doing work

Disadvantages OF OUTSOURCING – Employee PERSPECTIVE

• Shifting schedule (possible night shift)

- Gives you the opportunity to pursue your passion and interest during the day

• Dealing with irate customer

- There is training support on how to deal with irate customer

- There is also floor support

- Companies provide facilities and activities to help you unwind

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References:

http://searchcrm.techtarget.com/definition/contact-center
http://www.investopedia.com/terms/k/knowledge-process-outsourcing.asp
http://www.investopedia.com/terms/c/capacity-management.asp
http://www.techopedia.com/definition/28008/application-management-am
http://www.businessdictionary.com/definition/data-center.html
http://operationstech.about.com/od/glossary/g/Outsourcing.htm
http://www.businessdictionary.com/definition/help-desk.html

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