Introduction

Course Overview

You will have the opportunity to learn the basics regarding the
Business Processes Outsourcing (BPO) industry and its
importance to the economic growth of the Philippines. This will
be made possible through your active participation in the
following:

• Lectures
• Individual Recitation, Group Discussions, In-Class Group
Work
• Out-of-Class Individual Assignments, and, Out-of-Class
Group Work
• Article Reviews, Video Presentations

2
Course Norms & Rules

Your are responsible for your own learning:

• Come on time, all the time

• Be participative – ask questions, share your thoughts and opinions,
take notes
• Be supportive – assist your peers as long as they are willing to
assist themselves
• Do all assigned tasks to the best of your ability
• Be enthusiastic, energetic, and fun
• Keep all distractions away in your bag and on put silent-mode –
mobile phone, tablets, laptops
Getting to Know You

Take sometime to quickly tell us some things about

yourself:
– Name
– Year Level
– What I am most interested to learn from this course is…
Getting to Know You

Take sometime to quickly tell us some things about

yourself:
– Name
– Year Level
– My course or major is…
– What I am most interested to learn from this course is…
Initial Thoughts…

• In no more than five (5) minutes write down as many

answers to the question presented below:
– What are your initial thoughts or impressions about
the IT-BPM industry?

• At the end of five (5) minutes be prepared to share your

output with the group
Video Presentation: President Aquino
Video Presentation: Why the Philippines
Activity: Article Review
Module 1: Introduction
IT-BPM Industry Overview

In 2010, The Philippine Information Technology and Business

Process Management(IT-BPM) industry garnered recognition
from around the world. The UK’s National Outsourcing
Association determined the country #1 in business process
outsourcing service in its Global Business Trends report.

The word is definitely out – the Philippine is a major player in

global IT-BPM.

The opportunity remains for the Philippine IT-BPM industry to

capture a bigger share, given the global offshoring services
market is seen to more than double by 2016. The industry
has the potential to bring in USD$25 billion in revenue, and
employ 1.3 million individuals by 2016.
IT-BPM Industry Overview

Offshoring and Outsourcing (O&O) is perhaps one of the most unique

developments in business and industry. Firms now adopts truly global
scope with the opportunity to situate their Operations across the world.

Outsourcing is said to have first flourished in the run-up to the

beginning of the second millennium. IT processes and Operations were
migrated to India as some American and European companies focused
on dealing with the Y2k problem.
IT-BPM Industry Snapshot
in the Philippines
2016: Base Case vs. Accelerated Case
Increases Jobs from 3.1 Million to 4.5
Million
Otherwise 2016 talent requirements
will reverse the current demand-supply
situation by 2012-2013

Annual Demand and Supply

projections of entry-level industry
talent – PH IT-BPM ‘000 FTEs

80-100K @ 2.5%
growth rate

Widening gap will

accelerate cost and
quality pressures
Growth of IT-BPM Industry =
Economic Growth of the entire Philippines
 Introduction to the
IT-BPM Industry

Fundamentals of
Business Process Outsourcing 101
Topical Overview

• Definition of IT-BPM Outsourcing

• Rationale for Outsourcing

• Functions or Services being Outsourced

• Advantages and Disadvantages of Outsourcing

Module Learning Objectives

At the end of this module, you are expected to:

• Define and explain what is outsourcing

• Identify the reasons why companies outsource

• Identify functions/ services that are being outsourced

• Enumerate the advantages and disadvantages of

outsourcing
Breakfast of Champions
Outsourcing, Definition of

• Every time we buy something from somebody

rather than producing it ourselves, we have
essentially 'outsourced' the production of that
good or service.

• Contracting of a service provider for the delivery

of a process or service
Why Companies Outsource?

• Capacity Management
• Lower Cost
• Better Performance
• Faster and Continuous Service Delivery
• Part-based Activities
Why Companies Outsource?

• Capacity Management:

– Need to acquire/buy/hire (temporary) capacity

– Demand chasing (one day 50 employees needed, next

day only 10 are needed)
Why Companies Outsource?

• Lower Cost:

– Replace expensive local or in-house resources with less

expensive resources from external service providers

– Tax differential or government incentive programs in

other locations leading to lower cost
Why Companies Outsource?

• Better Performance:
Use of specialized external providers which can deliver
service with better quality, innovation, in new platform:

– Sales force providing web-based sales management

– PeopleSoft providing employee-facing tools

Why Companies Outsource?

• Faster and Continuous Service:

– Greater output from work being done around the clock

– Offshoring market research support to locations in

reverse time zones

– Offshoring processing of bills of lading to centers in

other time-zones to complete task faster
Why Companies Outsource?

• Part-based Activities:

– Automobile components
– Cruise-ship rooms
– Airplane avionics
– Desktop build and configuration
Why Companies Outsource – Summary

• C_______ M_________
• L____ C___
• B_____ P__________
• F_____ and C_________ S______ D_______
• P___-b____ A_________
What is Being Outsourced?

• Support or Auxiliary Services

• Routine activities or activities that can be
automated at larger centers
• IT services
What is Being Outsourced?

• Support or Auxiliary Services

– Cafeteria
– Janitorial Service
– Copy Center
– Building Maintenance
– Trucking/Shipping
– Security
– Payroll
– Legal
What is Being Outsourced?

• 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 network

– Small vendors using Amazon.com as data center,

marketing, and payment processing platform

– Banks using common/multi-bank core banking services

of large technology providers
What is Being Outsourced?

• IT Services
– Application development
– Application maintenance and management
– Production/ Data-Center Operations
– Production technical/systems support
– Helpdesk
– Software as a Service (SaaS): shared application
software
– Cloud services: shared data storage facilities,
database management
What is Being Outsourced - Summary

• S______ or A________ S_______

• R______ activities or activities that can be
a________ at l_____ c______
• __ S_______
Advantages and Disadvantages
of Outsourcing

• Advantages:
– Employer as well as Employee

• Disadvantages
– Employer as well as Employee
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 than

the buyer

• Buyer can leverage economies of scale of the Service

Provider
Advantages of Outsourcing –
Employer Perspective

• Service Provider may have more expertise/

capability than the buyer

Example:
Technical Support -

Accounting -

Animation -
Advantages of Outsourcing –
Employer Perspective

• Buyer can leverage economies of scale of

the Service Provider.

Example:
Technical Infrastructure
Human Resources
Technical Expertise
Advantages - Employee Perspective

• “Work Abroad, Live here”

– Be near your friends and family
– Work in the country and support Philippine growth
• 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 of resources
doing work
Disadvantages of Outsourcing –
Employer Perspective

• Cost can be higher because provider may add

premium for risk in case processes are not well
defined

– Example Problem: Vaguely defined task as “provide

clinic service.”

– Example Solution: Redefine tasks

2 full-time nurses and 1 full-time doctor, from 8:00AM to
5:00PM, providing emergency medicine (to what extent),
and, emergency care equipment (or not)
Disadvantages of Outsourcing –
Employer Perspective

• Buyer does not have full control of

resources doing work

– Example: Can your agency provided office assistant also

do this extra errand – bring pet to the vet clinic, bring
clothes to the dry-cleaner, pick-up kids from school?

– Solution: Do not use outsourced office assistant like

your personal assistant.
“Disadvantages” - 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
Module Summary

• Definition of IT-BPM Outsourcing

• Rationale for Outsourcing

• Functions and/ or Services being Outsourced

• Advantages and Disadvantages of Outsourcing