The document provides an overview of the business process outsourcing (BPO) industry in the Philippines. It discusses the history and growth of the BPO industry, its contributions to the economy, and how it has shifted from low-level to mid- and high-level skills. It also summarizes projections that mid- and high-level BPO jobs will increase and that the Philippines will capture 15% of the global outsourcing market by 2022. Challenges from the COVID-19 pandemic including reduced headcounts and revenues are also outlined.
The document provides an overview of the business process outsourcing (BPO) industry in the Philippines. It discusses the history and growth of the BPO industry, its contributions to the economy, and how it has shifted from low-level to mid- and high-level skills. It also summarizes projections that mid- and high-level BPO jobs will increase and that the Philippines will capture 15% of the global outsourcing market by 2022. Challenges from the COVID-19 pandemic including reduced headcounts and revenues are also outlined.
The document provides an overview of the business process outsourcing (BPO) industry in the Philippines. It discusses the history and growth of the BPO industry, its contributions to the economy, and how it has shifted from low-level to mid- and high-level skills. It also summarizes projections that mid- and high-level BPO jobs will increase and that the Philippines will capture 15% of the global outsourcing market by 2022. Challenges from the COVID-19 pandemic including reduced headcounts and revenues are also outlined.
The document provides an overview of the business process outsourcing (BPO) industry in the Philippines. It discusses the history and growth of the BPO industry, its contributions to the economy, and how it has shifted from low-level to mid- and high-level skills. It also summarizes projections that mid- and high-level BPO jobs will increase and that the Philippines will capture 15% of the global outsourcing market by 2022. Challenges from the COVID-19 pandemic including reduced headcounts and revenues are also outlined.
• Distribution of BPO firms in Metro Manila and provinces o Expansion goals beyond congested areas o BPO industry providing jobs in provinces and home-based settings • Contributions to the economy, tax, and job creation o Members of the BPO industry in the Philippines BPO Industry Before Pandemic • Challenging year for the Philippine BPO market in 2019-2020 o Ongoing global health crisis testing the resilience of outsourcing companies • Key points: o Continuing contribution to the Philippines economy o Shift from low-level skilled tasks to mid and high-level skills o Expected growth in healthcare sector and animation and game development industry o Expected increase in high value complex and digital services • Employment statistics and predicted decline in low-skilled jobs by 2022 Job Projection and Training Efforts • Mid-skill jobs projected to increase by 12%, high-level jobs by 19% by 2022 o 73% of jobs in the global ITBPM industry to require mid and high-level skills • The ITBPM industry collaborates with government and private organizations for upskill programs to keep Filipino workers relevant o Industry-driven incorporation of BPO subject in college curriculum in 2013 o 17 state colleges granted training and seminars for faculty and instructors Impact of Pandemic on BPO Industry in 2020 • SMEs cash-strapped, larger businesses experienced sharp drop in revenues due to the pandemic o Sectors like travel, hospitality, and tourism heavily affected • Clients pulling out accounts led to employees on floating status • Despite challenges, investment pledges for Jan-July 2020 were 37% higher compared to 2019 • Pandemic significantly affected headcount and revenue projection o Changes in work and service model within the industry • BPO industry continued business operations and increased capacity during community quarantine, supported by government agencies Philippine Literacy Rate and BPO Industry Statistics • Philippines has an average literacy rate of 98-98.2% • 788 BPO companies composed of large and SMEs o Individuals working in BPO from home Projections for BPO Industry • Focus on mid and high-value skills intensifies • 65% of BPO employees can deliver complex and varied services for international and local clients • Philippine outsourcing services projected to cover 15% of the total global outsourcing market by 2022 • Industry projected to grow 9% annually for the next five years, possibly increasing post- pandemic Definition and Rationale of Outsourcing • Outsourcing: arrangement in which one company provides services that could be provided in-house o Becoming more common among local and global industries • Reasons for outsourcing include capacity management, lower cost, better performance, swiftness and expertise through sharing, and reduced operational and recruitment costs o Capacity management involves managing organization's capacity limit and resources in line with demand o Lower cost achieved through using foreign companies with lower wages Reasons for Outsourcing • Cost savings: "If produced in the U.S will cost will probably cost 2,000 pesos however if that will be produced in the Philippines for example then it will only cost them 1,000 pesos." o Allows firms to concentrate resources in core competencies. • Better performance: "They want to focus on what they do best, their core competencies." o Swiftness and expertise: "Tasks are outsourced to vendors who specialize in their field." • Risk sharing: "Outsourced vendor is a specialist, they plan your risk mitigating factor better." o Reduces operational and recruitment costs: "Someone is doing it for you so that reduces your operational cost and recruitment cost as well." Commonly Outsourced Activities • IT outsourcing o Content development o Recruitment • Manufacturing o Legal services o Web design and maintenance • Logistics o Technical and customer support Functions Suitable for Outsourcing • Only outsource non-core functions or activities. o These are service aspects that are not necessarily required by a firm in fulfilling its value proposition to its customers. Advantages of Outsourcing to the Employer • Frees up management from dealing with myriad and complex employment issues. o Provides management with an integrated and cost-effective approach to human resource management and administration. Advantages of Outsourcing to Employees • Working abroad living here o Higher pay and no discrimination • Full insurance coverage including dental and health benefits o High overtime pays and generally no dress code Module One: Challenges of Outsourcing • Shifting schedule in the graveyard shift o Changes biological clock due to time zone differences • Dealing with irate customers o Requires patience to resolve issues No Man is an Island • Emphasizes interdependence in business and individual contexts o Business and individuals cannot function in isolation o Need to outsource resources and processes for efficient operations Nature of Business • Goals of business: o Increase shareholders' wealth o Provide excellent customer service o Produce satisfying products and services Two Types of Outsourcing • Third Party o Owned by a service provider o Provides services to clients of the service provider • Shared Service Center o Wholly owned by the mother company o Provides services to affiliates, subsidiaries, or clients of the mother company Strategies for Outsourcing • Multi-sourcing o The benefit is leveraging the best technical expertise from multiple service providers. o Disadvantage: Possibility of technology incompatibilities. • Crowdsourcing o Involves soliciting ideas and content from a large group of people, often through online communities. o Commonly used for obtaining diverse ideas and solutions. • Onshoring o Involves hiring vendors or service providers from the same country as the client company. o Advantages include immediate response and shared market knowledge, but it also poses risks such as staff attrition. • Nearshoring o Refers to transferring business operations to a nearby country, often sharing a border. o Offers cost arbitrage but entails additional coordination costs due to operating in a different country. • Offshoring o Involves vendors and clients in different countries, often separated by seas. o Allows companies to focus on core activities at a reasonable cost, but may lead to data privacy and cultural differences. Offshoring • Advantages o Enables companies to focus on core activities at a reasonable cost. o Offers the opportunity to expand into new areas cost-effectively. • Disadvantages o Data privacy and confidentiality issues. o Cultural differences leading to delays and issues with business acumen. Outsourcing in Organizations • Human resource management strategies can impact attrition and staff selection. o Poor training can lead to customer dissatisfaction. • Types of outsourcing in organizations: o Delivery of final products o Outsourcing of processes and non-core activities ▪ Essential non-core activities, support activities, processes, and functions are outsourced. What to Outsource • Outsource tasks, processes, and non-core activities. • Do outsource well-defined, documented tasks with standard outputs. o Examples include ID development, programming, documentation, integration, maintenance, help desk, and network support. Typical Outsourced Activities • Examples of typically outsourced activities: o Business Process Outsourcing, IT outsourcing, Support function, Routine activities, Seasonal requirements, and Part-time-based activities. • Business process components such as human resources, financials, payroll, and accounting are often outsourced. Examples of Outsourced Business Process Activities • Companies and third parties involved in outsourcing business process activities: o Rebook, Shell SSC Deutsch Knowledge Services, Coca-Cola Bottlers, Washington Mutual, Sallie Mae, Expedia, and Del Monte Philippines. Support Functions and Services Outsourced • Schools outsource: o Cafeterias, copy centers, security, janitorial services, trucking, shipping, building, and maintenance. • Routine activities or activities that can be automated: o Small banks outsource check processing and ATM-based multi-bank network services. Automated Outsourcing • Small vendors use Amazon.com as data centers and marketing and payment processing platforms. • Banks use common or multi-band core banking services of large technology providers. Seasonal and Part-Time-Based Activities • Seasonal requirements and part-time-based activities: o Automobile assembly, electronic assembly, packaging solutions, and some agricultural activities. Technologies Supporting Outsourcing • Technologies supporting outsourcing: o HP, Halo, Cisco, Sunderland, Google Classroom, Facebook, Messenger, and YouTube are used for online classes.
