Business process outsourcing in the Philippines

Business process outsourcing or BPO is an emerging industry in the Philippines. The business process outsourcing industry in the Philippines has grown 46% annually since 2006. This boom is led by demand for offshore call centers. Industry estimates from the Board of Investments, Business Process Association onf the Philippines (BPA/P) and BPO Services Association (BSA/U) put the number of people employed by the BPO sector by end of 2008 at 435,000 (vs 372,000 in 2007)- excluding the non-BOI/ nonPEZA entities. The BPO output for 2008 was US$ 6.1B (vs US$ 4.5B in 2007), putting the Philippines as the 3rd largest BPO destination (15%) after India (37%) and Canada (27%). It was expected to hit US$ 7.2B to 7.5B in 2009. The industry was optimistic of 18% growth in headcount 2009. Overall, Philippine BPO is forecast to earn between US $11 to 13 billion and to employ 900,000 additional people in 2010. To achieve and sustain this growth, the Philippine government offered fiscal and non-fiscal incentives to attract foreign direct investment in these industries as part of the 2007 Investment Priorities Plan. The IPP was prepared by the Board of Investments (BOI), as the lead agency in promoting investments, focused on the sectors identified in the Medium-Term Philippine Development Plan (MTPDP) 2004-2010 (PBOI 2006). Majority of the BPO facilities are located in First Tier cities in Metro Manila and Cebu. Second and Third Tier sites are located in regional areas such as Bacolod City, Baguio City, Cagayan de Oro,Clark (Angeles City), Dagupan City, Davao City, Tacloban City, Dumaguete City, Lipa City, Iloilo City, Legazpi City, Iligan City, Olongapo City and Urdaneta City.

Call Centre Industry in the Philippines

Main article: Call center industry in the Philippines In the Philippines, call centres or call centers actually began as plain providers of email response and managing services. The call center industry comprises 80% of the outsourcing industry in the country. With 80% of the services provided going to the US market. The Philippines has less expensive operational and labor costs, as well as an English-speaking workforce as a result of English being one of two official languages. English is also one of the major subjects in all educational levels. In 2008, The Philippines remained a top BPO destination with an estimated $12-billion in revenue business process outsourcing industry. By 2011, Philippines has beat out India for the top BPO destination in the world.

Legal and medical transcription

Main article: Medical transcription

Medical transcriptionist

These companies do mostly medical reports, discharge summaries, operative reports, therapy/rehabilitation notes, chart notes, and hospital and clinic reports using software and equipment for the U.S. In 2003 there were only 9 companies registered doing medical transcription in the Philippines. In 2008 there were 43 companies registered.

Finance, logistics and accounting

The Philippines is becoming a regional and global hub for shared corporate backroom operations, especially for financial services such as accounting and bookkeeping, account maintenance, accounts receivable collection, accounts payable administration, payroll processing, asset management, financial analysis and auditing, management consulting, inventory control and purchasing, expense and revenue reporting, financial reporting, tax reporting, and other finance-related services such as financial leasing, credit card administration, factoring and stock brokering; as well as for logistics management, and cargo shipment management.

Software Development and Animation

Fueling the recent growth spurt in the outsourcing industry in the Philippines are more higher-end outsourcing services such as Web design, software development, and animation (Shameen 2006). Filipino animators do well in the global market for animation, which is growing due to the increasing popularity of animation as an entertainment medium not just for free and cable TV and the movies but also for computer games, as well as an advertising medium, a graphics medium for Internet content, and an information and educational tool.

Major studios like Disney, Marvel, Warner Brothers and Hanna Barbera have offices in the Philippines (CNN 1995). Some of the latest works of Filipino animators include scenes in Pixar's Finding Nemo, Paramount Picture's Barnyard and Twentieth Century-Fox's Anastasia (ABS-CBN Interactive 2004).

Call centre

A very large collections call centre inLakeland, Florida.

A typical call centre worker's desk environment in Lakeland, Florida, United States.

Call centre worker at a very small workstation/booth, using CallWeb Internet-based survey software.

A call centre or call center is a centralised office used for the purpose of receiving and transmitting a large volume of requests by telephone. A call centre is operated by a company to administer incoming product

support or information inquiries from consumers. Outgoing calls for telemarketing, clientele, product services, and debt collection are also made. In addition to a call centre, collective handling of letters, faxes, live chat, and e-mails at one location is known as a contact centre. A call centre is often operated through an extensive open workspace for call centre agents, with work stations that include a computer for each agent, atelephone set/headset connected to a telecom switch, and one or more supervisor stations. It can be independently operated or networked with additional centres, often linked to a corporate computer network, including mainframes, microcomputers and LANs. Increasingly, the voice and data pathways into the centre are linked through a set of new technologies called computer telephony integration (CTI). Most major businesses use call centres to interact with their customers. Examples include utility companies, mail order catalogue retailers, and customer support for computer hardware and software. Some businesses even service internal functions through call centres. Examples of this include help desks, retail financial support, and sales support. A contact centre, also known as customer interaction centre is a central point of any organization from which all customer contacts are managed. Through contact centres, valuable information about company are routed to appropriate people, contacts to be tracked and data to be gathered. It is generally a part of companys customer relationship management (CRM). Today, customers contact companies by calling, emailing, chatting online, visiting websites, faxing, and even instant messaging.

Technology
Call centre technology is subject to improvements and innovations. Some of these technologies include speech recognition software to allow computers to handle first level of customer support, text mining and natural language processing to allow better customer handling, agent training by automatic mining ofbest practices from past interactions, support automation and many other technologies to improve agent productivity and customer satisfaction.[1] Automatic lead selection or lead steering is also intended to improve efficiencies,
[2]

both for inbound and outbound campaigns, whereby inbound calls are intended to quickly land with the

appropriate agent to handle the task, whilst minimizing wait times and long lists of irrelevant options for people calling in, as well as for outbound calls, where lead selection allows management to designate what type of leads go to which agent based on factors including skill, socioeconomic factors and past performance and percentage likelihood of closing a sale per lead. The concept of the Universal Queue standardizes the processing of communications across multiple technologies such as fax, phone, and email whilst the concept of a Virtual queue provides callers with an alternative to waiting on hold when no agents are available to handle inbound call demand.

A typical call centre telephone. Note: no handset, phone is for headset use only.

Premise-based Call Centre Technology Historically, call centres have been built on PBX equipment that is owned and hosted by the call centre operator. The PBX might provide functions such as Automatic Call Distribution, Interactive Voice Response, and skills-based routing. The call centre operator would be responsible for the maintenance of the equipment and necessary software upgrades as released by the vendor. Virtual Call Centre Technology[3] With the advent of the Software as a service technology delivery model, the virtual call centre has emerged. In a virtual call centre model, the call centres operator does not own, operate or host the equipment that the call centre runs on. Instead, they subscribe to a service for a monthly or annual fee with a service provider that hosts the call centre telephony equipment in their own data centre. Such a vendor may host many call centres on their equipment. Agents connect to the vendor's equipment through traditional PSTN telephone lines, or over Voice over IP. Calls to and from prospects or contacts originate from or terminate at the vendor's data centre, rather than at the call centre operator's premise. The vendor's telephony equipment then connects the calls to the call centre operator's agents. Virtual Call Centre Technology allows people to work from home, instead of in a traditional, centralised, call centre location, which increasingly allows people with physical or other disabilities that prevent them from leaving the house, to work.[4]

A predictive dialling system running out of numbers to dial.

Cloud Computing for Call Centres Cloud computing for call centres extends cloud computing to Software as a service, or hosted, on-demand call centres by providing application programming interfaces (APIs) on the call centre cloud computing platform that allow call centre functionality to be integrated with cloud-based Customer

relationship management, such as Salesforce.com or Oracle CRM and leads management and other applications. The APIs typically provide programmatic access to two key groups of features in the call centre platform: Computer Telephony Integration (CTI) APIs provide developers with access to basic telephony controls and sophisticated call handling on the call centre platform from a separate application. Configuration APIs provide programmatic control of administrative functions of the call centre platform which are typically accessed by a human administrator through a Graphical User Interface (GUI).

Patents

Call centre floor during shift.

There are many patents covering various aspects of call centre operation, automation, and technology. One of the early inventors in this field, Ronald A. Katz, personally holds over 40 patents covering inventions related to charge-free numbers, automated attendant, automated call distribution, voice response unit, computer telephone integration and speech recognition.[5] Another notable patent is US Patent number 7,734,029 on Natural Predictive Dialing.

Dynamics
Calls may be inbound or outbound. Inbound calls are made by consumers, for example to obtain information, report a malfunction, or ask for help. In contrast, outbound calls are made by agents to consumers, usually for sales purposes (telemarketing). One can combine inbound and outbound campaigns.[6] Call centre staff are often organised into a multi-tier support system for more efficient handling of calls. The first tier consists of operators, who initially answer calls and provide general information. If a caller requires more assistance, the call is forwarded to the second tier (in the appropriate department depending on the nature of the call). In some cases, there are three or more tiers of support staff. Typically the third tier of support is formed of product engineers/developers or highly skilled technical support staff for the product.

Some critics of call centres argue that the work atmosphere in such an environment is dehumanising.[7] Others point to the low rates of pay and restrictive working practices of some employers. [8][9]There has been much controversy over such things as restricting the amount of time that an employee can spend in the toilet.[10] Call centres have also been the subject of complaints by callers who find the staff often do not have enough skill or authority to resolve problems,[11] while the staff sometimes appear apathetic.[12] Telephone calls are easily monitored, and the close monitoring of call centre staff is widespread. [13] This has the benefit[14] of helping the company to plan the workload and time of its employees. However it has also been argued that such close monitoring breaches the human right to privacy.[15]

Varieties
Some variations [16] of call centre models are listed below:

Contact centre Supports interaction with customers over a variety of media, including but not

necessarily limited to telephony, e-mail and internet chat.

Inbound call centre - Exclusively or predominantly handles inbound calls (calls initiated by the

customer).

Outbound call centre - One in which call centre agents make outbound calls to customers or sales

leads.

Blended call centre - Combining automatic call distribution for incoming calls with predictive dialling for

outbound calls, it makes more efficient use of agent time as each type of agent (inbound or outbound) can handle the overflow of the other.

Criticism and performance

From callers, common criticisms include:[17]

Operators working from a script Non-expert operators (call screening) Incompetent or untrained operators incapable of processing customers' requests effectively[18] Obsequious behavior by operators (e.g., relentless use of "sir," "ma'am" and "I'd be happy to assist

you")

Overseas location, with language and accent problems Touch tone menu systems and automated queuing systems Excessive waiting times to be connected to an operator Complaints that departments of companies do not engage in communication with one another Deceit over location of call centre (such as allocating overseas workers false English names)

Requiring the caller to repeat the same information multiple times

Common criticisms from staff include:[19]

Close scrutiny by management (e.g. frequent random call monitoring) Low compensation (pay and bonuses) Restrictive working practices (some operators are required to follow a pre-written script) High stress: a common problem associated with front-end jobs where employees deal directly with

customers

Repetitive job task Poor working conditions (e.g. poor facilities, poor maintenance and cleaning, cramped working

conditions, management interference, lack of privacy and noisy)

Impaired vision and hearing problems Rude and abusive customers

The net-net of these concerns is that call centres as a business process exhibit levels of variability. The experience a customer gets and the results a company achieves on a given call are almost totally dependent on the quality of the agent answering that call.[20] Call centres are beginning to address this by using Agentassisted Automation to standardise the process all agents use.[21] Anton and Phelps have provided a detailed HOWTO to conduct the performance evaluation of the business,[22] whereas others are using various scientific technologies to do the jobs.[23][24][25] However more popular alternatives are using personality and skill based approaches.[26][27] The various challenges encountered by call operators are discussed by several authors.[28][29]
[30][31][32]

Outsourced bureau contact centres

Outsourced bureau contact centres are a model of contact centre that provide services on a "pay per use" model. The overheads of the contact centre are shared by many clients thereby supporting a very cost effective model especially for low volumes of calls. Bureau contact centres provide an opportunity for:

Pilot schemes - perform test of concept for new models for communications, sales or customer

services before investing in staff and infrastructure.

Flexible solutions for SMEs - small or medium-size enterprises can benefit from a flexible service that

can evolve with the business.

Best of breed systems/technology - clients can benefit from considerable investment into

communications technology, receiving benefits without having to invest in large capital expenditure projects.

Unionisation
Unions in North America have made some effort to gain members from this sector,[33] including the Communications Workers of America[34] and the United Steelworkers. In Australia, the National Union of Workers represents unionised workers; their activities form part of the Australian labour movement.
[35]

In Europe, Uni Global Union of Switzerland is involved in assisting unionisation in this realm.[36]

Standardisation
Customer Operations Performance Center Inc. (COPC) is the globally recognised performance management framework for the contact centre and BPO industry. You can become certified to the COPC-2000 CSP Standard after demonstrating compliance to over 30 different items of contact centre performance as outlined in the COPC-2000 CSP Standard. The COPC-2000 CSP Standard can be downloaded for free and is "open source" meaning it can also be utilized within your contact centre as a service to the industry.

Mathematical theory
Queuing theory is a branch of mathematics in which models of queuing systems have been developed. A call centre can be seen as a queuing network.[37][38] The models can be applied to answer queueing questions for call centres. The most widespread queueing model used is the Erlang C Formula. Call centre operations have been supported by mathematical models beyond queueing, with operations research, which considers a wide range of optimisation problems.

Call center industry in the Philippines

A typical call center production floor in the Philippines

One of the many call centers located within Metro Manila

Call centers began in the Philippines as plain providers of email response and managing services, these have industrial capabilities for almost all types ofcustomer relations, ranging from travel services, technical support, education, customer care, financial services, and online business to customer support, online business to business support. The call center industry is an up-and-coming industry in the Philippines. Business Process Outsourcing (BPO) is regarded as one of the fastest growing industries in the world. The Philippines is also considered as location of choice due to its less expensive operational and labor costs.
[1]

In 2007, The Philippines remain as a top BPO destination for the estimated $150-billion business process

outsourcing industry.[2].

Types of support
The calls managed by a number of Philippine call centers can be categorized into; Outbound Calls and Inbound Calls. Outbound calls include Advisories, Sales Verification, Customer Services, Surveys and it is usually the Call center agent who calls the client. While Inbound Calls include Inquiries, Technical Support, Inbound Sales and various Customer services and in this situation it is the client who calls the call center agent.

Recruitment and training process

A call center agent working in his station

The recruitment process for new call center agents may include (but is not limited to) the following:

Phone Screening this stage determines the voice quality over the phone and how the applicant

responds to the call;

Initial Interview conducted by the company human resource department or another outsource

staffing firm to test the speaking skills, attitude and how confident the applicant responds to questions;

Examination this includes aptitude tests, computer-based call simulations and emotional quotient

(EQ) or aptitude tests; and

Final Interview to assess customer service, technical, or sales skills.

There are various ways in which one may initiate a career in call centers. The most common of which is to apply directly to a call center's recruitment office. This process is commonly coined as a "walk-in" application. Another procedure includes employee referral where an applicant is referred by an existing employee of a call center. A person may also apply through an employment agency, which will conduct its own screening procedures, before endorsing an applicant to any call center. An emerging manner to secure a career in call centers is through on-line application. More and more companies and job seekers have embraced this means due to its benefits. Some of its many benefits include: acquiring more details of the call center before applying, facilitation of application forms and resumes and the ability to reach out to Filipinos in far areas.[3]

Number of centers
According to the Call Center Directory[4] of the Philippine Economic Zone Authority (PEZA), the Philippines now has 788 call centers over 20 key locations:

One of the many call centers located outside of Metro Manila

Bacolod City 6 Batangas City 1 Lipa City 2 Baguio City 8 Cabanatuan City 1 Cagayan De Oro 3 Dumaguete City 5 Metro Cebu 44 Metro Davao 10 Eastwood City 30 Gumaca, Quezon 1

Iligan City 2 Iloilo 7 La Union 1 Laguna 12 Las Pinas City 9 Makati City 274 Mandaluyong City 32 Manila City 38

Muntinlupa City 24 Ortigas Center 141 Pampanga 18 Pasig City 27 Quezon City 77 Rizal 4 San Juan City 13 Zamboanga City 1

Outsourcing
Call center managers require graduates who are extremely fluent in English and (for technical accounts) above par IT skills. Due to the economic downturn in United States (where the outsourcing industry's revenue came from), only few potential investors are surveying for outsourcing sites. In spite of this condition, a very well known US outsourcing giant declared recent plans for five new customer contact centers in the Philippines which signifies jobs for at least 7,000 people. In 2006, 160,000 people were employed in a US$2 billion (S$3 billion) business. The recession also prompted the significant loss of jobs for Overseas Filipino Workers (OFWs). This prompted the Philippine government to provide Filipino domestic helpers government-sponsored training for the OFWs to become call center agents[5]. The program, funded by the Overseas Workers Welfare Administration (OWWA), is part of the government's vocational scholarship program of OWWA and reintegration for OFWs. The new project will sharpen English proficiency of applicants and provide call center training for 40 hours at $700 per student which the Philippine government has shouldered. This would hopefully give options to the OFWs to shift careers.

Bookmark This Page Email This Page Format for Printing Submit an Article

BPO - What is Business Process Outsourcing?

What is business process outsourcing (BPO)? BPO is the process of hiring another company to handle business activities for you. BPO is distinct from information technology (IT) outsourcing, which focuses on hiring a third-party company or service provider to do IT-related activities, such as application management and application development, data center operations, or testing and quality assurance.

Read More Articles

Related Articles

Tools

&

What is Offshoring? How

to Respond to an Outsourcing Challenge What is

Outsourcing

Outsourcing?

In the early days, BPO usually consisted of outsourcing processes such as payroll. Then it grew to include employee benefits management. Now it encompasses a number of functions that are considered "non-core" to the primary business strategy. Now it is common for organizations to outsource financial and administration (F&A) processes, human resources (HR) functions, call center and customer service activities and accounting and payroll. These outsourcing deals frequently involve multi-year contracts that can run into hundreds of millions of dollars. Often, the people performing the work internally for the client firm are transferred and become employees for the service provider. Dominant outsourcing service providers in the BPO fields (some of which also dominate the IT outsourcing business) include US companies IBM, Accenture, and Hewitt Associates, as well as European and Asian companies Capgemini, Genpact, TCS, Wipro and Infosys. Many of these BPO efforts involve offshoring -- hiring a company based in another country -- to do the work. India is a popular location for BPO activities. Frequently, BPO is also referred to as ITES -- information technology-enabled services. Since most business processes include some form of automation, IT "enables" these services to be performed. An offshoot of BPO is KPO -- knowledge process outsourcing. Considered by some to be a subset of BPO, KPO includes those activities that require greater skill, knowledge, education and expertise to handle. For example, whereas an insurance company might outsource data entry of its claims forms as part of a BPO initiative, it may also choose to use a KPO service provider to evaluate new insurance applications based on a set of criteria or business rules; this work would require the efforts of a more knowledgeable set of workers than the data entry would. The current definition of KPO encompasses R&D, product development and legal e-discovery, as well as a number of other business functions. Also coming into use is the term BTO -- business transformation outsourcing. This refers to the idea of having service providers contribute to the effort of transforming a business into a leaner, more dynamic, agile and flexible operation.

Bookmark This Page Email This Page Format for Printing Submit an Article Read More Articles

Offshoring - What is Offshoring?

So, what is offshoring? Offshoring is a type of outsourcing. Offshoring simply means having the outsourced business functions done in another country. Frequently, work is offshored in order to reduce labor expenses. Other times, the reasons for offshoring are strategic -- to enter new markets, to tap talent currently unavailable domestically or to overcome regulations that prevent specific activities domestically. India has emerged as the dominant player in offshoring, particularly in software work. Three factors came into play to make this possible. First, in the 1970s the Indian government put in place regulations that mandated that all foreign ventures have Indian majority ownership. Fearing government takeover, many large U.S. corporations, such as IBM, departed, leaving India in the position of fending for itself to maintain its technical infrastructures. This quickly forced the creation of schools to train students in technology. Next came the global ubiquity of the Internet and massive telecommunications capacity, which enabled companies to get computerbased work done seemingly anywhere, including India. Third, as the year 2000 approached, organizations hired service providers to update their legacy program code. Much of this work was handled in India, where English was commonly spoken, where there was a large and highly trained population of software engineers, and where labor costs were much lower than in developed countries. Y2K work proved the merits of an offshore labor force, and companies have continued tapping the talents and skills (and cost savings) made available by Indian offshore service providers. Major companies working as offshoring service providers in India include Tata Consultancy Services (TCS), Infosys and Wipro. Russia, Ireland, Czechoslovakia and Poland have also surfaced as popular offshoring destinations for specific types of software expertise. The Philippines, which has a highly literate and educated population, as well as language and cultural affinities with the United States, has become a popular offshoring region for call center and customer support work. The dominant location for much of the manufacturing outsourcing (in the form of offshoring) by U.S. companies is China, which has made a push in recent years to also become a provider of services. The Chinese central government has made the "third industry" -- services -- a priority for its national development plans in the coming decades. English is taught in China starting in the third grade, and its technical schools and colleges graduate tens of thousands of software engineers annually.

Related Articles

Tools

&

What is Outsourcing?

How

To Reduce Offshore Hidden Costs You Should Be Using Skype in Offshore Work

Why

Outsourcing Quick Poll

Are you currently offshoring a process, function or set of tasks at your organization? Yes, Offshoring No, We're Offshoring No, But Thinking Offshoring We're

Not

We're of

Vote!

At the same time that other countries were coming to the forefront in areas such as software and call center work, the United States was experiencing an economic downturn that struck in 2000 and 2001. The resulting job losses and insecurities created an offshoring backlash, especially among technical workers. Both the potential for negative publicity and concerns about data security and privacy have prevented some companies from taking work offshore. However, that doesn't always prevent them from outsourcing. Rural sourcing -- having work done in domestic locations where salaries and operating expenses are lower (such as the Midwest for the United States) -- is an alternative for companies that want to avoid the negative aspects of offshoring. Other Dimensions of Offshoring Nearshoring is taking the outsourced work to a nearby country (such as Canada, in the case of the United States). Nearshoring is a popular model for companies that don't want to deal with the cultural, language or time zone differences involved in offshoring. Captive Centers are offshore companies set up by organizations to provide internal services and in some cases to sell those same services to clients. Often U.S. and European organizations set up captive centers for their outsourced work. Multinational corporations (MNC) are service providers with offices in many countries, which enable them to serve a global market of clients and tap the labor arbitrage available by offshoring certain types of work. Among this category are IBM, EDS, CSC, HP, ACS, Accenture and Keane.