Business process outsourcing involves hiring an external company to handle business functions like finance, human resources, customer service, and IT. There are several types of outsourcing arrangements including multi-sourcing, nearshoring, and offshoring. The Philippines has become a major location for BPO due to advantages like lower costs and an English-speaking workforce, though ensuring adequate training and addressing health issues remain ongoing challenges.

1. BUSINESS PROCESS OUTSOURCING
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2. BUSINESS PROCESS OUTSOURCING
• the process of hiring another company to
handle business activities for you.
PROCESS USUALLY OUTSOURCED:
• financial and administration (F&A) processes
• human resources (HR) functions
• call center and customer service activities
• accounting and payroll
• Information technology

3. Common Types of Outsourcing
1. Multi-Sourcing
• Multi-sourcing represents a contracting
structure that reduces customers’ reliance on
one supplier
• getting services from several different
sources
• brings a lot of flexibility as you can hire
several external service providers for one
task

4. Multi-Sourcing continues….
• Philips caters to Nokia and Ericsson
• In 2000, Philips ‘ plant were on fire and was
unable to produce the chips needed by Nokia
and Ericsson
• Nokia, who realized the problem on production
earlier, was able to claim the chips that was
produced leaving Ericsson high and dry
• Philips was the only supplier of Ericsson
• Ericsson lost $1.8B and almost 4% market share
to Nokia.

5. Common Types of Outsourcing
2. Nearshoring
• Companies looking for savings but worried about the
risks and cultural barriers involved in offshore
outsourcing
• Looking closer to home
• a company transfers its processes to companies in a
nearby country
• form of outsourcing arrangement performed in
roughly the same time zone with less than one day’s
travel to reach the nearshore destination.

6. Nearshoring continues…
• both parties expect to benefit from their
geographic location, linguistic, cultural,
political, economical, historical or other
similarities.
• very common in areas of business and
software development.

7. Nearshoring continues…
• complexity of offshoring stems from different
languages and cultures, long distances and
different time zones, spending more time and
effort on establishing trust and long-term
relationships, overriding communication
barriers and activities of that kind
• Nearshoring doesn't necessarily overcome all
of these barriers, but the proximity allows
more flexibility to align organizations

8. Common Types of Outsourcing
3. Offshoring
• having business functions done in another country.
• frequently, work is offshored in order to reduce labor
expenses, to enter new markets, to tap talent
currently unavailable domestically or to overcome
regulations that prevent specific activities
domestically
• The ability to offshore depends on the pool of
skilled candidates available offshore to provide
you with services you require as a company.

9. Offshoring continues…
• offshoring is usually outsourcing, but the
outsourced business process is done outside the
country where the company is based.
• Example: Deutsche Bank opened an offshore
banking unit in Manila in 1977. We also have
Bank of America, HSBC, Citibank etc..
• outsourcing means transferring one or more
business functions to a service provider.
• Example: Accenture, Teletech, Convergys and
People Support…

10. Brief History in the Philippines
• 1989 – outsourcing strategy started
• 1992 – Business Process Outsourcing in the
Philippines significantly started by Accenture
• 1997 - SYKES entered the Philippines, first
multinational BPO player to enter the
Philippines
• 1999 - eTelecare was founded, The Company
launched its first program in the third quarter
of 2000

11. Brief History continues…
• 2001 - PeopleSupport restructured its
business by relocating outsourcing operations
to St. Louis Missouri and Philippines, then
eventually migrated it’s complete operations
in the Philippines.
• 2006 – ePLDT Ventus has become the
forefront of the local BPO game with 11,000
employees
• 2010 – Philippines surpassed India as the BPO
Capital of the World (in terms of voice BPO)

12. Percentage Distribution of BPO
Companies (2008)
SOURCE: Business Processing Association of the Phils. (BPAP)

13. Advantages of Outsourcing
1. Swiftness and Expertise
• Most of the times tasks are outsourced to
vendors who specialize in their field.
• Effectively the tasks can be completed faster
and with better quality output
2. Concentrating on core process rather than the
supporting ones
• gives the organization more time to strengthen
their core business process.

14. Advantages continues…
3. Risk-sharing
• helps the organization to shift certain
responsibilities to the outsourced vendor since
the outsourced vendor is a specialist, they plan
your risk-mitigating factors better.
4. Reduced Operational and Recruitment costs
• outsourcing eludes the need to hire individuals
in-house; hence recruitment and operational
costs can be minimized to a great extent.

15. Disadvantages of Outsourcing
1. Risk of exposing confidential data
• it involves a risk if exposing confidential company
information to a third-party
2. Synchronizing the deliverables
• In case you do not choose a right partner for outsourcing,
some of the common problem areas include stretched
delivery time frames, sub-standard quality output and
inappropriate categorization of responsibilities
3. Lack of customer focus
• outsourced vendor may be catering to the expertise-
needs of multiple organizations at a time. In such
situations vendors may lack complete focus on your
organization’s tasks.

16. BPO Issues in the Philippines
1. Filling the demand for qualified workers for this
fast-growing industry.
• a huge number of the population is not really used to
using this language in daily conversation
• supply may seem to be running short
Response: TESDA has P400 million in funds put in the industry,
so we are training 65,000 scholars who are almost
employable and near hires in which 70 percent are
converted into hires.
CHED had a pilot deployment of the Service
Management Program, where college students can enroll
while in school and learn IT-BPO skills they need

17. BPO Issues continues…
2. US anti-outsourcing bill
• The “Bring Home Jobs Act” pushed by Obama could be a
threat to the growing BPO industry in the Philippines.
Should Obama win another four year term this November
here could be a stumbling block to the continued growth
of the industry.
• Was already rejected by US Senate
• Outsourcing makes American companies more
competitive. It is said that the 2,500 multinational
companies create more jobs in the US domestically and
therefore outsourcing actually supports the American
demand for employment,

18. BPO Issues continues…
3. Health issues
• shift work disrupt the body clock and have an adverse
effects on lifestyle which has been linked to an increased
risk of high blood pressure, diabetes, heart attack and
stroke caused by lack of blood in the brain
Response: Industry takes pride in providing the best health
care benefits possible.
“We invest a lot in health and wellness programs for our
workers, paying attention and incorporating WHO
campaigns on wellness programs, but we haven’t really
seen any study that singles out BPO employees,” said
BPAP’s Hernandez.