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7 lessons I’ve learned in my outsourcing career

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7 lessons I’ve learned in my outsourcing career
SHORE Official
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Jonathan Smith, COO, SHORE SolutionsBeing a pioneer in any venture is an exciting and daunting prospect. And being a pioneer in what was then a fresh new industry—the business process outsourcing (BPO) industry—could be an even greater challenge. But I joined this industry, decided to grow in it and forged ahead. So now I’ll admit and I’m proud to say: I am a veteran in the BPO industry in the Philippines, having notched 13 plus years in an industry that’s been around less than two decades here.

Outsourcing started in the Philippines in 1999 with an offshore call center facility set up at the former US Air Force base in Clark, Pampanga.[1] Outsourcing then gained ground in the Philippines in the early 2000s, going from a 40 million dollar industry in 2000[2] to an industry with 15.5 billion dollars in revenue by the end of 2013. The figure is expected to balloon to 25 billion dollars by the end of 2016.[3]

When I started here in 2001, less than 10 thousand people worked in the industry. At the end of 2013, there were 900,000 full-time employees (FTEs) in the industry. Those growth numbers are staggering indeed. But when I started helping set up BPO centers in a consultancy firm in 2002, I could already see the vast potential of the industry, so much so that my partners and I started planning to open up our own center in 2009, and then set up SHORE Solutions in 2010.

I’ve learned a number of lessons in my long outsourcing career that virtually parallels the Philippine industry’s development. This is what I’ve learned:

The Philippines is the best place to be for offshoring.

Even if the Philippines wasn’t participating yet when the global industry started in the early 90s, the country has definitely caught up with the formerly undisputed industry leader, India. The Philippines currently dominates the BPO industry’s voice sector, and comes second to India in knowledge process outsourcing (KPO). By 2016, BPO revenues are projected to exceed 27 billion dollars[4] with the Philippines taking over 10% of the total global offshore BPO market.

Among the many good reasons why more companies worldwide are outsourcing to the Philippines are the following: its low labor and operating costs; highly skilled and hardworking workforce; cultural compatibility with both the West and East; affordable telecom infrastructure; abundance of accessible, cost-effective Class A office spaces, many of which are in special economic zones or business parks; the country’s economic strengths including recognition as one of the most vibrant global economies; and strong government support for the local BPO industry.

In addition to all these business advantages are the country’s own draws such as its amazing and warm people, wonderful beaches, great shopping and many more. The Department of Tourism trumpets that “it’s more fun in the Philippines.”

A company’s success hinges on the quality of its people.

The Philippines has a highly skilled and hardworking workforce that leads to a higher standard of delivery. This is one of the country’s greatest strengths as an outsourcing provider. The Philippines has a high literacy rate of 93% and a large population of educated, creative, expressive, service-oriented people. The Philippines is the third largest English-speaking country in the world, with the highest business fluency in the global BPO industry. Filipinos’ facility with English is accompanied by a “neutral” accent that is an advantage in voice outsourcing services. Morevoer, the Philippines produces 400,000 university/college graduates every year in commerce, sciences, arts, health and medical courses.

Within the country, the various BPO providers also compete for the best employees. Hence, since a company’s success hinges  on its people, an outsourcing provider such as SHORE makes the effort to hire the most qualified employees, train them well, and keep them motivated and engaged to ensure they deliver expert service and stay with the company. Keeping your employees happy will keep them in your employ. You would do well to avoid a high staff turnover. Attrition in the industry is high and has a direct negative impact on performance and revenues. Replacement costs are estimated at 1,641.42 dollars per agent[5] that covers recruitment and training costs.

Moerover, because the outsourcing market is highly competitive, both in terms of companies choosing among outsourcing providers and outsourcing providers competing against each other for employees, a company cannot afford to be lax in its human resources strategies and implementation. There is a constant need for flexibility, innovation, training and polishing of the valuable people assets.

An outsourcing company’s management must exhibit vision and show that they care. Employees look up to their leaders who must make sure they model the way for their employees. Leaders must also be available to their people.

Quality trumps low costs. Despite competition, don’t give in to pricing pressures.

One of the main reasons the offshoring industry evolved is that companies were looking for ways to maximize a company’s productivity with world-class solutions at a lower cost. These are the same drivers to this day. Companies are looking to reduce costs, maximize profits, and save on time and effort by outsourcing components of their business such as back office functions and functions that require advanced, time-consuming skills.

Despite this focus on savings, companies have also frequently realized that the lowest-cost providers could be disappointments. They would be unable to deliver on their key process indicators (KPIs) or a case of getting what you paid for. Offshoring based on cost alone should not be the deciding factor. Companies’ overall goal is still process improvement. Hence, there have to be other factors for companies to base their outsourcing decisions.

Differentiation is important

With so many companies touting their various “unique” strengths, a company has to identify and enhance its differentiators. For example, SHORE realized early on that we shouldn’t do what everyone else was doing. So SHORE found its niche by providing outsourcing services with a difference – by being highly client-focused and operationally excellent. This strategy enabled us to expand quickly. Another company chose to exclusively cater to and give good service to small and medium firms only in specific industries. Still another company decided to specialize in the co-sourcing delivery model.

Re-evaluating your business regularly is critical.

While a business may be successful, the environment, market and competition constantly changes. It’s all about staying ahead of the game. SHORE’s strength used to be more of traditional outsourcing, but we realized that not everybody was entirely comfortable in handing all of their business to you. We have since shifted to offering comprehensive solutions for contact center, BPO and IT and professional services through multiple delivery models.

You should have the willingness to evaluate your business at regular intervals. You may even want to hire external third parties to do the evaluation. Then you should assess whether the recommendations align with your company’s vision, short-term and long-term objectives. You should also have the commitment to execute on and put your resources behind critical changes.

Always listen to your client and understand your client’s needs.

In the communication process, a person tends to speak more than listen. While getting points across and disseminating information is essential, listening to your client is equally if not more important, if only because good listening is hard to do. By good listening, this means open, empathetic listening with a sincere desire to hear what your client has to say. This is a habit that is also valued among agents who are trained to listen to their end-customers.

Listening and truly understanding your clients’ needs enables you to know your clients’ drivers, motivations, issues, needs and requirements so that you can respond appropriately, and implement or adjust your course of action, as necessary. Effective listening gets the job done, and makes your client confident you regard them as a partner in shared success. It also prevents bad situations from escalating and getting out of hand.

Be aware of what’s happening around you, and be prepared to innovate in response to developments.

The competition in the BPO industry is fierce. At the same time, there are many developments and trends that are necessary to monitor, adopt or adapt to for your business to thrive.

Some of the recent trends are how business is increasingly being conducted through mobile media including smartphones and tablets, as well as through the web and social media. Options for these media should be provided or accommodated. You can be sure that clients and customers will expect innovation in these and other areas that may crop up in the future. Your outsourcing business must be flexible, creative and prepared to sail successfully through a volatile environment by making changes to training, infrastructure and whatever else has to be updated.

These are just some of the lessons I’ve learned in my career in the Philippines’ outsourcing industry. I’ve learned a few more lessons, including the so-called soft ones, such as it’s important to have other interests and pastimes other than work: “all work and no play makes Jono a dull boy.” Cultivate a work-life balance to maintain your sanity and sustain your edge, and encourage this among your people. To illustrate: I enjoy following rugby and was a musician in my previous incarnation. I look forward to other activities at the end of the day. You need to take a break from the challenges and stress of work, then come back refreshed and ready to take on work matters. Don’t get me wrong – outsourcing work itself is fulfilling and invigorating, but the danger of burnout exists, and you should not neglect your other priorities such as family, friends, health, leisure time and civic participation.

There are many more lessons I’m willing to learn in pursuit of business success, and to ensure the clients’ service and satisfaction. Although I’m a veteran in this industry, I still have boundless energy to make a mark in my work, as well as in the outsourcing world in the next decade or two.

 


 

 

Jonathan Smith

As Chief Operating Officer and founder of SHORE, Jonathan provides overall strategic and operational responsibility for all contact center and BPO programs. His deep knowledge in outsourcing enables him to be an effective and inspiring leader who is actively involved in all programs. Jonathan has worked in the BPO and contact center industry for almost two decades. In 2001, he was one of the pioneers in outsourcing to the Philippines and is recognized as the “godfather” of Australian businesses offshoring contact center operations to the Philippines. Jonathan started as Project Manager who provided solutions covering customer service, technical support, customer satisfaction, inbound/outbound sales for technology, ISP and telecommunications for companies such as AT&T, Dell Computers and Earthlink. More recently, he was instrumental in securing outsourcing deals for companies from various verticals (IT, banking and financial services, among many) in Australia and Asia Pacific. Originally from Sydney, Australia, Jonathan has lived in the Philippines since 2002.

 

SHORE Solutions is a provider of outsourcing services, addressing client requirements for contact center, BPO, IT and professional services. SHORE is also an SAP channel partner authorized to resell SAP cloud solutions, including SuccessFactors, the leading provider of cloud-based Human Capital Management (HCM) software in the Philippines. SHORE offers customizable outsourcing models and a solid suite of shared support services, including facilities management, recruitment, HR, operations and IT support. SHORE has 2000 employees servicing clients from Australia, US, UK and the Philippines, across four locations in Metro Manila. SHORE Solutions’ website is www.shoreoutsourcing.com.

 

SOURCES

Elamparo, Jeo Angelo Chico. “Why PH’s BPO industry needs more employees.” 22 April 2014. http://www.abs-cbnnews.com.

Magtibay-Ramos, Nedelyn, et al. An Analysis of the Philippine Business Process Outsourcing Industry, March 2007.

Philippine British Outsourcing Council. “The History of BPO in the Philippines.” http://www.bpoc.uk.com/research.html.

“What 2 Philippine cities are on the list of the world’s best 10 outsourcing destinations?” InterAksyon, 27 April 2014. http://www.interaksyon.com/business.

 

 


[1] Forty million U.S. dollars was equivalent to two billion Philippine pesos in 2000. Philippine British Outsourcing Council, “The History of BPO in the Philippines.” http://www.bpoc.uk.com/research.html.

[2] Nedelyn Magtibay-Ramos, et al. An Analysis of the Philippine Business Process Outsourcing Industry, March 2007, p. 6.

[3] Jeo Angelo Chico Elamparo. “Why PH’s BPO industry needs more employees.” 22 April 2014. http://www.abs-cbnnews.com.

[4] “What 2 Philippine cities are on the list of the world’s best 10 outsourcing destinations?” InterAksyon, 27 April 2014. http://www.interaksyon.com/business.

[5] Philippine British Outsourcing Council.

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