Advantages Business Process Outsourcing

BPO possesses many advantages when compare to other BPO providers. The strategic location and adaptability as well as a huge pool of talented workforce are the country's primary competitive advatanges. The has many more advantages when compared to other providers of business process outosurcing.

Business Process Outsourcing or BPO is globally acknowledge to be the fastest growing industry in the world with a market that is expected to each almost $200 billion by the end of the decade. The industry has also remained stabled despite the global financial crisis. Customer contact services has the biggest share in the industry, followed by finance and accounting, and human resource services. Skills quality and competence is the primary driver why so many multinational companies prefer to outsource their non-core functions, plus the cost-effectiveness derived from entirely or almost entirely eliminating the fixed expenses of the outsources activities.

Business process outsourcing is the assignment of one or more business processes to an external usually offshore provider that specializes in the desired processes. The said process provider in turn owns, administers and manages the delegated process according to definite and measurable criteria of performance. The is internationally well known for the skills and competence of its BPO workforce.

The huge and continuously rising demand for call center services continues to lead the gigantic BPO boom in the country. The archipelago's 62% growth rate in 2006 when the industry earned $2.1 billion compared to the $1.3 billion it earned in 2004 was what has placed the country in the global BPO spotlight. It now ranks third in the world, slightly behind India, and a little more to go to reach the current BPO king, India. The 2,400 BPO workforce in 2004 increased exponentially to 200,000 Filipinos working in 120 BPO companies, most of which were call centers, in 2006. Overall, the BPO industry is expected to reach a demand of $11 billion with a workforce of 900,000 people before the start of the next decade.

Though the BPO boom was initiated by the traditional low-cost call centers, the growth was sustained by the great increase in the demand for the higher earning outsourcing services such as legal services, Web design, medical transcription, software development, animation, and shared services. The has already taken steps to elevate its large pool of highly skilled yet cost effective pool of lawyers and accountants and managers.

The government has expressed its full support to the countries BPO industry with its various significant fiscal and non fiscal incentives directed in attracting foreign direct investment on BPO companies. The government is determined to exercise all possible means to sustain this rapid growth and expansion.

Metro Manila houses the majority of the country's BPO facilities, along with Cebu and Bacolod Cities. The development however has reached other regional areas and eventually led to the establishment of BPO infrastructure in areas such as Baguio City, Cagayan de Oro, Clark (Angeles City), Dagupan City, Davao City, Dumaguete City, Lipa City, Iloilo City and Legazpi City. No wonder the has been cited as one of the top 10 choices for offshore operations.

The has definitely evolved into a global BPO leader where the most skilled and effective workforce and cutting edge technology and infrastructure can be availed without the need for a huge capital outlay. If you want to get away from the increasing cost structure of a competitive business while at the same time increasing the quality of your business processes, the is indeed the place to go.

BPO has transcended from being mere means of cost savings in transaction-intensive, back office business processes to being a very adaptive and strong approach to the realization of a wide array of strategic and tactical claims.

General BPO Benefits

1. Speed to Market - BPO quickly hastens the process of getting fully operational allowing a startup business to be fully stable in weeks rather than months through the use of state-of-the-art capabilities. 2. Competitive Capabilities - established businesses can evolve their current processes into globally competitive capabilities. 3. Cost Savings - BPO dramatically lowers the cost of processes through the elimination of fixed costs. 4. Growth stimulus - BPO can be utilized as a learning tool to get acquainted with the latest, unique and competent capabilities. 5. Revenue - higher quality capabilities brought about by BPO can cause great increase in a company's income generation capacity.

BPO is now generally considered as an edge to having that unique competitive advantage. With non-core processes being done by the external provider that is specialized in the said activities, the company is able to focus more on its core processes. In the case of human resource outsourcing, HR functions such as payroll and benefits, recruitment, and personnel evaluation are passed on to an outsourcer that specializes in human resource management (HRM) and who will keep the company abreast of constant change in the field of HRM.

The is deemed to have a stable grip in its place as a global leader of BPO. The country is in a very good position to accommodate outsourcing demands with its outstanding pool of superior yet cost-effective workforce and its excellent telecommunications software and infrastructure.

Business Process Improvement Calculating the Labor Cost

Have you ever wondered what a business process costs an organization or what the largest cost to a company building a product is anyway? It is usually either labor or materials, depending on the type of business, and over the decades we have seen a shift where overhead is consuming a bigger slice of the "product cost" pie.

While this article discusses business processes, and not product creation, labor is still a big cost component. So knowing how much labor a process consumes will help you better understand the cost. This article provides the basic steps on how to calculate the labor cost of a business process, which include:

1. List the process activities and times.
2. Identify the annual volume.
3. Determine the FTE number to use.
4. Determine the salary and employee benefit rate to use.

Here is more detail on each of these steps. I will use developing a product quote as the example.

First, you have to know the process time for the business process in question. Determine this by identifying how long each step in the process takes and total the actual time consumed by the activities. So, let us assume that it takes 46.0 minutes for each quote. Translated into hours, this equates to.8 hours (rounded up) to produce each quote.

Second, multiply the time from step 1 by the annual volume. Let us assume that we produce 3,200 product quotes a year. In our example, multiply the.8 hours (labor per quote) by 3,200 quotes (volume). This equals 2,560 hours spent on the quote process in a year (annual labor hours).

Third, decide what full-time equivalent (FTE) number you should use in your calculation. While the definition of FTE varies by business, it generally means the total number of hours an employee can be paid for in a work year. If an employee works 40 hours a week, then one FTE equates to 2,080 hours in a year (52 weeks x 40 hours per week). Of course employees may have holidays, vacation, and sick time available to them. To arrive at the right labor calculation to use, subtract the number of hours your company grants your employees for vacation, sick, and paid holidays.

In our example, I use 1,880 hours as the standard labor hours. I arrived at this number by subtracting 80 hours vacation, 40 hours sick time, and 10 days (or 80 hours) of paid holidays from the starting point of 2,080 hours in a year.

Once you know the FTE number to use, divide the answer in step 2 by the FTE number. In our example, divide 2,560 (total annual hours spent on the quote process) by 1,880 hours (FTE number) and you get 1.36 FTE. This means that the quote process consumes a little over one employee and almost 1-1/2 employees. Using the FTE concept enables you to account for percentages of an employee's time spent on a business process.

Fourth, multiply the employee salary by the FTE number. For simplicity, assume the work of creating a product quote is completed by one type of employee - entry level clerks. If they earn $30,000 a year, multiply $30,000 by 1.36 (FTEs) to arrive at $40,800, the labor-only cost for the process.

Of course, most employees receive benefits, so you have to add your organization's employee benefit rate (often referred to as "EB rate") to the employee's salary to arrive at the final labor cost for the business process.

If you have many different types of employees involved in a business process and they all earn different salaries, you will find it helpful to build a spreadsheet to perform the calculation.

Estimating process time and its associated cost is the fourth step to improving the effectiveness, efficiency, and adaptability of your business processes.

Project Manage a Business Process Improvement Project

Project management books abound, but you will not find one that addresses how to project manage a business process improvement (BPI) project. This article focuses on closing that gap.

In one sense, a BPI project is the same as any other project - you create a project plan to help keep you on track just as you always do to guarantee a successful implementation of a new or improved business process. The content though is different and it helps to define the project management phases around the 10 steps to BPI. The 10 steps, outlined here, create the bulk of the work breakdown structure (WBS) activities.

1. Create the process inventory: identifying and prioritizing the process list
2. Establish the process foundation: identifying the scope and process boundaries
3. Draw the process map: flowcharting and documenting the business process
4. Estimate process time and cost: estimating the process and cycle times, and calculating the process costs
5. Validate the process map and time estimates: gaining buy-in to the process activities and the time required for each step
6. Apply improvement techniques: improving the business process by using a series of techniques like eliminating bureaucracy
7. Create internal controls, tools, and metrics: error-proofing the process by identifying where a mistake can occur and how to avoid it, creating tools to help automate a step in the process and simplify an employee's job, and developing metrics so that you understand if the business process delivers what customers want from the process
8. Test and rework: creating the test plan to validate that the process and tools work as expected and adapting them as required
9. Implement change: generating an impact analysis to highlight the changes that have to occur; a communication plan to let the appropriate customers, clients, and employees become aware of the change; and a training plan to make sure that employees understand the new process
10. Develop continuous improvement plan: deciding how often to revisit customer needs, internal controls, metrics, or other foundational information

When creating a project plan, three phases that work well for a BPI project includes:

• The Design phase: This phase focuses on the definition and improvement of the business process and it includes steps 1 through 6 and part of step 7.
• The Development phase: In this phase, the main focus is on creating the tools (part of step 7) and conducting the testing on the process and tools (step 8). In this part of the project plan, list any tools identified during the design phase and estimate how long you think it will take to create them. If a report, for example, is identified as an activity, you have to include sub tasks like defining the report specifications, gaining agreement on the report design, and developing the report. While the design phase remains somewhat static from project to project, the development phase varies widely and estimating the time becomes more difficult because you do not know ahead of time what tools the project team may identify during the first phase.
• The Implementation phase: This phase includes rolling out the new process to the organization (step 9), and identifying how to accomplish continuous improvement (step 10).

Like with any other project plan, you can use the concept of tracks within each of the phases to further organize the work. The implementation phase, for example, could include a change management track that lists the changes that have to occur in order for the new process to work; a communication track that outlines the communication strategy you will use, to let the appropriate employees know about the process changes; and a training track that defines how to train affected employees.

In addition to including the 10 steps in the project plan, also include other normal project tasks like team formation, budget definition, sponsor or management communication, and creating an executive summary.

Managing a BPI project requires you to be more active than a conventional project manager on a large project. In a normal project, the project manager's main responsibility is to orchestrate the work. In BPI, the project manager:

• Is also the leader, or facilitator, of the work and you are the person who leads the project team through each of the 10 steps.
• Owns responsibility for the administrative tasks like translating the hand-drawn process map into a tool such as Microsoft Visio and creating the process documentation.
• Manages the team dynamics, anticipates problems, and diffuses team member concerns when a proposed process change may impact their job.

You can use project software, like Microsoft Office Project, to create the project plan, or for simple BPI efforts, you can simply use a spreadsheet. Include the same information in the spreadsheet that you would include in a software application, including the task name, duration, start/finish dates, predecessors, and resource names. Of course one downside to using a spreadsheet is that you have to calculate the duration for each task and its associated start/finish dates. Another downside is the inability to use a Gantt chart to show planned vs. actual timelines as the project progresses, and the Gantt chart is a good tool to use, to show progress in a graphical way. However, for simple BPI projects, a spreadsheet works fine.

The best part about creating a project plan for a BPI project is that you can use the framework over and over again because of the similarity of BPI projects. While you will have to adjust the time estimates depending on the complexity of the business process chosen, the activities and tasks remain the same.