It’s no secret that social media is bringing about a dramatic shift in marketing and customer support processes. We are at the start of the biggest revolution in the history of technology with millions of people communicating via social networking sites, and in the recent Technology Services industry Association (TSIA) member Social Media Survey, it was revealed that only 8% of members have integrated the new social media channels into their CRM / incident management systems. After a decade of trying to build the “360 degree view of the customer,”  social media interactions are not being tracked.

One could be forgiven for thinking that the members of the TSIA would be at the forefront of this new and fast moving IT space, but no, as it turns out that only 17% of their members reported having integrated social media channels into their corporate websites. Apparently accessing an online community requires a different logon and password, and uses a different UI than the corporate website. Thus, it was left out.

Interestingly, only 8% of TSIA members include social media channels in performance dashboards. So, if a social media channel was neglected, no alarms or notifications exist.

Only 3% of members address social media channels in Service level agreements. Thus, if customer expectations for service levels are not being set, then achieving high customer satisfaction will be challenging as traffic via these channels increases.

Interestingly we are starting to see some BPO and KPO Service Providers leverage this opportunity by providing social media based customer support as an extension of phone and chat channels. Social network listening (SNL) is a hot new field and is an extension of Social Media Monitoring, Reporting and Analytics.

Any business process that is not core and does not add value to a business, that can be executed more efficiently by a computer process, or more cost effectively by less expensive labour, could be, should be and will be outsourced.

There is a new and exciting area of business analytics and it is all about trying to get clarity around a company’s social media presence.  Many companies are dipping their toe in the water and once they get wet they like what they see. Other companies are a little bit more tentative as they are not so sure about how to proceed. There are over 80 different software tools to measure and monitor social media presence, but this is only half of the challenge. The output data needs to be analyzed and reported upon. Most companies not only have no time to do this– they don’t have the necessary head count or bandwidth to do it. This presents a unique opportunity for outsourcers with the right skill sets to offer their cyber workers as a ready-made solution. Think cyber assistants!

Most companies do not understand that participating in the world of social media requires effort. Take blogging for example. For people to be interested enough to read what a company is blogging about the content has to be original. Smart BPO companies are now gathering up writers and bloggers and creating original content, and offered to the market as a service. These companies will even post the content and manage your blog for you. It’s important if you want to maximize your spend on SEO and online marketing, that your blogs and websites  have current content so that  they will consistently rank higher on the search engines, so the more you post, the better.

In search engine optimization (SEO) terminology, a backlink is a hyperlink that links from a web page, back to your own web page or website. Also called an Inbound Link, these links are important in determining the popularity (or importance) of your website. Some search engines including Google will consider websites with more backlinks more relevant in search results pages. Backlink building maximizes your brand exposure to the search engines.

These very important but time-consuming processes can easily be outsourced.

Chevron, one of the largest companies in the world was recently represented by Chevron Shared Services’ former general manager, Bill Pfluger, at the Asia CEO Forum in Makati City, Philippines, where he shared his insights on the Philippines’ development of KPO or Knowledge Process Outsourcing.

KPO involves high-value work done by highly skilled workers in a different company or by a subsidiary of the same organization, which may have the same location or be situated offshore to save cost.

Having worked for Chevron in both the Philippines and Argentina, Pfluger thought that the Philippines had ‘the right stuff’ to support Chevron. “The country has highly skilled workers and a supportive investment environment such as the establishment of the Philippine Economic Zone Authority (Peza) special zones. Pfluger compared the Philippines’ KPO industry to Argentina saying it was easier to operate because its political climate is less turbulent. “Argentina had tougher times in the ’70s wherein there was turmoil and mistrust always prevailed.”

“The KPO industry in the Philippines is booming right now. It has dramatically changed. 12 years ago, you would see very few people at night. But now, it’s a different situation. We also had [only] one place to eat back then.”

During his presentation he made some valuable points and in particular he felt that senior leadership drive is essential to overcome resistance to change and that cultural change management cannot be over-emphasized.

Erik Nielsen told the story of Maersk Shipping Lines’ decision to place one of their facilities in the Philippines to service and keep track of more than 450 ships, trucks and trains that carry over 1.9 million containers, supported by 16,000 employees in 125 countries

His advice was to completely map the processes to ensure adequate knowledge transfer to prevent impacting negatively on the customer experience. He told how Maersk set clear targets and used end-to- end Key Performance Indicators to manage the knowledge transfer process.

According to BPO Consultant Gregory Kittelson of Makati-based firm Kittelson and Carpo Consulting, “With low operational costs and a large number of government-issued tax incentives, the Philippines is an ideal investment destination for foreign multinationals and other start-up companies.  Foreign BPOs prefer setting up operations in the Philippines because the Philippine workforce is exceptionally skilled, and boasts a large number of English-speaking professionals. Filipinos are also known for their hospitality and friendly manner, which has earned the country an enviable reputation as one of the prime outsourcing destinations in the world.”

This year, the Malaysian BPO industry is forecasted to grow at least 15 percent, according to AT Kearney, a global management consulting firm.

Located south of the Philippines, Malaysia is another prime outsourcing location in the Southeast Asian region. The country is home to a number of international BPO companies, like Scicom (MSC), Global and Vsource Asia. Malaysia offers unique advantages in government support, human capital, infrastructure, and domain expertise, which makes it an ideal destination for start-up BPOs.

Contact centers and BPO companies in Malaysia are growing in number, mainly because of the Malaysian economy’s resilience after the global economic crisis. The inflation rate in Malaysia is 2.4%, which is lower than most Southeast Asian countries.

The expected growth the Malaysian BPO industry faces its own challenges – scalability and saturated segments, to name a few. Despite these challenges, the Malaysian BPO industry has its own strengths, as Interactive Intelligence Inc.’s Asean regional sales director David Toh Yue Heng shares, “I foresee good growth in the outsourcing industry because it helps to drive down cost. We can speak multiple languages apart from English, Malay, Chinese and Tamil, and some even speak Japanese and Korean. Malaysia has all the ingredients to become a successful hub – skilled workers, resources and infrastructure as well as reasonable cost.”

“Competition is tough, especially in the low-end segment where India dominates. I suggest the government and the Malaysian BPO industry should work hand-in-hand to achieve their aims and attract external markets, such as the government sector, and inbound and outbound markets. Efforts by government agencies to improve the public delivery system has opened doors for call centre operators into this segment, since most of these agencies used telephones in communicating. I see opportunities here for the outbound market.”

Last month, Pangea3, one of India’s largest providers of legal process outsourcing (LPO) services, became the first India-based LPO to enter the legal services market in Australia in a tie up with Sydney and Melbourne based legal firm Advent Lawyers. The two firms will collaborate on lower level paralegal type work including contract drafting, compliance, risk management, mergers and acquisitions due diligence, litigation and intellectual property support. Perth based legal firm Balance Legal is also a new entrant into the LPO market.

These moves represent the first steps for Indian-based LPOs who are seeking to expand beyond their traditional markets of the US and UK.

In an unrelated move, Thomson Reuters is expanding its legal business process outsourcing (LPO) operations in the Philippines to address the growing demand from US law firms for subcontracted research services.

The company, with 1,800 employees in the Philippines, today will increase its headcount by 300 legally trained people. The company’s legal LPO business has over 14,600 employees around the world, with about 1,500 having law degrees.

“The legal business is our second largest in terms of the number of employees and by revenues, but it’s also number one in profits,” Thomson Reuters president for US core legal business Vin Caraher said.

“The team of employees at the new site will contribute to content processing and production, including compiling, organizing, converting and linking content for Thomson Reuters legal online services and print products around the world,” the company said in a statement.

After BPO and KPO, there’s a new term in outsourcing. This type of process outsourcing has been around for years, but only recently has it been coined by Alok Aggarwal, chairman of research firm Evalueserve Inc. The new acronym is PPO, which stands for person-to-person outsourcing.

Outsourcing often refers to the process of contracting to a third-party. While outsourcing may be viewed as a component to the growing division of labor encompassing all societies, the term did not enter the English-speaking lexicon until the 1980s. Since the 1980s, transnational corporations have increased subcontracting across national boundaries.

Aggarwal says, “Off shoring is now beginning to go main stream and is touching the upper class and working class alike.”

We are now entering the world of the cyber assistant, all made possible by the information super highway. So how does PPO work? Small businesses and individuals use PPO by outsourcing processes that are not directly involved in business, such as online tutoring, design services such as home and landscape, and personal assistant tasks like scheduling appointments. PPO providers work from home, and interaction, service delivery, and usually payment is done online. There are some risks for both the buyer and the PPO vendor, specifically around getting paid for work carried out. However new platform plays are being established to cater for this new marketplace like Elance.com, Odesk.com, GetAFreelancer.com, and Guru.com, by both parties trading across these platforms a considerable measure of assurance is provided.

Based on the research, PPO services follow two business models:

• Direct interaction model – where the buyer and the seller interact directly and sign a contract.
• Online marketplace model – where both client and vendor sign up as members. Clients post job details and requirements, including their budget for the project, and vendors bid on the project. Risk is reduced because clients have more assurance on vendors’ skills provided by the online marketplace’s online skills tests and review/rating system from other clients. A bit like the way the eBay rating system works.

Aside from online tutoring, there are companies like www.englishlink.com, Career Launcher, Educomp Datamatics, and Transtutors that offer live homework and essay writing assistance.

PPO might seem like a small market, with individual contracts ranging from $100 to $5,000, however the quantum of the market for PPO is estimated to be worth over $20 billion in the US

Evalueserve’s study shows that from April 2006 to March 2007, PPO is over $250 million and has a potential growth of over $2 billion by 2015. The study estimates that there are more than 90 online marketplaces to date, and projects that are up for bidding involve over 500,000 freelancers from low-wage countries. This market also allows many professionals to address the life work balance conundrum that a lot of professionals are thinking about.

Written by Rob O’Malley

The manner in which businesses in The UK and elsewhere in Europe outsource activity offshore, has changed dramatically over the past 10 years.  Back in 2003, I was in on a meeting where the objective was to determine how quickly that company could outsource 1000’s of call centre positions to India.  I recently revisited that company and was involved in a similar meeting.  They have a new CEO and management team.  The objectives of the meeting couldn’t be more different.  There was now much greater consideration as to what should be off shored and what shouldn’t.  Teams of people had been formed whose roles were to ensure that their new strategy of “offshore outsourcing” couldn’t possibly fail and if it did, there were contingency plans and procedures on what to do.  The due diligence in vendor selection had been completely overhauled and it was difficult to appreciate that this was the same company that I had visited 7 years previous.

Of course, in hindsight it is very easy to see the changes.  I, like many, who have been involved in any form of offshore outsourcing over the past 10 years, have learnt by mistakes (ideally someone else’s but sometimes our own).  The company I was visiting had learnt from those mistakes and they had brought in external skills from other companies who had also gone through that painful learning process.  When at University in England studying Business, I was always taught that British business was risk-averse and conservative in its nature.  If this is the case, then both our banks and our companies engaged in off shoring have been typically un-British over the past 10 years and now they’re all reverting back.

If I were to sum up the differences in offshore outsourcing now compared with a few years ago, it comes down to two key areas; de-risking the whole project and increasing the control that the company has.

Larger businesses now have teams of people dedicated to managing the vendors and many of these are located in the country of delivery.  These trends have also led to a rapid rise in near shoring.  For Western European businesses, near shoring now means Central & Eastern Europe and predominantly to those countries which were once Communist but are now part of the European Union.  In countries such as Poland, Romania, The Czech Republic and Hungary, there are now fast growing outsourced vendors covering a range of services.   Near shoring is therefore not so much a trend but a symptom of these trends towards greater control and reducing risk.

What is meant by near shoring?

Near shoring is essentially about trading risk for price.  A near shore option is considered lower risk but generally higher priced than the typical offshore locations such as India and The Philippines but without the perceived risk and negative associations around quality.  There are still significant cost savings when outsourcing to Eastern Europe but they tend to be less significant than Asia.

What are the advantages?

One key advantage with near shore is the pure geography. It is much simpler for a client to have positive input into an outsourcing project when it is only a 2-hour flight away to address any problems quickly.  This makes it far more expedient to manage the vendor.  It’s also easier to incorporate the near shore delivery team into the company’s operations as a whole.

Another issue is language availability. Companies are increasingly looking to centralise operations on a regional basis. Countries in Asia simply don’t have the breadth of European language skills as they do in Eastern Europe. In Romania, it is not unusual to have BPO agents with bi lingual skills, this is of course crucial for contact centre activity but it is also important for all types of outsourcing. A Frenchman is likely to be able to have some form of conversation with an Indian ITO supplier in English, but it can and often does pose problems.

The biggest difference is the way in which people are educated.  We all know that the Indian education system has been fantastic in producing some of the world’s greatest IT minds.  However, the education systems across Eastern Europe are very similar to those found in Western Europe, The USA and Australia in that it encourages creativity over the need to learn facts.  I worked for some time with a company who outsourced technical support to The Philippines, India and Romania.  The Asian agents were technically very competent, but the Romanian agents understood the nuances and intonations and what was required from the call and answered appropriately.  The Eastern Europeans achieved shorter call durations and higher customer satisfaction scores.

Conclusion

Eastern Europe will never compete head to head with large-scale outsourcing against the likes of Asian BPOs. It does however work very well for niche projects and is a very good proposition for European based firms or the increasing number of risk-averse companies.  It’s also the perfect location for companies looking to centralise European operations or for non-European firms to be able to service major economies such as Germany, Italy and France.  Even though many countries in Eastern Europe and now part of the European Union, they are still not part of the Euro Currency so costs are considerably lower than Western Europe.  There are differences across the various countries of Central and Eastern Europe.  Those outside the UK including Russia, Moldova, Serbia and The Ukraine are still considered riskier locations.  The countries closer to Germany including the Czech Republic, Slovakia and to a lesser extent Poland have seen costs and labour availability reduce over recent years.  The countries further to the South including Romania, Hungary and Bulgaria are now the more popular choices.  The Former Yugoslav Republics of Croatia, Bosnia and Macedonia are also hungry to find industries to employ their well-educated and young populations.  As we see their infrastructures and political systems mature, we are likely to see an outsourcing industry flourish especially if they are inside the European Union.

Rob O’Malley has worked in the outsourcing industry for the past 17 years. He can be contacted at rob.omalley@call-centres.com

The latest findings on the outsourcing industry show that one of the hottest segments this year will be procurement outsourcing. Procurement outsourcing is a provocative area and there are industry experts who have opposing views about procurement.

The jury is still out.

Aberdeen Group’s former group director, Andrew Bartolini, expresses his view on procurement: “Procurement outsourcing, in and of itself, is not evil. In certain circumstances it can drive huge value; in others, it can undercut critical business results. As technology continues to shrink the world, it will gain more traction.”

Supply Chain Digest’s “40 risks and mistakes of supply chain outsourcing” which is already a few years old, include the following mistakes that clients make today:

• Lack of risk analysis and risk-assessment planning
• Not considering the impact of outsourcing on other functions and areas of risk such as environmental and regulatory factors
• Not establishing an effective internal baseline to measure providers against, including costs, service and value-adds.
• Not having the proper internal skill set to effectively manage the selection process.
• Poorly developed and documented service or product specifications.
• Initiating an agreement with a service provider that limits flexibility in the future.

Rick Bertheaud, Equaterra’s managing director, comments on poorly managed compliance: “In the scheme of things, it is relatively easy to go out, find new suppliers and negotiate better contracts, which is the sourcing part. The toughest part comes afterwards – getting your internal customers within a client organisation to buy off those contracts. In fact, non-compliance with negotiated contracts and specifications from preferred suppliers can create significant value leakage.”

Managing director of Azul Partners and editor of Spend Matters Jason Busch writes on his blog: “I’d argue quite strongly that most BPO providers are in the dark when it comes to supplier information management, supply risk management, contract management and the finer points of supplier performance management outside of what’s in the textbook.”

Ultimately, while there are times when the vendor-side doesn’t live up to expectations or is not managed properly. Simply throwing the process over the fence and wishing for the best is not good enough.

The author of the Global Services Media article reaches a similar conclusion: “Picking the right provider is critical. While buyers should do the necessary due diligence to evaluate the provider’s, technology, delivery model and solution, choosing a partner that aligns culturally to foster an environment of collaboration and trust is even more important.”

The message of ’look before you leap’ bears repeating. Do your research, check out the vendors’ reputation, ask for references, and look at their management team and domain expertise. Like any market there are outstanding firms tied into industry associations with well-defined operating procedures and then there are cowboys.